TO: PRINT AND ELECTRONIC MEDIA HOUSES
FROM: KGANKI MATABANE
DATE: 12 May 2020
SUBJECT: THE BBC CALLS FOR CRITERION OF THE R200 BILLION LOAN-GUARANTEE PROGRAMME TO CHANGE AND BE INCLUSIVE
The Black Business Council (BBC) welcomes the R200 billion loan-guarantee scheme to help banks extend credit to businesses and support the economy in recovering from the coronavirus pandemic
The BBC, however, caution the banks not to misuse this opportunity by including and adding their non-performing loans, that have nothing to do with covid-19, to the equation. Furthermore, the BBC denounces the criterion set for the scheme as it will exclude a lot of Black-, Youth- and Women-owned Small, Medium and Micro Enterprises (SMMEs).
The BBC also challenge the banks to be transparent and disclose the recipients of the funds thus far, according to their BBBEE scorecard, including the quantum of funds received.
The BBC calls for the following:
- The inclusion of the National Empowerment Fund (NEF) as well as the Provincial development finance institutions, e.g, the KZN Growth Fund, etc, as part of the participating lending institutions. The participation of such institutions, which have distinct developmental and transformational agenda, will enhance the possibilities of majority Black-, Women-, and Youth-owned businesses benefiting.
- The fund should be positioned not only as a temporary relief measure against the impact of covid-19, but must equally be used to rebuild a transformed and thriving SMMEs sector.
- The fund must cover the acquisition of tools and machinery for new and existing businesses.
- That the Retail Financial Intermediaries be recognized as full participants in this scheme and that the scheme is not only available to the banks. This will ensure that SMMEs that may not necessarily meet the banks funding criteria are not excluded from relief funds.
- That the South African Reserve Bank (SARB) terms of reference for allocating these funds to banks are reviewed and amended to ensure that they include a set of criterion and formula that prioritizes Black-, Youth- and Women-owned exempted micro enterprises and qualifying small enterprises including enterprises owned by people with disabilities.
- That as an effort to de-risk the prioritization of these groups as per the above-mentioned point, a portion of the fund is set aside for enterprise support, mentorship and/or handholding of the loan recipients. These business coaches and mentors must have a Broad Based Black Economic Empowerment (BBBEE) status level 1.
“In order to realise the above, the BBC will set up a task team that will work closely with National Treasury to monitor and track the disbursements of these funds with a view to determine whether Black-, Youth- and Women-owned businesses do indeed participate. The scheme cannot be utilized to benefit only existing clients of banks but must also bring black owned businesses to the forefront of financing opportunities” said Bonolo Ramokhele, the Treasurer General of the BBC.
The BBC will set up an urgent meeting with National Treasury to table our concerns.