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Rubin Tours S. African Businesses

July 14, 1998

SOWETO, South Africa (AP) _ Toddlers were singing the South African anthem Tuesday when U.S. Treasury Secretary Robert Rubin strolled into a day-care center that Francine Mbense built in her garage in this black township.

Nakekelana Preschool _ Nakekelana means ``caring″ in Zulu _ can now afford tiny tables and chairs, books and other materials for the tots thanks to a $2,460 loan provided by a South African company. The company received its own start-up funding from the U.S. Agency for International Development.

``This is terrific,″ Rubin shouted to Mbense over the din of 39 young voices singing at full throttle. Rubin was told the children’s parents were working, with part of their salaries paying the tuition, which in turn was repaying the loan. ``This is terrific!″ Rubin shouted again.

Four years after white rule ended in South Africa, more than half its blacks live in poverty, with no running water, much less jobs.

Under pressure to provide more for a people long neglected under apartheid, the government is looking at microenterprises funded by government and foreign loans to help redress the imbalance.

A discussion Rubin held later with finance officials, small business entrepreneurs and government officials at Vista University’s Soweto campus showed the enormous challenge of redistributing South Africa’s wealth.

``We tend to think we have found a panacea: All we need to do is give away this money and they will be successful entrepreneurs,″ said Bob Tucker, executive director of the Council of South African Banks.

Small-business entrepreneurs backed up the point. Coming from poor townships, undereducated and unused to dealing with the business community, they said starting a business was trial and error.

Still, there are successes. Simon Aphane, who runs the VITA company that specializes in microenterprise loans, said it has loaned $508,000 to 168 businesses, including Mbense’s, and has a 98 percent repayment rate.

Zanele Mbeki, wife of Deputy President Thabo Mbeki, said the Women’s Development Bank that she advises has made 12,000 loans to 5,000 clients.

``Each client represents a job,″ she declared.

Ntombi Msimang, who owns a restaurant in Soweto, said she was cowed at first by the business environment. But she recently summed up the courage to walk into her bank manager’s office and appeal for a lower loan rate.

``I was paying 4 percent above prime rate, and I told him it was too much,″ said Msimang, her head swathed in a traditional orange-and-blue cloth headdress.

To her surprise, the banker reset her loan 1 percent above the prime rate.

``What worries me is how few of the multitudes can do that, or go sit down with a banker and say: `I have no collateral but I have a plan that will make money,‴ she said.

Banks are not eager to make loans without collateral. Msimang’s is guaranteed by a program, funded by the government with a healthy injection of foreign aid, so her bank faces no risk if she can’t make her payments.

With public funds already stretched to extend medical, education and other benefits for South Africa’s 43 million people, there is not much left for seed money for small businesses.

One banker made clear he’s not in the business of philanthropy.

``I’ve got impatient shareholders I’ve got to deliver profits to as soon as I can,″ said Mutle Mogase, an official of a division of banking giant ABSA.

In a speech later at the Soweto campus _ interrupted when a rat scampered across the stage _ Rubin complained about banking loan practices that freeze out a majority of South Africans.

``South Africa has a world-class, sophisticated system of banking and finance,″ Rubin said. ``However, access to credit is very unequally distributed.″

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