Beyond Money: South Africa’s SME Funding Gap Requires Better Data

The estimated $21.5 billion funding gap for micro, small, and medium enterprises (MSMEs) in South Africa might suggest a capital shortage—but experts argue the real issue is data scarcity.

While the number of potential lenders has doubled since 2018, with over 300 funders now active, banks still struggle to assess risk for many businesses. Edna Sathekga-Montse, Group Chief Transformation and Sustainability Officer at African Bank, explained that this contradiction highlights a deeper problem: “When we understand businesses better, we can assess their creditworthiness more accurately.”

The OECD’s Financing SMEs and Entrepreneurs 2026 report reveals some stark realities—56% of South Africa’s MSMEs are unregistered, and only 7% used formal loans to start. With the sector employing around 80% of the workforce, this presents both an opportunity and a challenge.

The Data Deficit

Many small businesses have revenue streams but lack structured data that lenders can verify—information scattered across invoices, bank transactions, and various digital platforms. Even with widespread adoption of digital financial services (nearly 80% usage), access remains uneven (50% internet, 49% social media presence).

African Bank is responding by offering holistic support beyond traditional lending—including payroll, tax assistance, and supply chain financing solutions that provide a more comprehensive view of business health.

A New Approach to SME Finance

As the Finfind report found, 85.6% of finance applicants have annual turnovers below $61,538 (R1 million), yet remain underserved despite creating over 80% of jobs and representing 85% of funding demand.

By looking beyond credit scores to analyze invoices, purchase orders, and digital payment patterns, lenders can gain a more nuanced understanding of risk—particularly for businesses with limited formal financial history.