JPMorgan Chase & Co says it has launched a $20m fund for black-owned enterprises in South Africa, a sign that global investment banks are still betting on the country despite its anemic economic growth in recent years.
A JP.Morgan logo is seen in New York City, US 10 January 2017. Reuters/Stephanie Keith
The fund was launched in partnership with South Africa's Department of Trade, Industry and Competition (DTIC), the bank said.
Although the coronavirus pandemic has shrunk the economy of Africa's most industrialised nation to its level from a decade ago, local banks, retailers and realty firms see a brighter future because of the country's young population, rising entrepreneurship and strong middle class.
"The South African private sector has great capacity to multiply impact through partnerships, as we are aiming to do with the DTIC," Kevin Latter, JPMorgan's senior country officer in South Africa, said during a virtual conference.
The R300m fund, which is accompanied by a grant of R40m, will be disbursed as short-term loans with a duration of about three to four months and long-term loans with a duration of two to five years, Latter said.
He did not say at what interest rate the bank would offer the loans but said they would be "heavily subsidised and below commercial rate."
The fund could potentially unlock R2bn in capital over an eight-year period and would create hundreds of jobs, said Ebrahim Patel, minister of trade and industry.