Financial services for informal sector entrepreneurs
South Africa, 2012
Social Issue
South Africa, according to a World Bank report, is one of the countries with the highest level of economic inequality in the world. 1% of South Africans own 70.9% of the country’s wealth. In 2012, a quarter of the population was in extreme poverty. Many people created small businesses to survive, but they found few financing opportunities.
Our Response
The Small Enterprise Foundation (SEF) is a non-profit entity, founded in 1991, whose mission is to combat extreme poverty. Although South Africa is a country with medium-high income, Apartheid has caused extreme inequality; in the province of Limpopo, where SEF has its operations, 60% of the population live below the country’s poverty line. SEF has more than 171,000 clients, of whom more than 99% are women.
SEF provides credit for self-employment, combined with the mobilisation of savings and a methodology which substantially increases the possibility of their clients’ self-employed activities being successful.
SEF follows the group-solidarity loan approach, very similar to the Grameen Bank of Bangladesh, which helps the poorest members of the community. To identify individuals in need of help, it uses its own tool, the Participatory Wealth Ranking; this determines who the poorest and most vulnerable members of a community are.