Unlocking Opportunity: How Township Spark is Expanding Access to Finance in South Africa.

A new approach to financing South Africa’s overlooked but active township economy.

May 13, 2026

A young entrepreneur at the Township Spark initiative works on a carpentry project in his workshop, demonstrating craftsmanship, innovation, and the role of skills development in supporting local livelihoods and economic empowerment.

By Janet Thorlie

Early morning in a South African township, the economy is already in motion. A spaza shop owner is restocking bread and airtime. A hair salon is opening its doors. A young entrepreneur is preparing deliveries of scones and Magwinya for the day.

These businesses are active, resilient, and deeply embedded in their communities. Yet when they approach formal financial institutions, many are told the same thing: they do not qualify. Across township economies, small businesses remain locked out of formal lending systems, unable to secure loans due to limited collateral, lack of credit history, or operating outside formal structures.

The township economy is not short on ambition, activity, or enterprise. It is short on access. The consequences of this exclusion extend far beyond individual businesses. Without access to finance, entrepreneurs are unable to invest in equipment, expand operations, or hire additional staff; even when demand is clear and consistent.

Many rely on informal lending or high-interest credit to stay afloat, eroding already thin margins. Others remain deliberately small, not due to lack of ambition, but because growth without capital carries too much risk. Over time, this creates a quiet but persistent constraint on local economies: businesses that could grow, employ, and contribute more remain capped below their potential.

Addressing this challenge requires more than traditional grant-based support, it requires a fundamental shift in how risk is understood and managed within financial systems.

This is the thinking behind Township Spark—a blended finance initiative led by the United Nations Development Programme (UNDP), in partnership with the Development Bank of Southern Africa (DBSA), the United Nations Capital Development Fund (UNCDF), and African Bank.

At its core, Township Spark is designed to unlock capital for underserved entrepreneurs by tackling one of the biggest barriers to lending: perceived risk. Through a guarantee mechanism, Township Spark is set up to help de-risk lending for financial institutions, enabling banks to extend credit to township-based small and medium enterprises that would otherwise be excluded from formal finance.

“Township Spark bridges public and private capital to unlock opportunities where they are most needed. By sharing risk, this facility enables financial institutions to look beyond traditional lending requirements and support businesses that have long been excluded from formal finance. Rather than replacing private investment, we have designed this to make it easier for more capital to flow into township economies and underserved communities.” Dr Gloria Kiondo, Deputy Resident Representative, UNDP South Africa.

The initiative places inclusion at the centre of economic development by expanding access to finance for businesses historically excluded from formal financial systems. This is especially important for women-led enterprises. While women make up a significant share of the informal economy, they continue to face greater barriers to credit, investment, and growth opportunities.

South Africa continues to face deep economic inequality and high levels of unemployment, particularly in township communities. Township Spark shows what is possible when development partners, banks, and public institutions work together around a shared goal: ensuring that a business’s potential matters more than its location. As noted during the launch, the initiative represents “a shift from survival to scale, and from exclusion to meaningful participation in the economy.”