Absa set up a dedicated Micro Enterprise Finance unit (AMEF) in 2007 to make funding more readily available to these businesses. We escalated commitment to this market in 2008, rolling out a 22 - strong network of outlets. These outlets, called Micro Enterprise Service Centres, now employ 200 colleagues and reached more than 10,000 clients.

Absa’s growing network of Micro Enterprise Service Centres offers micro-businesses across South Africa a range of products and services specifically tailored to their needs at various stages of their development. These products include three existing types of loans and a fourth currently being piloted, all geared to suit micro-enterprises with annual business turnovers of between R15,000 and R500,000. However, the bulk of the clients serviced by AMEF are at the lower end of this range, turning over between R15,000 and R75,000.

As well as helping these businesses to fund jobs and growth, AMEF is also helping to further Barclays Inclusive Banking strategy by opening up banking services to many people formerly excluded from them. More than 80% of AMEF’s clients are unbanked, so Absa is offering to open savings accounts for these unbanked customers. More than 80% of AMEF’s clients are women, underlining AMEF’s impact in providing the generally underbanked female population with access to financial services.

Four tailored products

The three micro-enterprise loan products already out in the field are Yanda, suited to unbanked entry-level micro-enterprises; the Retail Enterprise Loan, tailored to well-established micro-enterprise that have been operating for more than a year from the same premises; and Group Lending, which is designed for women’s groups, and emulates the accessible lending model pioneered by Grameen Bank in Bangladesh.

A fourth type of loan, currently being piloted ahead of its launch, is a weekly Hawker loan, designed to be offered at all points where hawkers purchase goods, such as fresh produce markets, flower markets, fish markets, wholesalers and abattoirs. Since the businesses AMEF works with are informal and unregistered, all its lending is in the form of unsecured personal loans.

Another gateway to basic banking

Overall, the progress made in AMEF’s first year has put it at the heart of Absa’s drive to boost financial inclusion. Prior to the launch of AMEF, it was estimated that as many as 97% of micro-entrepreneurs in South Africa had no access to loans. As well as setting a lead on funding micro-enterprises, Absa is also a pioneer of basic banking in South Africa, with more than 4.5 million people on low incomes using its savings accounts, transaction accounts and loans. AMEF is boosting this figure still further by providing another way to get people included in the financial system.