Standard Bank’s R2 billion loan injection helps SA’s small businesses beat load-shedding and build solid futures

By helping SMEs finance their generators and solar power, they remain sustainable and productive

Thousands of small businesses battling to survive the electricity crisis that has cost the nation an estimated R1.2 trillion thus far have, with the assistance of Standard Bank, supported their futures by investing more than R2 billion in alternate energy generation solutions.  

To date, says Simone Cooper, Head of Business and Commercial Banking, more than 2 000 small businesses from across the country have opted for bank financing for their generators and solar power.

This has ensured that their enterprises will remain sustainable and productive. In the process, she says, the vital SME sector, which contributes about 40% to the country’s GDP, has been able to grow, an important achievement considering that the sector employs about eight million people. 

“The bank’s approval of R2 billion in finance has meant providing reliable energy sources for small businesses, which have been among the hardest-hit by ongoing load-shedding and local electricity outages.

“Spending on alternate sources had been primarily on generators and PV solar systems,” says Cooper, who goes on to point out that:

• Gauteng accounted for about 33% of approved finance, with equipment installed at 563 sites (28% of the national total). Assistance provided in respect of solar and battery installations totalled R693 million. Generators attracted about R192 million of the province’s total uptake of more than R885 million.
• The Western Cape was second in terms of finance received, with solar and batteries accounting for R352 million and generators for R111 million of the funding. This stabilised the energy supply at 320 sites and saw the province absorb 17% of the total loan book.
• Together absorbing 36% of the total finance uptake were the Free State (11%), the Eastern Cape (10%), the Northern Cape (8%) and Limpopo (7%). 
• KwaZulu-Natal applicants received R169 million (6%) of the funding, while Mpumalanga received R117 million (4%), and North West Province received R87 million (3%).

“Although the demand for solar and battery installations far outstripped requests for funding of generators; this machinery remained in demand as an integral part of holistic, optimised energy solutions.

“Many businesses regard generators as essential as they can compensate for energy losses when adverse weather conditions negatively impact solar outputs. They can also be activated if component failures occur in other systems,” says Cooper, who anticipates that loan requests to purchase generators will steadily decline as battery prices drop.

Although the demand for energy financing packages came from all economic sectors, agribusiness was the most active. It accounted for R1.1 billion, or 40% of the financing uptake, with R935 million going to solar and batteries and R139 million to generators.

“The requests for financial assistance have increased rapidly during the past three years, and there is no sign that the momentum in the alternate energy sector is slowing. However, the demand is fragmented, and this has caused us to reconfigure our solutions to ensure that we were not just providing funding, but also helping to ensure the delivery of quality systems to our clients,” says Cooper. 

“Part of our funding process is to vet the engineering, procurement and construction companies (EPCs) to ensure they use quality equipment and hold the expertise required to implement the systems correctly and comply with regulations.

“Standard Bank’s participation in the sector with other finance providers will, we believe, relieve the immense stress on small businesses, increase their competitiveness, and reduce the loss of jobs. All of these elements are vital for SA’s economic health. Our commitment to economic growth in the African continent in its entirety is centred around enabling our clients to achieve sustainable business growth by partnering with them to identify the impact of climate change risk,” Cooper concludes.