FMO, the Dutch development bank has signed a transaction with Small Enterprise Foundation (“SEF”) in South Africa. The transaction will be for a ZAR 30 million (USD 2.3 million) Massif funding line for 5 years. The facility between FMO and SEF was signed on Tuesday 17 November by Mr John de Wit, Managing Director of SEF and Mr Nanno Kleiterp, CEO of FMO during the official signing ceremony that is part of Dutch trade mission in the presence of H.E. Prime Minister Rutte of the Netherlands.
Small Enterprise Foundation (“SEF”) is a South African not-for-profit, pro-poor microfinance institution that began operations in 1992. SEF’s objective is to enable the poor to increase their income through microcredit and by assisting them in the accumulation of savings. SEF currently operates 65 branches located in four of South Africa’s provinces: Limpopo, Mpumalanga, North West Prov. and Eastern Cape. In economic terms South Africa is categorized as an upper-middle income country but its apartheid past has left a society which is amongst the most unequal in the world.
99% of SEF's clients are female. Typical enterprises include hawkers of fruits and vegetables and new or used clothing, small convenience shops, and dressmakers. On average, each business employs 1.4 individuals, including the owner, on a full-time or part-time basis.
SEF applies the Grameen methodology and is SA’s leading MFI in that regard. SEF starts working in a community by first conducting participatory wealth ranking (“PWR”). Thereafter field staff go to the poorest households to motivate the women of those households to start or resume an income generating enterprise. Once a client requests a loan, she is required to form a group with four others whom she knows very well and trusts. Each of the five must also be interested in obtaining a loan for their own individual businesses. The five group members are then required to guarantee each other’s’ payments. No other collateral is required. SEF’s loans are only for enterprise and a series of checks are in place to ensure that loans are not diverted for other purposes.
SEF has gained considerable international recognition for its poverty-targeting methodology and its success in reaching and ensuring positive impact on the very poor. SEF’s poverty targeting tool, PWR, was one of the first such tools officially recognised and promoted by the Microcredit Summit Campaign. The transaction fits very well into FMO’s strategy to improve access to finance for SEF’s clients; micro entrepreneurs at the bottom of the pyramid. The loan will be provided from a fund that FMO manages on behalf of the Netherlands government. This fund specifically supports the financing of micro and small enterprises in emerging markets & developing countries.
About FMO
FMO (the Netherlands Development Finance Company) is the Dutch development bank. For 45 years, FMO has been investing in the private sector in developing countries. We believe in a world in 2050 where nine billion people can live well and within the boundaries of the planet. In pursuit of this vision, our mission is to empower entrepreneurs to build a better world. We specialize in sectors where we believe our contribution can have the highest long-term impact: financial institutions, energy and agribusiness. Alongside partners, we invest in the infrastructure, manufacturing and services sectors. With an investment portfolio of EUR 8 billion, FMO is one of the largest bilateral private sector development banks. www.fmo.nl
Press contact:
Paul Hartogsveld
Senior Marketing & Communications
T: +31 70 314 9928
M: +31 6 11589127
