South Africa has extended by a further three months the deadline of a loan scheme that is central to efforts to counter the economic impact of the Covid-19 pandemic, the Treasury said on Monday.
President Cyril Ramaphosa announced the bank loan scheme for businesses, worth up to R200 billion ($13.72 billion) in total and partly guaranteed by the government, in April 2020.
The availability of the loans in the scheme has been extended to July 11, from an earlier deadline of April 11, the Treasury said in a statement issued jointly with the South African Reserve Bank and the country’s banking association.
The extension is to enable an orderly winding down of the scheme and to assess the applications already received, the statement said.
The scheme’s main aim was to encourage banks to lend more, and on more favourable terms, to businesses affected by the coronavirus crisis, which last year pushed South Africa’s economy into its largest annual contraction in a century.
But the uptake has been low, with just R18.16 billion paid out as of March 27.
“The (scheme) has not been as effective as originally envisaged, as many distressed companies have been reluctant to assume more liabilities with little certainty of the length and severity of the economic impact of the Covid-19 pandemic,” the statement said.
The Banking Association South Africa previously cited flawed design features, risk aversion by businesses, and a preference for other relief measure as contributing to the low uptake.