South Africa’s MSME financing gap persists despite lender growth, African Bank eyes alternative data

South Africa’s micro, small and medium enterprises face an estimated R350 billion ($21.5 billion) financing gap even though the number of small business funders has doubled from 148 in 2018 to over 300 in 2025, according to the OECD. Edna Sathekga-Montse of African Bank says the issue is not just money but a lack of data: many businesses remain unregistered (56%) and only 7% used a formal loan to start, while the sector employs 80% of the country’s workforce. Though close to 80% of MSMEs use digital financial services, only half have internet access, 49% have a social‑media presence and 32% maintain a website, leaving lenders with thin credit profiles. African Bank is moving beyond traditional loan assessments by using invoices, purchase orders, payroll and tax records to gauge affordability and risk. The bank also offers payroll, tax and HR assistance alongside lending, and promotes invoice discounting and purchase‑order financing. A September 2026 report by Finfind, produced with African Bank, shows 85.6% of finance applicants turnover below R1 million ($61,538); these micro‑enterprises create over 80% of MSME jobs and drive more than 85% of funding demand yet remain the least served. Over half of their owners have poor or below‑average credit scores, making alternative data crucial. Sathekga-Montse urges development finance institutions, credit guarantee schemes and timely payments by large firms to ease cash‑flow pressure. For Nigerian entrepreneurs and policymakers, what lessons from South Africa’s use of invoice data and payroll services could help close local financing gaps?

SOURCE: https://techcabal.com/2026/09/18/south-africa-sme-funding-gap-data/