Community investment fund launched

Community investment fund launched

Standard Bank has extended an innovative project aimed at lending to informal businesses to Gauteng. This is the first Community investment Fund to be set up in the province following the successful rollout of six identical funds in the Eastern Cape, KwaZulu Natal and Limpopo provinces.

The bank has partnered with a local community organization, the Seeker’s Tower Ministries, to launch the fund. Loans of between R1000 - R50 000 will be extended to small businesses that do not qualify for credit under the bank’s lending criteria

The launch, held in the Vereeniging City Hall at the weekend (Saturday 24 January), was attended by Kennedy Bungane, Deputy Chief Executive Officer, Standard Bank Corporate and Investment Banking and the Honourable Executive Mayor of Sedibeng, Cllr Mahole Mofokeng.

Coenraad Jonker, director of Community Banking at Standard Bank said: “Informal businesses play a vital role in the country’s economy and we at Standard Bank are working towards creating a more sustainable and supportive environment for the sector to thrive.” Community Banking is responsible for setting up the funds.

Standard Bank’s six existing Community Investment Funds have achieved remarkable success over the past 15 months. Over R7m has been disbursed to more than 630 businesses with average loans sizes of R11 000. The average default rate across all six funds is 7%.

Cllr Mahole Mofokeng, the Executive Mayor of Sedibeng said: “We have a responsibility to meet the needs of our communities in the informal business sector and to partner with them in unlocking different economic opportunities. We believe this fund will enable the community to realise their full potential.”

The Community Investment Fund model is novel in two respects: Firstly, funds are only launched in communities which have strong community-based organizations that are capable of partnering with Standard Bank in managing and disbursing the loan funds. Secondly, the model does not require collateral to support loans but relies on community peer pressure and moral persuasion to ensure repayment.

Standard Bank Community Investment Funds (CIF) have been established in the Eastern Cape, Kwa-Zulu Natal and Limpopo provinces. Four funds are in rural communities and two in peri-urban areas.

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