Low interest, delayed repayments for companies seeking credit: Ramaphosa
President Cyril Ramaphosa has announced changes to the government's R200bn loan guarantee scheme aimed at mitigating the affect of Covid-19.
He said repayments would now be delayed by as long as 12 months.
The president made the announcement on Wednesday during his address to the nation as he moved the country from lockdown level 2 to level 1.
Ramaphosa last week described as “scandalous” that only around R25bn of the government's loan scheme had been used to rescue struggling businesses in the last six months.
At the time, he described it as "frustrating" that banks had stuck to their traditional way of assessing loan applications, seemingly not taking into the account the affect of Covid-19.
The loan guarantee scheme, which enables banks to grant financial assistance to companies whose revenue have been affected by the lockdown, was announced by Ramaphosa in March as part of various strategies to mitigate the economic affect of the pandemic.
But far too many companies have had the door of banks slammed in their faces without the much needed assistance.
Ramaphosa on Wednesday said this will change as the country desperately awaited companies to be back in full operation to stimulate the economy and create jobs.
“Adjustments have been made to the Loan Guarantee Scheme to make it easier for companies of any size to access credit at low interest rates, with repayments delayed for as much as 12 months,” he said.
“We encourage all companies who have faced a disruption of their earnings to seek support from this scheme while the economy recovers.”
Ramaphosa added that “an ambitious social compact for economic recovery” was close to completion at Nedlac.
After its finalisation, he said, the government would build from this to finalise the country’s economic reconstruction and recovery plan soon.
The plan would build on the foundation laid by the R500bn social and economic relief announced by the government in April to deal with the effects of Covid-19.
The relief so far had come in handy to the livelihoods of many South Africans, he added.
“Through the special Covid-19 grants and the top-up of existing grants, well over R30bn in additional support has already been provided directly to more than 16 million people from poor households.
“More than 800,000 companies have benefited through the UIF wage support scheme and through the grants and loans provided by various government departments and public entities.
“More than 4 million workers have received R42bn in wage support, helping to protect these jobs even while companies were not able to operate.
“This support has touched the lives of millions of South Africans and has made a real difference to those in greatest need.”
Ramaphosa thanked South Africans from all walks of life for making donations to the Solidarity Fund that was set up at the initial stage of the pandemic.
To date, he said, the fund had racked up R3.1bn worth of donations, spending R2.4bn of that to bolster the government’s response to Covid-19.
“These include the purchase of testing equipment, medical supplies and personal protective equipment and the local manufacture of ventilators,” he added.
“It extends to food relief for vulnerable households, vouchers for subsistence farmers, care for survivors of gender-based violence and a national Covid-19 awareness campaign.”
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