JOHANNESBURG (Reuters) – South Africa has extended the deadline for a loan program, which is central to combating the economic impact of the COVID-19 pandemic, by an additional three months, the Treasury Department said on Monday.
President Cyril Ramaphosa announced in April 2020 the bank loan for companies with a total value of up to 200 billion rand (13.72 billion US dollars), some of which is guaranteed by the government.
The availability of loans under the program has been extended from an earlier date on April 11 to July 11, the Treasury Department said in a joint statement with the South African Reserve Bank and the country’s banking association.
The extension is intended to enable the system to run properly and assess the applications that have already been received, the statement said.
The main objective of the program was to encourage banks to lend more and on cheaper terms to companies hit by the coronavirus crisis, which last year caused the South African economy to experience its biggest annual decline in a century.
However, acceptance was low: by March 27, only 18.16 billion had been paid out.
“The (system) has not been as effective as it was originally intended as many distressed companies were reluctant to take on more debt without knowing the length and severity of the economic impact of the COVID-19 pandemic,” the statement said.
The South African Bankers Association previously cited flawed design features, corporate risk aversion and the preference for other aid measures as contributing to the low acceptance.
($ 1 = 14.5807 rand)
Reporting by Mfuneko Toyana; Adaptation by Olivia Kumwenda-Mtambo and Gareth Jones