Cyril Ramaphosa berates SA banks for slow disbursement of R200 billion in government guaranteed loans
By S’thembile Cele
(Bloomberg) – South African President Cyril Ramaphosa has criticized the the largest banks in the country for not having paid quickly government guaranteed loans to businesses struggling to survive the coronavirus pandemic and not doing enough to promote investment and create jobs.
The government agreed to guarantee 200 billion rand ($ 13.3 billion) in loans last year as part of its response to Covid-19, less than 18 billion rand has been distributed so far. While lenders drew criticism for overly enforcing loan requirements, the National Treasury said banks were willing to adjust their terms and some traders chose not to apply for funding because they didn’t were not sure their businesses would remain viable.
“We have put in 200 billion rand and said we are helping the private sector, to enable it to protect jobs so that businesses can operate through Covid, and with that we should also restructure our economy and bring in more black people. who have been prevented from operating in their own economy, ”Ramaphosa said in an address to government officials Thursday. The response from the banks has been “very disappointing,” he said.
FirstRand’s First National Bank, Standard Bank Group, Absa Group and Nedbank Group are South Africa’s largest lenders. They have previously said they helped their clients when the pandemic hit and there was not much demand for additional funding after the government-backed plan was announced.
Ramaphosa also said the country was too dependent on the financial services industry to drive theconomic growth, and more emphasis should be placed on promoting industrialization and manufacturing, which would help to 32.5% unemployment rate.
“The profits made by our financial sector have just been huge, billions and billions,” and not enough of the money is being invested in job-creating assets, he said. The banking sector also remains too monopolized, with money rotating between the four major lenders, he said.
The president also said the government’s “archaic procurement system” needs to be overhauled to promote entrepreneurship among the country’s black majority, while ensuring that it is not vulnerable to corruption. .
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