Sasfin’s first in the world: R600m to support marginalised SMEs

Sasfin has obtained a R390m funding line as well as a R600m portfolio guarantee facility (NASIRA) from FMO, the Dutch Entrepreneurial Development Bank, to provide loans to women, youth and Covid-19 impacted businesses and empower South African entrepreneurs to build a better world. Sasfin is the first bank in the world to receive the NASIRA guarantee provided by the European Union.

This innovative financial program promotes inclusive growth, job creation and sustainable development in the country. The facility comes with technical assistance from the Frankfurt School of Finance and Management to ensure the development aims are met.

The FMO provides guarantees to unlock lending to these entrepreneur groups that are typically regarded as higher credit risk. By 'risk-sharing’ NASIRA reduces the risks of lending to vulnerable and underserved parts of the population.

FMO invests in businesses, projects and financial institutions, by providing capital, knowledge and networks to support sustainable growth and empower entrepreneurs across the developing world, South Africa is one of the most unequal countries in the world with a struggling SME sector that has now been hit by Covid-19.

“NASIRA could not be better suited for this market, Sasfin’s genuine focus on financial inclusion and innovative spirit made them the suitable candidate for the first-ever NASIRA guarantee. We are thankful for Sasfin’s collaborative spirit throughout the process and for the way they embraced NASIRA, knowing that also on FMO’s side, this was the first time that we were working on this program,” explains the FMO’s CIO Linda Broekhuizen.

Michael Sassoon, CEO of Sasfin, adds, “We have always been committed to SMEs, and with NASIRA, are now in an even better position to step up support to so many SMEs who struggle to access finance. This facility is a major next step in expanding our digital B\\YOND Business Banking offering, becoming more diverse and inclusive as we launch to market in 2021. We are proud to be the first bank in the world to receive the NASIRA guarantee under EU funding which speaks volumes about the work we are doing for SMEs in our country. NASIRA ensures that we can continue to transform the business banking experience of our clients.”

“Our aim is to be a long-term partner to our clients beyond the role of a traditional bank. With this in mind, we are very excited to partner with the Frankfurt School and the FMO to enhance our tailor-made offering to SMEs, which includes new lending and non-financial products. The non-financial products include tools for to an entrepreneur to run his business more effectively and hassle-free,” says Meagan Rabe, Head of Build the Bank at Sasfin.

Sasfin's recent COVID-19 SME impact survey showed the immense challenges the pandemic has placed on local small businesses with as many as 73% believing they would not survive the lockdown.

Marjeta Jager, EU Deputy Director-General for International Cooperation and Development, adds, “We profoundly believe that it is very important for the West to reach out to countries that need help, and the FMO has the expertise to use EU money to do that. The support of the EU and Dutch government for NASIRA is a major step towards ensuring that financing reaches underserved entrepreneurs. They are potentially great job creators in countries where employment is much needed, now and in the future. We believe increased coordination and cooperation between governments, development finance institutions and the private sector is a prerequisite to deal with the complex challenge of financial inclusion of young, female and migrant entrepreneurs."

NASIRA is an example of blended finance, bringing together public and private funding, with the guarantee provided by the European Fund for Sustainable Development (EFSD). The Dutch government has also supported NASIRA with a €7.5 million contribution from the MASSIF fund, and in December 2018, FMO and the European Commission (EC) signed the agreement for the NASIRA Risk Sharing Facility for an amount up to €75 million for a period of four years.

The facility targets mainly Tier 1 and Tier 2 financial institutions, and Tier 1 microfinance institutions in sub-Saharan Africa and European neighbouring countries. By catalysing other investors, the program is expected to support a staggering EUR 500 million in financing.

Sasfin Holdings Limited is a banking and financial services group committed to enabling growth in the businesses and global wealth of its clients. Sasfin provide a comprehensive range of specialist financial products and services focused on the needs of asset suppliers, small and medium businesses as well as institutional and private investors. We go beyond a bank by working closely with entrepreneurs and investors to better understand their needs and provide appropriate solutions to the challenges they face.

NASIRA is an innovative financial program that supports young, female, and migrant entrepreneurs in Sub-Saharan Africa and countries neighbouring Europe. As of April 2020, the scope is widened to also reach small COVID-19 affected entrepreneurs in the same regions. NASIRA uses guarantees to allow local banks to on-lend to underserved entrepreneurs. The goal is to allow local banks to provide loans to groups they normally perceive as too risky. By so-called ‘risk-sharing’ NASIRA reduces the perceived and real risks of lending to vulnerable and underserved parts of the population. The NASIRA guarantee is part of the EU External Investment Plan, which, by investing €4.6 billion in EU funds, is set to leverage an additional €47 billion in total investment from the public and private sector. It will enable small business owners to access affordable loans through local banks, microfinance institutions and other non-banking financial institutions.

FMO is the Dutch entrepreneurial development bank. As a leading impact investor, FMO supports sustainable private sector growth in developing countries and emerging markets by investing in ambitious projects and entrepreneurs. FMO believes that a strong private sector leads to economic and social development and has a 50-year proven track-record of empowering people to employ their skills and improve their quality of life. FMO focuses on three sectors that have high development impact: financial institutions, energy, and agribusiness, food & water. With a committed portfolio of EUR 9.7 billion spanning over 85 countries, FMO is one of the larger bilateral private sector developments banks globally. For more information: please visit www.fmo.nl