Data Gaps Leave South Africa’s MSMEs Struggling to Secure Finance

South Africa’s micro, small and medium enterprises face an estimated financing gap of R350 billion ($21.5 billion), with limited access to reliable business data emerging as one of the obstacles to lending.

The gap persists even though the number of small-business funders increased from 148 in 2018 to more than 300 in 2025, according to figures attributed to the Organisation for Economic Co-operation and Development (OECD).

Many businesses remain difficult for lenders to evaluate using the data systems traditionally used to assess credit risk. The challenge is particularly significant in a sector that employs about 80% of South Africa’s workforce.

Informal businesses face additional barriers

The OECD’s Financing SMEs and Entrepreneurs 2026 report found that 56% of South Africa’s MSMEs are unregistered. It also reported that only 7% used a formal financial-services-provider business loan to start their business.

At the same time, the sector shows significant use of digital financial tools. Close to 80% of MSMEs use digital financial services, while 50% have internet access, 49% maintain a social-media presence and 32% have a website.

These digital connections may provide lenders with additional information, but business records are often spread across invoices, bank transactions, payroll records, tax filings, accounting software and purchase orders.

African Bank seeks broader view of businesses

Edna Sathekga-Montse, African Bank’s Group Chief Transformation and Sustainability Officer, said the lender is working to develop a deeper understanding of entrepreneurs and their businesses. She spoke to TechCabal on the sidelines of the Global Entrepreneurship Congress Africa in Cape Town.

“When we understand them better, it allows us to assess their affordability and assess their credit status a lot better and a lot differently,” Sathekga-Montse said.

She added: “Without the data that we require, we are unable to, as organisations, understand whether or not any type of risk falls within our risk appetite.”

African Bank offers payroll, tax and human-resources assistance alongside banking services, according to Sathekga-Montse. The bank is also using invoice discounting and purchase-order financing as products for entrepreneurs.

Alternative information, such as invoices, purchase orders and digital-payment activity, may help lenders develop a fuller picture of a company’s cash flow, demand and transaction patterns beyond a traditional credit score.

Micro-enterprises account for much of demand

The September 2026 SA MSME Access to Finance Report 2025, produced by Finfind and African Bank, found that 85.6% of finance applicants had annual turnover below R1 million ($61,538).

The report identified businesses below that threshold as formal micro-enterprises and attributed more than 80% of jobs created by MSMEs, as well as more than 85% of funding demand, to this group. It also reported that 50.9% of owners of businesses turning over less than R1 million had poor or below-average credit scores.

Sathekga-Montse said African Bank was seeking to connect its enterprise and supply development work more closely with its commercial activities. She described the intended approach as working with entrepreneurs throughout their business journey.

“Tell us about your business, tell us about what you need, and let’s figure out a way for us to work the journey with you,” she said.

Calls for risk-sharing support

Sathekga-Montse also said that technology and banking products would need to be supported by measures that reduce the risks of lending to smaller companies.

“We need development finance institutions as well, who help to de-risk through schemes such as credit guarantee schemes and so forth,” she said.

She further urged large companies to pay smaller suppliers on time, warning that delayed payments can place pressure on SME cash flow and working capital.

The figures indicate that increasing the number of funders alone may not close South Africa’s MSME financing gap. Better access to business information, combined with risk-sharing mechanisms and support services, could influence how lenders assess smaller and less formal enterprises.