(Bloomberg) — South Africa’s top banking lobby group criticized the government’s withdrawal of proposed changes to the National Credit Act that were meant to help small firms secure loans.
Trade, Industry and Competition Minister Parks Tau withdrew the draft amendments last week — before the closing date for comments on the proposals.
The move “sets a dangerous precedent for current and future legislative processes in South Africa,” the Banking Association of South Africa said in a statement Sunday.
Tau withdrew the bill over a clause that some feared would have listed educational institutions as originators of credit information and made student debt reportable to credit bureaus.
BASA said the proposed amendments “have nothing to do with allowing” credit bureaus to receive information from education institutions, and that this provision has been in the act since 2006.
The organization said the withdrawal took place “in the face of misplaced and misinformed political pressure.”
About 3 million small businesses employ around 13.4 million people, BASA said, citing data from a 2024 study by Finscope. The changes to the credit act would enable lenders to add to the 274 billion rand ($15.8 billion) in lending banks had extended to these firms by January of this year, it said.
Business Unity SA also says the ministers decisions botched the policy making process and caved in to political pressure, which undermines trust, ignores due process and derails efforts to close a 350 billion rand funding gap for small and medium sized businesses in the country.
The act is almost 20 years old and needs to be reviewed to better meet the needs of small businesses, credit providers and South Africa’s developing economy, BASA said.
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