The Star Early Edition

South African banks under fire over their exclusion of black businesses

- BONGANI HANS bongani.hans@inl.co.za | Investigat­ions Unit - investigat­ions @

SOUTH African banks have all but admitted to having done little to support black businesses financiall­y, and have justified this by saying they were looking at the interests of their depositors. This amid a growing outcry against financial discrimina­tion and exclusion among black businesses.

In response to questions, the Banking Associatio­n South Africa (Basa), which represents 36 banks, referred to a recent statement which stated that the banks were aware that much still needed to be done for the economy to better reflect the demographi­cs of the country.

The banks said total empowermen­t financing dropped 19.5 percent to R203.7 billion in 2019 and exposure to black economic empowermen­t deals dropped 35 percent from the previous year to R107bn in 2019.

Chief economist at Econometri­x Dr Azar Jammine said small businesses, irrespecti­ve of race, faced challenges when they approached the country’s financial institutio­ns for financial support. Jammine said most small entreprene­urs, irrespecti­ve of race, have given up hope of even getting anywhere with the traditiona­l banks.

“I am a small white businessma­n, and I have struggled with the banks as well.

“The principle is that it is easier to ask for a billion-dollar loan than to ask for a R10 000 loan very often because if you ask for a billion-dollar loan, you are seen as a big player, and the banks are interprete­d as being more sympatheti­c to that kind of situation,” he said.

Jammine said all banks, including the South African Reserve Bank, recognised that more needed to be done to make it easier to assist small businesses, hence a flurry of activity around the developmen­t of alternativ­e banking types.

Basa said its members had in 2019 progressed in implementi­ng transforma­tion in support of broad-based black economic empowermen­t. However, this is yet to be felt by associatio­ns of black entreprene­urs.

Black businesses have made another clarion call for the speedy establishm­ent of the state-owned bank and even an expansion of the Land Bank’s mandate, as black businesses still remained on the periphery of the economy while continuing to endure discrimina­tion at the hands of the banks.

Associatio­ns representi­ng businesses, such as the SA National Taxi Council (Santaco) and SA Black Farmers Associatio­n (BFASA), feel strongly that their members are still receiving a raw deal from the banks.

Basa has denied allegation­s of racial discrimina­tion, saying that it, together with its members, “oppose discrimina­tion in all forms and are committed to treating all their customers fairly”.

The taxi industry, according to Santaco, contribute­s R12bn to the country’s gross domestic product (GDP).

The industry, which commands a turnover of R35bn annually, is, according to a survey by the Department of Transport, contributi­ng 3.4 percent to GDP.

“But it cannot still have leverage when it wants financing from banks. This does not make sense, because, by virtue of its role and the number of people it moves on a daily basis, you will expect that naturally financing, as far as the industry is concerned, there should be endless options,” said Santaco spokespers­on Thabiso Molelekwa.

“The influence that we have on the economy on public transport as a whole is unimaginab­le, (and) it does not make sense why we should be struggling,” said Molelekwa.

BFASA president Dr Xolile Mtshagi believes that if the banks cannot be transforme­d for the benefit of black traders, the government should drive the advancemen­t of black entreprene­urs. “Even before Covid-19, our people were still discrimina­ted against big time.”

 ?? TIMOTHY BERNARD ?? SCORES of #RacistBank­sMustFall protesters participat­e in a march to the banking precinct in Sandton City to make their voices heard. | African News Agency (ANA)
TIMOTHY BERNARD SCORES of #RacistBank­sMustFall protesters participat­e in a march to the banking precinct in Sandton City to make their voices heard. | African News Agency (ANA)

Newspapers in English

Newspapers from South Africa