The South African Reserve Bank (Sarb) has defended the R200-billion Covid-19 Loan Guarantee Scheme, in spite of its low uptake by distressed businesses.
Sarb Governor Lesetja Kganyago on Friday said that in spite of the criticism surrounding the low uptake of the loan guarantees, the banking sector had responded swiftly to assist with the shocks of the pandemic.
The average value of a loan was R1.23 million, while 82 percent of loans went to businesses with a turnover of R20m or less. “In addition, small and medium businesses appear to have been reluctant to take up more debt, especially in an environment characterised by deteriorating confidence, a sluggish recovery and heightened economic uncertainty.”
Deputy Reserve Bank Governor Kuben Naidoo said the scheme had “played a positive role” in mitigating the impact of the crisis. Last week the Banking Association South Africa said that one of the key lessons from the scheme was that entrepreneurs were unwilling to take on additional debt in times of business and economic uncertainty.
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