Black empowerment lobby group to haul banks to Equality Court
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Johannesburg - Complaints of black-owned businesses being sidelined from government’s multibillion rand stimulus funding continue to pile up at an alarming rate.
Now black empowerment lobby group Transform RSA (TRSA) is preparing to haul some of the big corporate banks before the Equality Courts.
Earlier this year, government announced a R500 billion stimulus package to help manage the damaging fallout from the Covid-19 pandemic.
The banking sector were to administer R200bn of these funds.
In a statement on Thursday, TRSA president Adil Nchabeleng said it would mobilise ordinary South Africans and the international community against the banking sector which allegedly deliberately disregarded black businesses and consumers hit hard by the pandemic.
“The organisation sees the need for the banks to be taken to the Equality Courts of South Africa. We are appalled that the South African Reserve Bank (SARB) which gave SA banks liquidity of more than R200bn by reducing their balance sheet requirements, provided a further R200bn in guarantees which was committed by government so that banks could provide loan facilities to businesses that are affected by the Covid-19 pandemic,” Nchabeleng said.
Most black businesses and individuals who applied to banks for relief funding were rejected on the grounds that their businesses were not fundable and that they did not have a track record among other compliance issues, he said
“The banks have a monopoly in SA. There are no black-owned banks yet the banks continue to get funding from the SARB and depositors.
"Most of the depositors and clients of banks are black people that are being discriminated against. Black businesses are deemed non-compliant, politically exposed or are said to have reputational issues. These are the excuses given by banks while upholding the bank accounts of corrupt monopoly capital owned companies,” he said.
Companies implicated in corruption by their own admission such as Steinhoff, Tongaat Hulett, Stefanutti ABB, EOH, among others, are enjoying funding and loan facilities from banks and their accounts remain open. This was discrimination against black companies, said Nchabeleng.
The country’s Equality Courts are designed to deal with matters relating to unfair discrimination, and publication of information that unfairly discriminates, harassment as well as hate speech.
Nchabeleng said: “Offering payment holidays while continuing to leverage interest on individual loan accounts was a sinister way to defer debts. Banks should have frozen not only repayments but also interest on all monies owed. The banks offered individuals a payment holiday of three months, and the lockdown is into the fifth month, which means those payment holidays were grossly insufficient.”
He argued that banks had therefore used the more than R400bn liquidity injection and guarantees to shield their profits and passed very little of that money to their clients who have been badly affected by Covid-19.
“This goes against the very reasons that money was availed to the banks. Instead of aiding in the protection of the economy against the effects of Covid-19, banks have acted as a cartel and put their interests ahead of the interest of the majority of their clients who are black,” he said.
DA spokesperson for finance Geordin Hill-Lewis said banks had so far not covered themselves in glory as they were unwilling to lend money.
“The R200bn loan guarantee scheme is not working well as banks are reluctant. So far about R10bn of the R200bn has been made available.”
Cope spokesperson Dennis Bloem said: ”Covid-19 has exposed a lot 26 years into democracy and we are still talking about the equality of people.
“Banks pick and choose who they will assist financially and there is no empowerment or an indication that they want to develop people.”
Bloem said small business owners were shunned by banks.
“When the apartheid government was in power, they were assisting poor white people even if they had no guarantees or backing. Why is it that banks ask you how you are going to turn this small business into a big business? All big businesses started somewhere.”
UDM leader Bantu Holomisa said: “People on the ground are struggling and individual companies have provided more financial assistance than the financial institutions.”
PAC president Narius Moloto said there was no equality, as the banks did not provide equity for the majority of the people.
“The banking system is not helping the poor. It is there to consolidate the elite and this is destroying the economy.”
The Association of Black Securities and Investment Professionals treasurer Khaya Sithole said while the involvement of civil society and transformation organisations in matters relating to access and opportunity for black business and role-players within the financial services sector was welcome, they were unable at this stage to assess the practices of the banks in relation to the Covid-19 pandemic and establish whether they had conducted themselves in a manner that went against the spirit of transformation.
“We will, however, be observing the court case proceedings and may comment further on the basis of the developments in the case,” he said.
Standard Bank said it was committed to financial inclusion and opposed discrimination. It said with regard to the SME Guarantee loan scheme launched in mid-May, the lender was accepting applications and making disbursements to those who qualified and met the credit requirements.
“In Personal and Business Banking, we have implemented a number of instalment relief measures, fee waivers and restructures. We have also encouraged clients to contact us should they find themselves in financial difficulty.”
The bank said by the end of May, it had provided R92bn in relief to individuals, small businesses and commercial clients in South Africa across 285000 accounts.
Efforts to get comment from the other banks and the Banking Association of SA proved fruitless by the time of publication.