Sugar processor Tongaat Hulett has informed sugarcane millers that the company is unable to pay for their produce in advance after the Government banned bank lending.
Economic commentators have warned that the ban will have negative repercussions on the economy as firms rely on bank credit to fund their operations.
In a notice to sugarcane farmers on Thursday, 12 May 2022, Tongaat Hulett COO James Bowmaker, said:
It is with regret that the millers advise of the immediate suspension of advance payments until further notice.
We normally fund the advances from loan proceeds that we access from the banks.
Following the recent suspension of lending by banks, we find ourselves unable to continue offering advances.
Meanwhile, Finance and Economic Development Minister Mthuli Ncube said the ban on bank lending is aimed at combating indiscipline in the financial services sector driving inflation and weakening the local currency. He said:
Indiscipline is something that we need to deal with and we will make sure that we enforce the measures that we have put in place to deal with this indiscipline.
These are temporary measures, what we are trying to do is to prick the speculative bubble, which has emerged in the forex market as well as in the equities market.
As I said, it (the ban on bank lending) is temporary and we will get to a point where we can loosen up and open up.