Photo by: Reuters
The R3.75-billion economic recovery support package announced by Trade, Industry and Competition Minister Ebrahim Patel, represents a united front from a number of entities for the restoration of businesses that were adversely affected during the violent looting and unrests that took place in KwaZulu-Natal and Gauteng last month.
Department of Trade, Industry and Competition (DTIC) acting deputy director-general Susan Mangole unpacked this economic rebuilding package and its application process during a webinar on August 20.
She said that, in the wake of the unrests, the DTIC had recognised the devastating impact on the country’s economic activities, especially businesses, across a range of sectors.
To mitigate this, the DTIC conducted a survey across the economic sectors to gauge the impact and determine appropriate support required to assist businesses.
Mangole noted that government had set aside R3.7-billion to support affected business, with the fund forming part of the broader R38-billion relief package announced by former Finance Minister Tito Mboweni.
Mangole informed that 1 200 businesses – insured and uninsured businesses – from Gauteng and KwaZulu-Natal had responded to the DTIC survey.
Findings from the survey include that significant asset and property damage had been suffered by businesses.
More importantly, Mangole highlighted that the survey confirmed that at least 10 200 jobs were affected across the manufacturing, retail and service sectors.
She noted that 43% of respondents estimated that they could recover in less than a month, whereas 7% expected it would take a year or more to fully recover.
Importantly, she said the survey found that 57% of respondents did not have insurance, with these being the most vulnerable and most in need of support.
Therefore, the government, through the DTIC, the Industrial Development Corporation (IDC) and the National Empowerment Fund (NEF), is providing funding packages to support various business recovery interventions.
Mangole noted that R1.5-billion had been made available for this purpose by the IDC, R2-billion by the DTIC and R250-million by the NEF.
Further, the DTIC's Critical Infrastructure Reconstruction Programme grant, which has been implemented to support investment that has been affected by unrest in the two provinces, has also been made available.
It is cost-sharing grant of up to 50% of total qualifying infrastructure costs and is capped at R30-million. It is aimed at leveraging investment by supporting the rebuilding of relevant affected infrastructure.
Applicants must meet certain mandatory requirements, including but not limited to, being a legal entity in the country, and in a municipality from the affected provinces of Gauteng or KwaZulu-Natal.
The IDC’s Business Recovery Fund, meanwhile, is a tailored comprehensive package that includes funding support for businesses and communities affected by the unrest.
The considered response comprises a total recovery package of more than R1.5-billion, Mangole said.
This entails a R1.4-billion post-unrest business recovery fund to assist all businesses (existing and new clients) that operate in sectors the IDC funds.
The funding will be available at concessionary rates to ensure significant development impact.
Moreover, there is a R100-million regional programmes grant allocation to provide technical and financial assistance to uninsured small businesses in townships, rural areas and small towns that have been affected by the unrest and associated supply chain disruptions.
In Gauteng, the IDC is partnering with Gauteng Enterprise Propeller, which has set aside R50-million to co-invest with the IDC, on the proposed R100-million in funding.
There is also a R10-million corporate social initiative allocation to support food security and recovery efforts in affected communities.
This funding will cater for school infrastructure rebuilding, and support for care facilities and clinics. The IDC’s focus will mainly be on rural, outlying and less developed areas that now face increased vulnerability. It will be working with its established non-governmental organisation partners to ensure reach and impact.
In addition to these, the IDC will be administering the DTIC’s R400-million Manufacturing Competitiveness Enhancement Programme Economic Stabilisation Fund.
The fund will support manufacturing companies affected by the unrest, including those impacted by associated supply chain disruptions. The fund will offer concessionary funding to affected companies through interest free loans.
Lastly, the NEF in partnership with the DTIC, established the Economic Stabilisation and Rebuilding Fund to support businesses adversely affected by the unrest.
It will support any business that has been affected, in all sectors of the economy.
Eligibility criteria include, but are not limited to, the business being located in KwaZulu-Natal or Gauteng; demonstrating that it was affected by the riots and unrest; and the business not being covered by insurance or there being an insurance shortfall.
The R250-million in NEF fuds will be used to support building improvement and fittings for premises; replacement of machinery, equipment, commercial vehicles and replenishing stock; and working capital shortfalls owing to supply chain disruptions.
Also presenting during the webinar was the Unemployment Insurance Fund (UIF), unpacking details of the Destroyed, Affected or Looted Workplaces: Temporary Financial Relief Scheme.
The scheme was approved by Patel on August 6 and published in the Government Gazette on August 10.
The purpose is to establish a temporary relief scheme aimed at giving financial relief to vulnerable workers; to provide the payment of temporary financial relief to vulnerable workers; and to set out the application process for this temporary financial relief.
The target group is workers not being paid their (partial or full) remuneration owing to the closure of workplaces as a result of the unrest.
Workers qualifying under this relief scheme shall receive a monthly flat rate of R3 500. The benefit is intended to be paid from July 9 to December 15. However, the continued operation of this benefit will be reviewed every two weeks.
Employers will apply on behalf of their employees and qualifying conditions include, but are not limited to, being registered or having to register with the UIF, and the employer’s closure being directly linked to the unrests.
The intention is to start accepting applications from August 25, subject to the finalisation of system checks.
Also present during the webinar was the Small Enterprise Finance Agency.
Claims received to date by the organisation amount to an estimated R14-billion, with 90% reported and 10% made up of smaller claims.