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President Cyril Ramaphosa finds it “scandalous” that no more than 25 billion rand from the government’s 200 billion rand coronavirus loan scheme has been used to rescue distressed companies in the past six months.
In a digital media engagement with senior news editors and journalists on Wednesday night, he said the current criteria used by banks to assess loan applications from companies hit by Covid-19 were too prohibitive and he wanted it to they will change.
The R200bn Covid-19 loan guarantee scheme, in which banks would provide financial assistance to companies whose profits have been affected by the lockdown, was announced by Ramaphosa in March as part of measures to mitigate the economic impact of the pandemic.
Speaking to reporters following the release of figures that the country’s economy had contracted 16.4% in the second quarter of this year, Ramaphosa said it was “frustrating” that banks had stuck to their traditional way of evaluating loan applications, apparently without taking into account the impact of Covid-19.
“My frustration is that the conditions and criteria that are being applied to these loans are simply prohibitive, many companies are being rejected and are being rejected because they do not meet this criterion or the one established by this bank, established by the central bank and all that, and I say that the criteria must be aligned with the moment we are in, ”he said.
