Commercial banks are not alone. A shortage of debt finance then drives entrepreneurs to seek other, expensive finance elsewhere, such as from micro-lenders. The second problem, critics argue, is a general failure by banks to extend credit to black entrepreneurs. Banks have a point, but they fail to grasp that the status quo is a historical problem. It is for this reason that many critics have said banks are insensitive, not only to this historical legacy, but also to SA's developing status.
Banks use first-world standards in a developing country.
There is clearly something wrong with a financial system when hordes of would-be entrepreneurs keep complaining that they lack access to finance, yet the media is filled with headlines trumpeting black empowerment transactions. Consider that just about all the financial institutions have spent billions propping up black economic empowerment, a process that has failed to make even a dent in SA unemployment. In a nutshell, empowerment has served political expediency rather than true economic ownership. More important, the process has been facilitated by fancy financial engineering by institutions even though some of the empowerment proposals did not make good business sense. There is a lack of innovation at financial institutions to develop appropriate products for SMMEs, and also a lack of appropriate institutions that can play such a role.