51710 - FRB SME Loan

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Summary of Investment Information

Project Number

51710

Company Name

FIRSTRAND BANK LTD

Date SPI Disclosed

Sep 18, 2025

Country

South Africa

Region

Africa

Projected Board Date

Jul 2, 2025

Environmental Category

FI-2 - Limited

Status

Active

Last Updated Date

Oct 19, 2025

Department

CF3SA - Regional Industry - FIG Africa/FIG Southern Africa

Industry

Financial Markets

Previous Events

Approved : Jul 2, 2025
Signed : Sep 17, 2025
Invested : Oct 17, 2025

Sector

Commercial Banking - SME Finance

Project Description

The proposed investment consists of a senior unsecured loan of up to US$100 million to FirstRand Bank Limited (the Bank or FRB), an existing IFC client, under the MSME Finance Platform-SME Envelope for a maturity of up to 5 years.

The Platform’s SME Envelope seeks to address financial inclusion gaps, with a focus on reaching priority small and medium-sized enterprise (SME) segments, including women entrepreneurs, businesses in agriculture (Agri-SMEs), and supporting SME climate financing by providing medium- and long-term loans to eligible financial service providers. FirstRand Bank (FRB or the Bank) is a key strategic partner to IFC in South Africa, and the proposed project meets the IFC SME eligibility criteria for the country.

Sponsor / Cost / Location

Product Line	IFC Investment (million USD)
Risk Management
Guarantee
Loan	100.0
Equity

IFC's loan to the financial institution described in this SII is targeted for on-lending to the following sector(s):

Product Type	Use of Proceeds
Syndications	Loans to SME Borrowers
Straight Senior Loan	Loans to SME Borrowers

IFC's Definitions of Targeted Sectors can be found here.

Development Impact

Project outcomes - Stakeholder effects: Increased access to finance for SMEs: Despite having a developed financial sector, SMEs in South Africa still experience challenges in accessing credit, mainly from insufficient collateral or guarantees required by the banks. By providing FRB additional funding dedicated to SME on-lending, the Project is expected to contribute to bridging this gap and increase access to finance for SMEs through an IFC existing client with a proven track-record in SME finance in the country. The Bank’s large branch network is a key asset to support access to finance for domestic SMEs. Contribution to Market Creation - Competitiveness: The Project is part of a long-standing and multifaceted cooperation between IFC and FRB and marks the 5th investment project with the Bank targeting SME lending to increase access to finance for SMEs in South Africa. By supporting lending to SMEs in the country, the Project is expected to increase competitiveness among the domestic banks as many of them improve and scale up their SME product offerings.

Financial Additionality - Financing Structure: Long-term financing to financial institutions for targeted on-lending to SMEs is relatively scarce in South Africa due to the perceived risk associated with SMEs as well as the short-term nature of deposits and other funding sources available to banks. IFC’s additionality, therefore, includes the provision of long-term financing dedicated to SME on lending, which is not mainstream in the market. The provision of a US$100 million senior loan will provide FRB with stable long-term funding to support the expansion of its loan portfolio via lending to SMEs. Non-Financial Additionality - Knowledge, Innovation and Capacity Building: As FNB is aiming to grow its SME portfolio, the Bank will further benefit from IFC’s expertise and standard setting to position itself as a market leader in the SME segment in South Africa. By leveraging IFC’s insights, FNB can expand and deepen its SME lending to new as well as underserved segments such as WSMEs, sustainable agriculture finance and affordable housing finance including for women.

Indicator	Metrics	Calendar Year 2022	Calendar Year 2023	Calendar Year 2024
MSME share of total loan portfolio	%	Pre-dates IFC investment	Pre-dates IFC investment	Pre-dates IFC investment
Number of Outstanding Loans, MSMEs	number	Pre-dates IFC investment	Pre-dates IFC investment	Pre-dates IFC investment
Value of Outstanding Loans, MSMEs	USDMill	Pre-dates IFC investment	Pre-dates IFC investment	Pre-dates IFC investment

E&S Category Rationale / Risks and Mitigation

The Project will support FNB’s lending program to SME segments, including women entrepreneurs, businesses in agriculture (agri-SMEs), and SME climate financing. The overall E&S risk of activities to be supported by IFC are considered to be medium and can be readily addressed through mitigation measures. Therefore, the Project has been categorized as FI-2 in accordance with IFC's Sustainability Policy. The Project will not support coal-related, IFC Exclusion list activities, higher risk Agri activities, or higher risk business activities that may include: a) involuntary resettlement; b) risk of adverse impacts on Indigenous Peoples; c) significant risks to or impacts on the environment, community health and safety, biodiversity, cultural heritage; or d) significant occupational health and safety risks. The Bank will be required to screen out higher E&S risks transactions and eligible projects against the IFC Exclusion List and national E&S laws in South Africa. FRB’s labour and working conditions are largely in line with the requirements of this Performance Standard 2 and Life and Fire Safety Standards requirements.

FRB is an existing client and has implemented an environmental and social (E&S) management system. The Bank has a dedicated E&S team responsible for managing the E&S risks and impacts associated with its lending activities. The Bank’s E&S risk management process includes E&S screenings and assessments applicable on clients and on the transaction level. These entail a check against the FRB excluded activities, higher risk activities, a regulatory compliance check, and a reputational risk. Detailed in-house E&S risk assessments are done by the Bank’s E&S specialists or through external consultants. E&S risk assessments also entail E&S risk-based categorization, E&S assessment against applicable local standards, and, where applicable, the Equator Principles and the IFC Performance Standards. Where applicable, identified mitigation measures as well as E&S risk management covenants are included in the legal agreements. Monitoring is conducted post-disbursement to ensure that all appropriate E&S risk management covenants, warranties or conditions included in the loan documentation have been fulfilled and remain current. Under this investment, FRB will be required to continue implementing its E&S risk management system adequately in line with the applicable IFC E&S requirements.

Contacts

For Inquiries About the Project, Contact

FirstRand Bank Limited
Cameron Gough
FirstRand Group Treasury
Cameron.gough@firstrand.co.za
4 Merchant Place, Corner Fredman and Rivonia Road, Sandton, 2196 South Africa
www.firstrand.co.za

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