It took only one week for the number of COVID-19 cases in South Africa to jump from 52 to 402 and that figure is currently over 700.
On Monday, March 23, President Cyril Ramaphosa updated the nation on the latest measures being adopted to get ahead of the COVID-19 pandemic. He stated that South Africa will embark on a 21-day lockdown starting from the midnight of Thursday, March 26.
And surely, many businesses are in for a rough time especially as the only groups exempted from the lockdown are those in essential services, including the production, distribution, and supply of food. Every other person in South Africa will pretty much remain at home for the next three weeks.
To mitigate the impact of the expected economic slowdown on small, micro and medium enterprises (SMMEs) in the country, the Department of Small Business Development has set up an SMME support intervention comprising of a Debt Relief Fund and a Business Growth/Resilience Facility. And here’s what we know about the intervention.
According to the Department of Small Business Development, the Debt Relief Fund is aimed at providing relief on existing debts and repayments, to assist SMMEs during the period of the COVID-19 State of Disaster.
This facility will also assist entities to acquire raw material, pay labour and other operational costs. All these interventions will be structured to match the patterns of the SMEs’ cash flows, as well as the extent of the impact suffered.
“The Debt Relief Fund will provide relief for all SMMEs whether funded by the State or not, explained Small Business Development Ministry’s Chief of Staff, Sarah Mokwebo, who spoke with Refilwe Moloto of Cape Talk.
“The Debt Relief Fund will provide relief for all SMMEs whether funded by the State or not,” she added.
However, the department insists on the use of the SMMESA database, maintaining that it is based on the need to track, monitor and strengthen the impact of business development support to SMME’s by both government and the private sector during this period and beyond.
It is understood that in the future, the database will also be used to enable applications for both financial and non-financial support, as well as access information about business opportunities and the market while also serving as a funnel for support.
The Department of Small Business Development is understood to have made over ZAR 500 Mn (USD 28.7 Mn) available to immediately assist small and medium enterprises that are in distress through a simplified application process.
However, as Mokwebo put it, there is no confirmation this time as to what specific amounts will be disbursed to specific businesses. This is because there are still ongoing engagements with the President, the minister, and business representatives.
She does reveal, in any case, that the ministry is coming up with amounts for various sized categories and maximum amounts for each SMME.
“It will go on a case-by-case basis and prioritise those who need it more,” said Mokwebo.
President Ramaphosa stated in his Monday evening address that all small, micro and medium enterprises (SMMEs) may apply for relief on existing debts and payments. In order to be eligible, all applicants will be required to show an impact, or potential impact, of the virus on their business.
That is to say, for small businesses to be eligible for assistance under the Debt Relief Fund they must demonstrate a direct link to the impact or potential impact of COVID-19 on their business operations.
Additionally, firms must be 100 percent South African owned and employ 70 percent South African workers to be eligible to benefit.
It is also important to note that the financial assistance would be extended to all businesses, irrespective of whether companies are majority black-owned or not.
For businesses with a turnover of less than ZAR 50 Mn (USD 2.8 Mn) a year, the South African Revenue Service (SARS) will relax pay-as-you-earn (PAYE) liabilities over the next four months.
In addition, the Small Enterprise Finance Agency (SEFA) will introduce a payment holiday for a maximum of six months for those that took loans from the agency, while the Industrial Development Corporation (IDC) will offer ZAR 3 Bn (USD 172.3 Mn) in funding for industrial support.
In other news, South Africa’s two richest families, the Ruperts and the Oppenheimers, have pledged ZAR 1 Bn (USD 57.5 Mn) each to assist small businesses and their employees affected by the coronavirus pandemic.
Small businesses are requested to enroll at www.smmesa.gov.za. The site has since gone live but as of this morning, it was reported to be down, just as it was for several hours when it first went live on Tuesday, March 24.
Featured Image Courtesy: Euractiv