Durban – The state-owned bank Ithala has turned down funding requests from many of the desperate service providers contracted to the jinxed R2.1 billion KwaZulu-Natal Department of Education schools’ nutrition programme.
The bank told IOL that the documentation provided by the applicants shows that they “do not meet the threshold of bankability” and it has an obligation to lend money where it is certain it will recoup it.
NEWS: Ithala, the state-owned bank operating in KwaZulu-Natal has turned down funding requests from many of the service providers contracted to the jinxed R2.1 billion KwaZulu-Natal schools nutrition programme.
— Sihle Mavuso (@ZANewsFlash) June 7, 2023
The Service Level Agreements (SLAs) signed with the KZN Department of Education are the ones that caused this uncertainty after it was stipulated that the contracts are “stop-gap” measures and could be terminated any time before May 2026.
“This Service Level Agreement is a stopgap measure to mitigate the unexpected collapse of the Private Label Programme and to protect the rights of learners by ensuring that food items are procured, supplied and delivered to all schools.
“This means this contract may be terminated any time before March 2026 depending on the outcome of the legal processes etc,” reads the part of the SLA that allegedly triggered the uncertainty.
Some service providers indicated that with timely payments from the department, they are unable to carry the load.
NEWS: The R2.1 billion KwaZulu-Natal schools nutrition programme continues to face numerous challenges. In this internal memo, the Department of Education says it has learnt that some schools are threatening not to cook if they don't receive their full foodstock for June. @IOL pic.twitter.com/r3QfFyjbCS
This has caused uncertainty that the programme may collapse any time from now if the service providers are not funded.
IOL approached Ithala Bank after it was swamped by calls from concerned service providers that the bank was not funding them, citing some challenges with the documentation they have provided.
Some service providers alleged that they have not been paid for the month of April; even though the department had promised them that all processes for that payment would be done by 26 May 2023.
“Ithala is not financing us and on the other side, we are not getting paid by the department on time.
“Some of us have to rely on loan sharks to keep on delivering and that is not sustainable at all,” one service provider told IOL, threatening to quit.
NEWS: Claims by the ANC-led KZN provincial government that all schools have food and that all teething problems with the schools' nutrition programme have been resolved have been proven wrong. One can now reveal that some schools in Mtubatuba have no food and parents are pic.twitter.com/dcFBeOvHlF
Sitandiwe Dimba, reputation manager group marketing and communications at Ithala confirmed that they were unable to fund the service providers.
“As a financial institution and as an institution that uses taxpayers’ funds to assist businesspeople, the IDFC has an alienable duty to minimize risk.
“To that end, it must satisfy itself of the ability to repay the loans extended to applicants, as stipulated by the National Credit Regulator and FICA.
“Given that the documents presented by the applicants so far, including one from the Department of Education, do not meet the threshold of bankability, the IDFC is currently unable to approve loans to participants in the National School Nutrition Programme,” Dimba told IOL on Wednesday.
The spokesperson of the KwaZulu-Natal Department of Education, Muzi Mahlambi, did not respond when asked about the unpaid service providers.
The issue of funding from Ithala Bank was one of the issues raised in an internal memo dated 2 June 2023 signed by Nkosinathi Ngcobo, the department’s HoD (Head of Department).
Ngcobo expressed concern that some schools were threatening not to cook for learners until all their food stock for June had arrived.
The non-delivery of the full stock has been attributed to struggling service providers unable to deliver the food on time.
In the memo, Ngcobo admitted that the SLAs are key documents needed to secure funding from Ithala and other institutions.
“Since there were delays caused by the need to consult Senior Counsel before issuing Service Level Agreements, which are a source documents to be used by service providers to secure funding from Ithala and other financial institutions, schools are directed to accept food items even if it is not for the full month whilst service providers arrange funding from Ithala Bank and other institutions,” Ngcobo said in the memo.
Last Tuesday, IOL visited some schools in Mtubatuba and found that some of them, including Nkonyane primary school, have never received any allocation since April when they reopened for the second term.
Parents with children enrolled in the school were forced to fund their own scheme in order to ensure that learning is not hampered.
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