The African Development Bank and Absa Group, a prominent financial services provider in Africa, have announced a significant partnership to implement a groundbreaking financial initiative. This agreement aims to boost funding for underserved sectors in South Africa and throughout the continent, specifically targeting women-owned businesses, young entrepreneurs, and small and medium-sized enterprises (SMEs).
Absa’s financial package aims to enhance regulatory capital, improve access to finance, and deepen domestic capital markets in regional member countries, including low-income and fragile states. Key components include a R1.7 billion subordinated sustainability-linked loan and R18 million for capacity building for SMEs, youth, and women-owned businesses. The package also includes R1 billion for affordable housing loans to female homeowners through Absa’s inaugural social bond and a $150 million trade finance Risk Participation Agreement to support trade transactions by African banks.
Leila Mokaddem, Director General of the African Development Bank’s Southern Africa Region, said, “This partnership with Absa Group underscores our commitment to driving sustainable and inclusive economic growth across Africa. Through this financial package, we are not only fortifying Absa’s capital base but also ensuring that essential funding reaches women, youth, and entrepreneurs, fostering a more equitable and prosperous continent. This collaboration aligns seamlessly with our strategic priorities of supporting Africa’s industrialization and enhancing the quality of life for its people. “
Charles Russon, Absa Group interim CEO said, “The finalisation of this package concludes a three-year process that significantly enhances our capacity to fund social initiatives aligned with our commitment to being a force for good. This partnership enables us to increase funding for women and youth in South Africa while facilitating greater trade opportunities across the continent.”
Ahmed Attout, Director of the Financial Sector Development Department at the African Development Bank said, “This partnership aligns with the African Development Bank’s strategic objectives of advancing green, social, and sustainability instruments in the domestic capital markets, supporting African capital market development and regional financial integration.”
The $150 million trade finance facility will help support trade in Africa by addressing the continent’s annual trade finance gap of more than $100 billion. This initiative will make it easier for important sectors like agriculture, transport, and manufacturing to access funding, while also promoting the growth of the financial sector and regional cooperation.