To assist social grant recipients who live in areas where automatic teller machines (ATMs) and bank branches have been damaged in the recent riots, customers will be able to use any ATM, including those not operated by their own bank, without incurring additional charges, from August 1 to September 30.
The Banking Association South Africa (Basa) says the damage done to banks in KwaZulu-Natal and parts of Gauteng is steadily being repaired, but, in the meantime, it encourages customers who can do so to use digital banking services.
The association says South African banks are now focusing on supporting customers whose businesses have been disrupted, after having started or completed repairs on most of their own infrastructure.
Basa says 1 223 ATMs and 269 banks were destroyed in the civil unrest that occurred in mid-July.
The association assures the public that banks’ emergency response teams are working to ensure that social grants and salaries are paid as usual at the end of the month.
Banks will, in the coming weeks, offer financial relief to affected clients with measures including bespoke arrangements and targeted payment relief. It notes that enterprises that have been left without stock, premises or business cannot be expected to meet their financial commitments as usual.
However, Basa points out, that it is also important to note that banks’ financial relief will not amount to debt write-offs.
Banks are exploring several relief measures intended to give their customers time and space to rebuild and restock businesses and enterprises. One of the measures under consideration is the provision of bridging finance while insurance claims are being processed by the State-owned South African Special Risk Insurance Association (Sasria), which is responsible for insuring against social and political unrest.
Banks are working with Sasria and the short-term insurance industry to find ways to simplify and shorten the claims process.
Basa says banks will take into account the documentary evidence produced by claimants when considering the provision of bridging finance facilities.
“We encourage, and will assist, those companies and entrepreneurs who receive insurance pay-outs, to reinvest in opening their businesses and to continue to serve their communities and retain jobs.
“However, restoring business confidence requires unequivocal explanations for the cause of the violence and a credible assurance that it will not recur.
"It is clear that some businesses hit by the unrest, especially small, medium-sized and informal family enterprises that may not have been insured, will need government support,” the association explains.
It adds that, one of the key lessons from the Covid-19 Loan Guarantee Scheme, which was set up to help small businesses through the pandemic, was that entrepreneurs are unwilling to take on additional debt, which they may not be able to repay, particularly in times of great uncertainty.
These businesses need alternative relief measures, ranging from the provision of targeted grants to the suspension of rates and taxes to help reduce business expenses.
Basa believes that because banks understand their clients’ needs, they are well-placed to help those in financial distress. Assisting customers who experience financial difficulties is part of the normal business of banking.
Between April 2020 to February this year, banks provided R293-billion in Covid-19 financial relief to their customers.
However, the Covid-19 crisis also served to highlight that financial solutions alone are not enough to assist businesses in a weak economic environment.
It is far more critical that businesses have access to efficient public infrastructure like power and transport, that policies are clear and not subject to arbitrary change, and that excessive red-tape hampering entrepreneurs falls away.
Basa highlights attractive, long-term incentives as necessary to secure investment in commercially sustainable economic and social infrastructure.
Above all, businesses need confidence in continuing social stability and rule of law.
“It is our fervent hope that recent events will galvanise government action on these imperatives as we continue the collective work of rebuilding business and restoring communities disrupted by the recent unrest. Basa and its members stand ready to do our part,” the association concludes.