African Bank raises R700 million in social bonds to support SME's in South Africa

African Bank has raised R700 million of 3- and 5-year social bonds enabled by its first Sustainable Finance Framework (SFF) that aims to drive inclusive growth in South Africa through the financing of small to medium enterprises.

The bonds were well subscribed, with more than R1 billion in bids received, African Bank said on Monday. The SFF was instrumental in enabling the bank to raise capital through Green, Social, and Sustainability bonds and loans, in support of projects that deliver measurable environmental and social impact.

Several other South African institutions have issued these bonds, such as the Development Bank of Southern Africa, Nedbank, and the City of Cape Town. These bonds typically fund initiatives like affordable housing, education, healthcare, and employment creation.

African Bank's SFF outlines eligible criteria for SME financing and will in future enable financing for green and social projects, including renewable energy.

The SFF includes "robust governance, risk management, and reporting mechanisms to ensure transparency and accountability," said African Bank’s Group Chief Transformation and Sustainability Officer, Edna Sathekga-Montse.

“Our sustainability strategy is holistic, addressing internal operations, stakeholder relationships, community impact, and environmental sustainability, all of which are crucial for long-term success in South Africa, for our customers and the communities where we operate,” she said.

Under its transformative business strategy, African Bank has over the past few years evolved into a diversified retail and business bank. This evolution has now progressed further with the launch of the inaugural listed social bond, embedding sustainability into the bank’s DNA and aligning with key United Nations Sustainable Development Goals, including climate action, gender equality, and financial inclusion.

“This framework to raise money for social and environmental initiatives is more than a financial tool; it is a commitment to responsible banking, inclusive growth, and environmental stewardship,” said Sathekga-Montse.

African Bank intends to publish annual Allocation and Impact Reports and obtain independent verification to ensure the effective use of proceeds. The framework was approved by the JSE and has received a Second Party Opinion, confirming alignment with international best practices.

“This step cements our commitment to inclusive growth in South Africa. We are not just talking; we want to demonstrate how we drive positive change through our bold actions to empower individuals in pursuing their aspirations. It positions African Bank as a catalyst for change in communities across South Africa that are facing challenges,” said Sathekge-Montse.

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