Standard Bank CEO Sim Tshabalala. Picture: MASI LOSI
Standard Bank CEO Sim Tshabalala. Picture: MASI LOSI

Standard Bank Group has raised the alarm about proposals to revive a faltering government-backed credit program designed to aid South African businesses battered by Covid-19.

While SA’s largest lender is open to talks on how to restructure the R200bn program to drive up demand, it rejects suggestions to swap into grants the loans that have been provided, CEO Sim Tshabalala said in the bank’s annual report.

“Apart from the unfair burden that a conversion to grants would place on our depositors and investors, and on taxpayers, we think that converting loans into grants would set a very undesirable precedent,” he said.

President Cyril Ramaphosa has criticised the country’s banks for failing to speedily disburse credit under the initiative started in May. The Banking Association of South Africa (Basa), has said that total allocations were unlikely to reach 10% of the program’s capacity.

The program is due to expire on April 11. A review by the banking association found many business owners had opted for relief arrangements with their individual banks over loans from the program.

If the decision is to forgo payment of loans already issued, the cost “would be too high at a time when SA is under extreme fiscal stress,” according to Tshabalala. The nation meanwhile needs its resources to pay for vaccines and other medical supplies, he said.

Relief Plan

Government last year unveiled a R500bn support package by reprioritizing spending from existing budgets. Banks were roped in to distribute loans guaranteed by the government to small-to medium-sized businesses, starting with R100bn of disbursements before doubling up.

The national treasury didn’t immediately respond to questions about the future of the program after April 11. The SA Reserve Bank referred queries to treasury.

While there was disappointment about how the program has fallen short of its capacity, efforts by banks could only go so far in counteracting the effects of the country’s deepest economic contraction in a century, Tshabalala said.

“Good business people are never keen to take up a loan unless they are confident about their capacity to use the funds productively and about their ability to repay the loan,” he said.


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