Lending to small businesses under spotlight as regulators consider inquiry

Stephen Grootes speaks to Xolani Nyali, Partner at Bowmans about the firm’s warning that South Africa’s banks could face a potential Competition Commission market inquiry into their lending practices toward black-owned small businesses and SMMEs.

Listen to the interview in the audio player below.

Competition regulators across Africa are beginning to pay closer attention to how banks lend money and set their fees.

The issue comes amid heightened scrutiny of access to funding for historically disadvantaged persons, ongoing investigations into aspects of banking conduct, and broader debates around competition and transformation in the financial sector.

While the financial sector was not the main focus of competition enforcement in 2025, signs suggest this may soon change, particularly here in South Africa.

The Competition Commission of South Africa has announced an investigation into how the prime lending rate is set and applied. This rate influences the interest consumers and businesses pay on loans, including home loans and business financing.

There is also growing discussion about launching a market inquiry into how banks lend to small and medium-sized businesses (SMEs) and companies owned by historically disadvantaged persons.

Concerns have been raised that some businesses struggle to access affordable credit, which can limit growth and job creation.

Authorities want to ensure that lending practices are fair and do not unfairly exclude smaller businesses or new entrants from accessing finance. If companies cannot secure loans on reasonable terms, it can prevent them from competing and expanding.

Speaking to Stephen Grootes on The Money Show, Xolani Nyali, partner at Bowmans says an inquiry to the conduct of baking practices might be a good thing for the sector as a whole.

"It may counter-intuitively be in the interest of the banks to have a conversation with South Africa, around whether are the expectations of policy makers and perhaps to some extent the public realistic and correct in terms of what banks who probably may view themselves as stewards of capital, probably acting in a fiduciary position in relation to depositors money."

- Xolani Nyali, partner - Bowmans

"A lot of the money that they hold is depositors money, and it's not their money. And so in those circumstances, is it right that they be expected to fund what they may perceive, whether we agree or not as being not very prudent."

- Xolani Nyali, partner - Bowmans

Scroll to the top of the article to listen to the full interview.