South Sudan’s struggling small businesses thrown a lifeline

Aiming to support citizens and small companies with limited ability to invest in equipment or their companies, a system called the Africa Leasing Facility was launched last week at South Sudan’s Central Bank.

The country’s principal operations officer Riadh Nouar said the system was up and running in 14 countries in Africa but it is the first time that a lending system without collateral is being rolled out in South Sudan.

It will offer hope to many hard-pressed small businesses: Unlike ordinary loans, this system does not require people to pay collateral to access capital, Nouar said.

Once assets are leased out they remain property of the banking institution, as a way of protecting the financial institutions from incurring losses.

At the end of the leasing term and after the client pays back 100 percent of the principal value of the asset... the ownership of the asset will be transferred to the client,” he explained.

Nouar said that such assets need to be insured against any damage, adding, however, that he was sure that the people who lease equipment will take care of them. Lenders need to monitor the usage of such equipment until the end of the lease term.

The IFC Africa Leasing Facility was first introduced in 2008 to promote leasing as an alternative form for financing for businesses in Africa. It targets leasing companies, government agencies, leasers and investors.