ANC Treasurer-General Paul Mashatile has accused South Africa’s banks of not supporting black-owned small, micro and medium enterprises (SMMEs).
Mashatile was reacting to claims that white-owned businesses have received the lion’s share of the R200 billion COVID-19 loan guarantee scheme provided so far. The scheme provides loans, substantially guaranteed by the government but with some of the risk shared by banks, to eligible businesses hit by the pandemic.
Small Business Development Minister Khumbudzo Ntshavheni told Parliament last week that 75 percent of the R15 billion in loans provided so far have gone to white-owned businesses.
“Government has provided R200 billion government-guaranteed loans. Of that R200 billion, banks have advanced R15 billion to SMMEs [and] 75 percent of the beneficiaries are white,” she said.
‘Banks are ignoring black SMMEs’
Speaking to SABC News on Sunday, Mashatile said it wasn’t the government’s fault. “It is the South African banks that are ignoring small black businesses, not government. The scheme was made for all small businesses, but the banks in this country are not supporting black businesses,” he said.
Mashatile admitted that generally, people would always blame the government, adding that the government needs to address the issue with the banks.
“The President [Cyril Ramaphosa] has already said that they are going to intercede [and] engage the banks. We need to show South Africans that we are fighting for their rights, including small businesses, and we are going to do exactly that,” he added.
Speaking during an engagement with the SA National Editors’ Forum last week, Ramaphosa also expressed concern that only about R15 billion had been granted so far.
“The banks need to loosen the criteria so that we can get businesses to function again. It does not help the economy of our country if businesses are not functioning,” the President said.
In a statement on Friday, the Banking Association of SA (BASA) said the National Treasury, SA Reserve Bank and commercial banks are working to make the scheme more accessible to businesses.
It said as of 29 August, 35 percent of loan applications had been rejected because they did not meet the eligibility criteria or banks’ risk criteria. Reasons include businesses not being in “good standing” or applying for loan amounts that were too high.
25 percent of applications have been approved so far and 37 percent are currently being assessed, BASA added. “Banks, along with the Reserve Bank and National Treasury, are continuing to review the reasons for the rejection of loan applications with a view to making the scheme even more accessible while balancing the risks to taxpayers,” it said.