Standard Bank Group is now financing small and medium-sized (SME) enterprises, tapping into a lucrative segment that was previously ignored by mainstream lenders but is increasingly on the agenda for most African governments.

There is a $140-$170 billion financing gap for SMEs on the continent, according to research by the International Finance Corporation and McKinsey.

With some 40 million SMEs in the 17 countries that it operates in Standard is aiming to extend 1 billion rand of loans by the end 2012, from 250 million rand currently.

The financing product known as Ouick Loan lends between $300 and $30,000, which it expects to be repaid within three, six or 12 months, said Amrei Botha, head of SME banking for Standard.

Interest rates range between 1.2 to 6 percent per month, which Botha says is a third or half of what competitors charge.

"The future in Africa definitely lies in the small and medium enterprise sector," she told Reuters.

"What we had underestimated is the huge demand."

Standard has rolled the product in four countries; Kenya, Ghana, Nigeria and Tanzania, and charges on average between 1.2 to 6 percent interest per month.

The vast majority of Africans are not employees and earn their income from small businesses or farming. Many do not keep proper records or have collateral, which causes obstacles when they need loans.