Assessing South Africa’s Loan Guarantee Scheme to support firms during the Covid-19 Pandemic
Date
2023
Authors
Journal Title
Journal ISSN
Volume Title
Publisher
University of the Witwatersrand
Abstract
This article presents a timeline and data on South Africa’s Loan Guarantee Scheme (LGS) established in response to the Covid-19 pandemic. It defines the LGS take-up rate as a key measure of the effectiveness of the policy’s design and implementation. It references relevant theoretical literature, on co-ordination theory, incentive structures, information asymmetries and market failures, to provide explanations for the low take-up rate of South Africa’s LGS. It presents comparative data on the take up rates and design features of LGS-type interventions in a number of other countries. Finally, the article draws lessons from South Africa’s LGS experience which would be relevant for planners and policy makers implementing similar such policies in future.
Description
Keywords
Covid-19 Pandemic, South Africa’s Loan Guarantee Scheme, Public-health-driven lockdown, Small and Medium-Sized Enterprises (SMEs)