Proparco is collaborating with Absa by granting it a senior loan of $20 million
Proparco is collaborating with South Africa’s third largest bank by assets, Absa Bank Limited, by granting it a senior loan of $20 million to contribute to its support plan for Corporate SMEs in the context of the continuing Covid-19 crisis.
South Africa’s small and medium-sized enterprises (SMEs) represent more than 98 percent of all businesses, employ between 50 and 60 percent of the country’s workforce across all sectors, and are responsible for a quarter of private sector employment growth – particularly among young people. Before the Covid-19 crisis, SMEs were already facing difficulties, which have been exacerbated due to the pandemic.
Absa Bank Limited (Absa) is the South African subsidiary of Absa Group, one of the top four African banking groups by earnings, assets and market capitalisation. The group is present in all customer segments and conducts the majority of its business in South Africa. Absa Group also has subsidiaries in Kenya, Botswana, Ghana, Tanzania, Uganda, Mauritius, Mozambique, Zambia and the Seychelles. With more than 600 branches, 8,600 ATMs, and 9.5 million customers in South Africa, Absa has an extensive presence across the country. At 30 June 2021, its gross loans and advances to business banking customers totalled R130 billion.
During the Covid-19 crisis, Absa was one of the first banks to announce a comprehensive support plan, the “Covid-19 Payment Relief Plan”, for its clients in corporate, wealth, business bank, private bank and retail (SMEs and individuals). The plan offered a systematic deferral of payment and was the largest provided by a South African bank.
Signed on December 17th 2021, the operation between Proparco and Absa consists of a 20 million United States Dollars loan, dedicated to finance Corporate SMEs operating in sectors impacted by the Covid-19 crisis: including construction, manufacturing, transport, tourism, wholesale, and retail.
“This operation is fully in line with Proparco’s strategy to support the financial sector in its response to an unprecedented context of the crisis linked to the Covid-19 pandemic. We are delighted to start this partnership with Absa Bank, a key player with a strong pan-African presence and to be part of a much-needed counter-cyclical role.”says Emmanuel Haye, deputy head of the Financial Institutions Debt Group, covering Africa and Middle East, at Proparco.
“The agreement further enables Absa to provide financial support to corporate SMEs, a vital component of the local economy, as it recovers from the impact of the Covid-19 pandemic. We are particularly pleased with the agreement as we view the relationship with Proparco, a significant development finance institution in Africa, as strategically important.”says Parin Gokaldas, Group Treasurer at Absa.