Labour seeks new review of R200bn loan scheme to benefit more businesses
Easier access will help companies avoid lay offs and save jobs
The labour sector has called for another review of the R200bn loan guarantee scheme to allow more companies to benefit from the Covid-19 pandemic relief initiative and save jobs.
The scheme, which forms part of the R500bn social and economic relief package announced by President Cyril Ramaphosa in April, is aimed at helping struggling businesses stay afloat during the global Covid-19 pandemic.
The funds borrowed from the scheme can be used for operational expenses such as salaries, rent and lease agreements as well as contracts with suppliers during the pandemic.
After a slow disbursement rate when the relief was introduced, the National Treasury, SA Reserve Bank and the Banking Association SA announced in a joint statement in July that the scheme had been reviewed to make it easier for struggling companies to access it.
As a result of the review, the bank credit assessments and loan approvals were made “more discretionary and less restrictive, in line with the objectives of the scheme”. The test for businesses in good standing was also moved back to December 31 2019 from February 29, to accommodate firms which were already experiencing cash-flow problems in February.
Cosatu spokesperson Sizwe Pamla said the further opening of the economy will “hopefully save jobs”.
Pamla, however, said reopening an already ailing economy without any drastic interventions, including the injection of new money, was “futile”.
“This lack of an economic stimulus by government amidst depressed private capital investment will continue to plunge and trap the economy into what is becoming a serial stagnation, characterised by episodes of technical recessions and a rising unemployment rate,” said Pamla.
That only R14bn of the R200bn has been disbursed “means there’s a problem. The government must review the scheme and lower it down to make it more accessible”, he said.
“The sentiment we are getting is that more workers are going to be retrenched and that is a problem for us. If we are in a crisis, let’s act like we’re in a crisis.”
Godfrey Selematsela, president of the Federation of Unions of SA (Fedusa) said they also supported another review of the scheme to make it simpler for businesses to access it.
“The rate at which job losses are taking place is scary and alarming. We want to see a situation where businesses are able to access that money and prevent further job losses,” said Selematsela.
“The funding that has been disbursed so far is a small fraction of the R200bn. We want to see a situation where processes are simplified for businesses to access the funds, but that must not be done in a reckless way.”
National Council of Trade Unions (Nactu) general secretary Narius Moloto said: “We fully support the review of the scheme because the township economy has been left out completely. It must be reviewed so that there is greater inclusion.”
However, the National Treasury told Business Day on Monday that the scheme had already been adjusted on July 27 to “make the qualifying criteria wider”.
“National Treasury continues to work on the scheme to ensure that it does reach the intended businesses,” the Treasury said, adding that R14bn of the loan guarantee scheme had now been used.
This has benefited almost 10,000 businesses, “with another almost 40,000 applications still being processed by banks”.
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