The Minister of Small Business Development Khumbudzo Ntshavheni says her department has committed R230 million to support and assist small businesses, but cautioned that the allocated budget may fall short.
As part of providing relief in the light of the COVID-19 pandemic, the government has initiated a relief fund for small, medium and micro enterprises as well as a Business Growth facility.
Ntshavheni briefed Parliament’s Joint committees on the progress of this support via a virtual platform.
Registered small businesses that are 100% South African owned, with 70% of its staff being South African may apply for assistance from the debt relief fund. So far the department is processing nearly 17 000 applications, according to Ntshavheni.
She says, “We are sitting at R235 million approval, which means we are only short. Nowadays we can do an average of 100 and 150 million rands. We will reach the threshold within the next three days of exhausting the R530 million scheme.”
Ntshavheni clarified that these are not grants, but soft loans. “Why give soft loans? Some won’t survive, so much have treatment mechanisms for loans. Those businesses that won’t survive, the owners don’t carry the burden of business that has failed,” says Ntshavheni.
Some opposition political parties have said that they would challenge the Broad-Based Black Economic Empowerment (BBBEE) requirement in court to receive the loan. However, Ntshavheni added that it was fundamental to the country’s economic transformation agenda.
“BBBEE is a fundamental requirement for transformation. We can’t choose when to use it, it is a critical requirement. All people need to own a share. So, evaluate on need but also consider demographics not only race, but also like age, gender, people with disability…”
More support should be provided for small businesses: DA
The Democratic Alliance (DA) is calling on the Minister of Small Business Development, Khumbudzo Ntshavheni, to urgently facilitate additional support and funding for self-employed individuals (sole proprietors), micro-retailers, and informal traders, during this lockdown period.
The party says businesses are under pressure because of the COVID-19 lockdown regulations.
“Self-employed individuals and informal traders are still left in the lurch with little to no assistance from the Department of Small Business Development since the beginning of the COVID-19 lockdown,” says the DA in a statement.
There are an estimated 3 million informal traders in South Africa.
The Department of Small Business Development has proven to be weak in its attempts to provide emergency relief to businesses. Even small business owners, who the Department has supposedly been assisting find themselves desperately trying to access funding and are not getting clear answers from government as to how they can get assistance.”
The party is asking Ntshavheni to update the nation on the Department’s relief assistance interventions for small businesses.
“For many SMEs, without adequate cash reserves or some kind of business insurance, this hard lockdown will deliver the final deathblow, putting an estimated 1.5 million jobs at risk. All of those employers and employees are deeply anxious and panic-stricken about their circumstances and future, so Minister Ntshavheni needs to play open cards with the public about how far the SEFA-administered Debt Relief Scheme is with receipt and finalisation of applications, disbursement of funds and reasons for delays or bottlenecks in the process. “
The party plans to submit parliamentary questions to the Minister regarding the matter. “And we also urge her to present it to the Portfolio Committee on Small Business Development at its first virtual meeting, whose date is yet to be announced. “
The DA has welcomed the announcement of the guidelines for the Spaza Shops and General Dealers Support Scheme.
DSBD COVID-19 SMME Support contacts pic.twitter.com/Xw7zLSIfFl
— Department of Small Business Development (@DSBD_SA) April 9, 2020
South African Future Trust
Announcing the COVID-19 lockdown in March, President Cyril Ramaphosa mentioned that certain prominent families would assist in trying to curb the economic blow this would cause. The South African Future Trust (SAFT) was set up by the Oppenheimer family to provide direct financial relief of R1 billion to employees of qualifying SMMEs against possible income loss as a result of COVID-19.
Executive Chairman of Oppenheimer Generations, Jonathan Oppenheimer, explains SAFT: