Finfind has released the highly anticipated South African MSME Access to Finance Report 2025 in partnership with African Bank. The report reveals that MSMEs continue to face significant barriers to accessing the finance that they need to grow. Darlene Menzies, CEO of Finfind, notes that if South Africa is serious about job creation, everyone must invest in the efforts to support businesses that are creating jobs.
According to Zweli Manyati, CEO of Business and Commercial Banking at African Bank, the data, such as that contained within the report, is imperative to building an inclusive economy. “Far too many viable micro and small businesses are locked out of the formal financial system, not because they lack potential, but because they don’t fit traditional funding models. This partnership with Finfind is our way of stepping up to listen, to learn and to lead with the solutions that reflect the lived realities of MSMEs. We will use this intelligence to co-create more effective funding products, strengthening enterprise development efforts and deepening our contribution to meaningful economic participation.
Details of the Study
Drawing on a large study sample of 10 000 cleaned MSME funding requests submitted between 1 September 2023 and 31 August 2024, as well as a comprehensive funder base of 315 funders and 605 active finance products, the Report is a robust picture of the MSME funding environment in South Africa. The study sample has been independently deemed a credible, representative sample when compared to the SARS 2024 VAT and company tax statistics and the QLFS and Stats SA samples for the same period, and as such, the findings can be generalised for the formal MSME sector in South Africa.
Experian South Africa’s Financial Affluence Segmentation (FAS) model highlights a stark divide – affluent segments secure funding more easily, while less affluent MSMEs remain unserved. To bridge this gap, we need tailored financial solutions and broader open finance to enable secure data sharing and support alternative credit scoring models.
The report highlighted the following funding needs:
- 38,7% of all businesses are looking for loans of less than R250 thousand, with 30,8% requesting loans between R250 thousand and R1 million.
- Buying equipment (21%), business expansion (16,1%) and finance for startups (13%) are the three most requested types of funding, accounting for over 50% of all loan applications.
- Cash flow assistance is one of the top two funding requests for businesses with a turnover of more than R1 million per annum.
- The demand for purchase order funding increases as the business size increases, with 4,8% in businesses with a turnover of less than R1 million per annum to 10,2% in businesses with a turnover of more than R10 million per annum.
The South African MSME Access to Finance Report 2025 highlights challenges, but it also points out the way forward, calling for change:
- International focus on funding solutions for MSMEs with a turnover of less than R1 million per annum.
- Reforms to traditional risk assessment and credit scoring models used by banks and Development Finance Institutions (DFIs).
- Open finance and alternative data – a shift from the current data holder-centric approach to a data subject-centred approach to improve data sharing to revolutionise MSME credit risk assessment and scoring.
- Banks and DFIs to partner with fintechs to harness digital solutions for loan processing to reduce the cost of smaller loans.
- Improved risk-sharing models, including the revamping of the Government’s credit guarantee scheme with a focus on supporting funding for MSMEs with a turnover of less than R1 million.
- Enhanced MSME support services, including financial recordkeeping training and accounting tools, funding readiness assistance and digital enablement.
- Changes are needed to the banking sector submissions (BA200 and BA900) to the Reserve Bank for their reporting and lending to MSMEs to provide greater granulation and transparency, aligned with OECD standards.
- Changes recommended to the NCA are detailed in the report.
- Implementation of the recommendations in the newly gazetted MSME funding policy.
The comprehensive report built from a large sample provides accurate insight into the state of MSMEs in South Africa and their access to funding. It’s the hope that providing access to the data that this report highlights will enable key industry role players and policymakers to address the cause of the funding gap. The information indicates clearly where the disparities lie, such as a lack of funding for particular groups, industries or barriers to entry.
You can access the full report on the Access to Funding Report website.
