LocationsUNDP and UNCDF, together with DBSA, and African Bank, launch Township Spark to ignite inclusive growth in South Africa’s township economies
December 15, 2025
UNDP South Africa, UNCDF and partners at the official launch of Township Spark, a new blended-finance guarantee facility advancing access to finance for township-based MSMEs.
The United Nations Development Programme (UNDP) in South Africa, the United Nations Capital Development Fund (UNCDF), and partners, including the Development Bank of Southern Africa (DBSA), and African Bank, officially launched Township Spark, on the margins of the G20 Social Summit.
Building on the priorities and momentum of South Africa’s G20 Presidency, Township Spark is an innovative blended-finance initiative designed to unlock new capital flows for township-based micro, small, and medium-sized enterprises (MSMEs), particularly youth- and women-led enterprises.
Township Spark is a unique syndicated “club” guarantee structure that blends and leverages the de-risking capabilities of public development finance partners to catalyze commercial capital flows to vital and underserved township markets. Through this facility, the partners aim to address the persistent financial exclusion of township economies, catalyzing agile lending solutions, testing alternative credit metrics and generating actionable market data to shape and scale-up in South Africa before replication across the African continent.
South Africa’s township economy contributes an estimated R1 trillion annually and sustains millions of livelihoods through small-scale trading, services, and manufacturing. Yet nearly 80 percent of township businesses remain informal, disconnected from mainstream finance, and unable to start up or scale. This calls for the need for targeted, catalytic interventions that can unlock access to affordable capital, formalise enterprises, and create a pathway for township entrepreneurs to participate meaningfully in the wider economy.
UNDP South Africa Deputy Resident Representative, Dr Gloria Kiondo, emphasized the power of coordinated action. “The launch was a reminder of what’s possible when UN agencies move with purpose, pace, and the ability to convene multisectoral partners,” said Dr Kiondo. “Through collaboration with government, financial institutions and development partners, Township Spark bridges public and private capital to unlock opportunities where they are most needed.”
UNCDF Chief Investment Officer Srilata Kamilla added “Township Spark is a prototype for the post-Sevilla agenda—showing what becomes possible when innovation, blended finance, and partnership converge to unlock growth in early-stage and last-mile markets. By pooling development finance across international and domestic actors into a syndicated guarantee facility and leveraging a domestic bank to crowd in private capital, we are providing township entrepreneurs access to affordable, catalytic finance. Together, we're expanding the very toolkit available for financing development."
DBSA welcomed the introduction of smarter, evidence-based lending tools. "Township Spark represents precisely the kind of partnership-driven innovation that DBSA supports,” said Palesa Ryan, Head of Social, Health & Education. “Our strategy has long recognized the importance of small-business development, particularly in job creation a key impact measure for the DBSA. By working with UNDP, UNCDF, African Bank and other development partners, we can incorporate smarter credit-risk approaches that reflect the real credit risk inherent in township enterprises and price for them accordingly. By providing the guarantee facility, the cost of borrowing will be reduced and improve the chances of success for entrepreneurs who have historically been overlooked.”
Bringing in the perspective of the commercial banking sector, African Bank Group Chief Transformation & Sustainability Officer, Edna Sathekga-Montse, highlighted both the historical context and the future opportunity unlocked by this facility.
“This partnership is a continuation of the journey that began more than five decades ago when a group of entrepreneurs with a bold vision to create a bank for the people, by the people first conceptualised what we now know as African Bank. Our founders understood the barriers to success and sought to provide a solution that allowed other entrepreneurs who, despite their talent and determination, lacked access to the capital needed to grow their businesses and improve their communities.
That same resilient entrepreneurial spirit remains at the heart of who we are, guiding make or break decisions that affect our customers. Through this partnership, we are answering a generational challenge — to create pathways for access to finance that enable many township-based enterprises to thrive and contribute meaningfully to the South African economy.”
Township Spark is a practical demonstration of what modern development financing looks like in action: moving beyond grant-based support toward sophisticated blended-finance mechanisms that mobilize domestic capital for underserved communities. The initiative showcases how the UN system can influence financial architecture, catalyze domestic resources, and support MSMEs with real investment capital, not just advisory services.
As a coordinated partnership among government institutions, global development partners, and domestic financial institutions, Township Spark ensures that policy and finance move in sync. Its multi-tiered risk-sharing structure blends first-loss, junior, and senior guarantees to reduce lending risk, modelling a new way of financing at scale.
With expressions of support already received from the Small Enterprise Development and Finance Agency (SEDFA) and the South Africa Department of Small Business Development (DSBD), Township Spark will only continue to grow.
About UNDP
The United Nations Development Programme (UNDP) works in approximately 170 countries and territories to help eradicate poverty, reduce inequalities and exclusion, and strengthen resilience so that countries can sustain long-term progress. As the UN’s development agency, UNDP plays a central role in supporting countries to achieve the Sustainable Development Goals by advancing inclusive growth, strengthening institutions, and promoting sustainable development pathways.
About UNCDF
The United Nations Capital Development Fund (UNCDF) mobilizes and catalyses an increase in capital flows for impactful investments in high-risk markets, especially in Least Developed Countries, Small Island Developing States and countries in special situations. By crowding in capital through the deployment of risk-absorbing financial instruments, mechanisms and structuring advisory, UNCDF contributes to job creation, sustained economic growth and equitable prosperity in more than 70 countries.
In partnership with UN entities and development partners, UNCDF operates with speed and agility to deliver scalable, blended finance solutions to drive systemic change and pave the way for commercial finance and scale up by development finance institutions and multilateral development banks.
About DBSA
The Development Bank of Southern Africa (DBSA) is a development finance institution committed to accelerating inclusive and sustainable development across the continent. By expanding access to development finance, the DBSA supports the delivery of integrated and sustainable infrastructure that drives shared socio-economic growth. Guided by a strategy focused on financial sustainability, strong governance, and measurable development impact, the DBSA identifies infrastructure opportunities, mobilizes public and private capital, and supports effective project implementation. Through its programmatic approach of conceptualising, catalyzing, and implementing, the DBSA works with governments, the private sector, and development partners to address infrastructure backlogs and advance national policy priorities.
About African Bank
African Bank Limited is a Personal and Business & Commercial bank offering a range of financial products and services, serving both private and business customers. The bank has a countrywide branch distribution network and a full digital channel offering, as well as sales, collections, and customer service contact centres. African Bank is a scalable, diversified, and sustainable business focused on its heritage journey of being a bank for the people, by the people, serving the people - with a clear vision and strategy, strong leadership, and an audacious drive to deliver on the promise of its founders.
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