Banks assist 84% of South Africans who applied for financial assistance
JOHANNESBURG - South African banks had received 3 196 403 individual applications for assistance up to September 12 and granted assistance to 2 687 320 , or 84 percent, of the individual customers who applied, the Banking Association of South Africa (Basa) managing director Bongiwe Kunene said this week.
The Covid-19 pandemic, which has exacerbated the devastation of South Africa’s economy, has hit South African bank clients and commercial and small businesses.
Basa collects data on credit agreements between banks and their customers.
The association also said that 141 505 commercial and small businesses also approached them with applications for financial assistance. Of them, 135 126, or 95 percent, were assisted.
Mergence Investment Managers investment analyst focusing on consumers Lulama Qongqo said the numbers of people who approached banks because they were in financial distress was shocking considering that it exceeded the number of people who lost their jobs in the second quarter of this year.
Last month, Statistics South Africa’s Quarterly Labour Force Survey (QLFS) for the second quarter this year showed that the number of employed persons decreased by 2.2 million to 14.1 million compared to the first quarter.
Qongqo said some people were still getting by with the likes of the Unemployment Insurance Fund (UIF) Covid-19 TERS, howerver, going forward, they would lose their purchasing power when these financial aid from the UIF and even banks ceased.
Qongqo said South Africa had not yet seen the caving in of businesses due to the pandemic imposed lockdown because some were still holding on, however at a later stage liquidations would risee.
“When that happens the country will be in a predicament because retail sales that make a significant portion of the country’s gross domestic product will decline.”
The UIF said last month that it had so far disbursed R45 billion in more than 10.2 million payments through 902 775 employers. At the beginning of this month, the Fund started processing Covid-19 TERS applications for the period covering August 16 to September 15.
In its recent Covid-19 Financial Relief Update, Basa said that as at September 26, banks had provided R49.69bn in financial relief, R33.61bn in payment breaks on credit agreements and R16.08bn under the loan guarantee scheme to South African businesses and individuals who were financially distressed due to the Covid-19 pandemic and national lockdown.
North-West University Business School based economist Professor Raymond Parsons said while it remained essential that banks be allowed as much flexibility to assist small business, financial assistance from the banking system alone would not be enough.
“As much as the commercial banks have only been able to respond unevenly to the needs of business, the business distress trends experienced so far underscore why the announcement of the long-awaited economic reform plan on Thursday is imperative to further help to improve business prospects in South Africa,” said Parsons.