IFC extends R740 million in finance to Mercantile Bank to expand its lending to SMEs

IFC extends R740 million in finance to Mercantile Bank to expand its lending to SMEs

19 January 2018

Johannesburg, South Africa, 19 January 2018. The International Finance Corporation (IFC), a member of the World Bank Group, has announced that it will extend a seven-year R740 million term loan to Mercantile Bank Limited, allowing the bank to grow its lending to South African Small and Medium Enterprises (SMEs) and with a focus on women-owned SMEs.

This is a great opportunity for the bank as the loan will not only allow Mercantile to expand its own business, but will also enable us to help SMEs to sustainably grow their businesses and contribute more effectively to boosting productive economic activity and job creation. “A lack of access to finance is one of the biggest barriers to their success and ability to grow to create employment and wealth,” says Karl Kumbier, CEO of Mercantile.

According to the Global Entrepreneurship Monitor’s 2015/2016 country report on South Africa, in 2015, only six women for every ten men were engaged in early-stage entrepreneurial activity. This number was down from eight women for every 10 men in 2014. Unfortunately, this highlights that there remains a substantial divide between representation of men and women in the business world.

Karl Kumbier, CEO of Mercantile, says the bank’s sole purpose is to grow entrepreneurs and it is expanding this purpose to focus on supporting female entrepreneurs. “At Mercantile, we are already privileged to count a number of successful female entrepreneurs among our clients - we have worked with them and seen their businesses grow. This has led us to recognise the importance of providing financing to specifically help women take their businesses to the next level.”

Kumbier says early-stage entrepreneurs and other women involved in SMEs and business are steadily working to increase the level of female participation in the economy, but much more remains to be done to realise a more equitable economic future for the working female population of South Africa. He adds that while start-ups and micro enterprises make a vital contribution to addressing unemployment in South Africa, it is critically important to ensure the growth of established small and medium-sized businesses. “Established small businesses generate much-needed jobs and help to improve the lives of far more people than just the business owner.”

“It is so encouraging to see an institution like the IFC continuing to recognise the opportunity for growth in South Africa, despite the current tough economic climate in the country. Mercantile is also very proud of the continued confidence the IFC has shown in the bank over an extended period. This loan will not only allow us to assist other businesses, but also enable us to expand our own business further,” says Kumbier. Mercantile has doubled its lending to SMEs over the past five years and this loan will position Mercantile to sustain its growth momentum and reach its goal of being the number one Business and Commercial bank in South Africa.

Mercantile and the IFC have previously concluded a landmark securitisation deal (in 2014). The transaction valued at R240 million, saw the securitisation of Mercantile Rental Finance contracts and was the first of its kind in sub-Saharan Africa. Mercantile is also one of only two South African banks to be upgraded by Moody’s in 2017 and the agency has placed the bank on positive review for a possible further upgrade. After climbing two notches, the bank’s crediting rating now stands at Baa1.