AfriForum’s legal team directed a letter to Absa bank demanding clarity regarding its use of racial criteria in granting business financing. This comes after AfriForum received complaints from members of the public regarding Absa’s purported qualifying criteria for small and medium enterprise business loans. For these loans, Absa requires, among other things, that the business applying must be at least 51% black owned. These loans provide access to loan amounts between R50 000 and R1,5 million for new and existing businesses with a minimum of 51% black ownership in all sectors except agriculture.
In light of the above, AfriForum requested written feedback in response to the following questions:
- Why does Absa require 51% black ownership to apply for business finance successfully?
- Is this requirement by Absa due to a statutory and/or regulatory requirement, or is Absa’s internal policy to only provide access to business finance to companies that are 51% black-owned?
- How does Absa square its policy with the general rule that businesses with an annual turnover of less than R10 million qualify as Exempted Micro Enterprises (EMEs) that do not have to conduct a full BEE verification to achieve a BEE level?
- How does Absa justify this exclusion in light of the South African Constitution that champions non-racialism and equality?
- Does Absa provide other options to businesses that do not comply with being 51% black-owned?
Ernst van Zyl, Campaign Officer for strategy and content at AfriForum, says that policies and practices requiring racial classification extend and preserve the racial classification system used by the apartheid regime. In effect, it keeps the Population Registration Act of 1950 alive long after it was repealed in 1991.
“It is sickening how normalised discrimination against racial minorities has become in South Africa. In principle, racial discrimination is wrong, and the double standards that the ANC and its allies push in this regard are abhorrent and unacceptable,” Van Zyl concluded.