South African Banks criticized over the exclusion of black businesses

South African Banks criticized over the exclusion of black businesses. [Image: Courtesy]
DURBAN, South Africa — South African banks have admitted to putting less effort in supporting black businesses financially.

The banks have however justified themselves saying they are looking at the interests of their depositors.

The South African Bankers Association (Basa) which represents 36 banks has recognized that banks ought to do much for the economy to better reflect the country’s demographics.

The banks added that total empowerment financing in 2019 dropped by 19.5% equivalent of R203.7 billion while exposure to Black Economic Empowerment deals dropped by 35% from the previous year to R107bn in 2019.

Dr Azar Jammine, chief economist at Econometrix said that regardless of the race, small businesses faced challenges when seeking financial assistance from the country’s financial institutions.

He added that this has made most small entrepreneurs give up hope of approaching 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.

Basa said that in 2019, members implemented transformation to support broad-based black empowerment (B-BBEE). However, this is yet to be felt by associations of black entrepreneurs.

Black businesses are calling for a speedy establishment of the state-owned bank and an expansion of the Land’s Bank’s mandate.

Black businesses still remain in the economy while enduring discrimination from the banks.

Basa has however denied allegations of racial discrimination stating that its members “opposed all forms of discrimination and promised to treat all customers fairly.”