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BL Premium reports that trade union federations say moves by the ANC to overhaul the government’s R200bn loan guarantee scheme will save jobs and cushion small businesses from the negative effects of the coronavirus pandemic on the economy.
The scheme is one of the key pillars of the R500bn social and economic package announced by President Cyril Ramaphosa in April 2020 to help SA stay afloat during the lockdown. It is aimed at assisting firms that need additional resources to bridge them through the pandemic, but has been beset by low take-up and has already had to be overhauled once since it was launched. In his remarks to the ANC national executive meeting on Sunday, Ramaphosa said: “The meeting agreed that the national loan guarantee scheme must be fundamentally restructured to improve its accessibility and it should enable the participation of nonbank SMME funders.” But, he did not explain what they planned to fix in the scheme and how they would go about amending it. However, Sizwe Pamla of Cosatu said banks needed to be forced to review the interest they charged and development finance institutions should be part of the scheme. “Banks should be encouraged to explore equity options, where they don’t saddle these companies with unaffordable debt but consider taking ownership stakes. Grant options should be explored by government in hard-hit sectors where jobs are at stake. All of this though should be conditional on jobs being saved,” he suggested. Fedusa’s Godfrey Selematsela said restructuring the scheme would lead to many small, medium and macro enterprises being able to access funding from the scheme to “enable them to sustain their operations and retain jobs”. Nactu’s Narius Moloto said they had been calling for the scheme to be overhauled because it discriminated against small businesses not qualifying for bank loans.
- Read the full original of the report in the above regard by Luyolo Mkentane at BusinessLive (paywall access only)
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