Service providers who are part of the National School Nutrition Programme in KwaZulu-Natal have been severely impacted by the closure of Ithala SOC Limited. File Picture: Henk Kruger Independent Newspapers
Scores of services providers contracted to the KwaZulu-Natal Department of Education to supply nutritious meals to poor township and rural schools face an uncertain future following the closure of Ithala SOC Limited (Ithala Bank).
The bank played a crucial role in providing financial assistance to service providers, many of whom relied on cession agreements to purchase food supplies for schools.
Ithala would be paid back once the Department of Education paid the service providers.
The closure of Ithala Bank has created significant disruptions, affecting service providers’ ability to deliver meals to learners. Ithala is facing a provisional liquidation application which has been brought by the SA Reserve Bank’s Prudential Authority.
Service providers told The Mercury that the bank’s unique position as a financial institution willing to back small businesses, especially black-owned ones, made it indispensable to the success of the National School Nutrition Programme (NSNP) in the province.
Thabang Mncwabe, NSNP Service Providers Association communications and stakeholder specialist, highlighted the scale of the problem. “We have about 60% of suppliers that relied on Ithala to ensure that the programme runs smoothly since the department declined to sign cession agreements with the wholesalers.
“The majority of them are affected by the closure of Ithala,” he said.
Mncwabe also revealed frustration with the KZN Department of Education.
“The department of education is mum on the issue. We have tried to communicate with them to raise concerns; however, they issued a verbal instruction to the district NSNP co-ordinators to inform Ithala bank users to change their banking details so that they will be able to be paid.”
For many service providers, the closure of Ithala Bank has been nothing short of devastating.
Lindani Matiwane, a service provider, said: “This was the only financial institution that was willing to help us sustain our businesses. The closure of this bank is disastrous, and the government has failed its people, particularly black individuals who own small businesses that provide employment for others.”
Matiwane said he has had to resort to unsustainable emergency measures to keep his business afloat. “I had to borrow money from loan sharks, who charge very high interest,” he said.
According to Matiwane, the payments due to service providers this week may be affected.
“Some of us will receive that money because we went to other banks, opened new business accounts, and submitted those to the Department of Education. For those who owe Ithala, the money will go to their Ithala accounts, and unfortunately, those accounts are frozen,” he said.
He expressed disappointment with the government’s handling of the situation, saying, “This bank never gave us any issues. I do not understand why the government would close it. Ithala was sustainable and effective. We cannot even plan for the future because we are uncertain of what will happen next.”
Sanele Ngcobo, another service provider, confirmed that his Ithala account had been frozen but said he was not severely affected as he had back-up plans in place. Ngcobo grows his own food, which he supplies to schools and sells to other NSNP service providers.
However, he raised concerns about the low rates paid to service providers. “R3.76 a day per child in primary school is very little. The government must increase the rate so that suppliers can have reserves,” he said.
Payment delays compounded the financial strain, he added.