Minister of Small Business Development Khumbudzo Ntshavheni says they are going to be meeting with banks to get them to assist in funding the sector as the economy battles to shake off the Covid-19 hangover.
Ntshavheni recently told parliament that only R15 billion of R200 bn of the government guaranteed scheme has been distributed by banks and that most of the companies that benefited the most were white-owned.
“Banks are funding white [owned] companies because [they claim] blacks don’t qualify,” Ntshavheni said in an interview with Vutivi News.
She said by the beginning of September a total of R306.7 million had been dispersed across 1 159 SMMEs as part of the department’s SMME debt relief scheme.
She said the funds had helped SMMEs maintain 23 254 jobs in the economy spread across the country.
She added that the restructuring of loans on Small Enterprise Finance Agency (Sefa) funded clients consisted of two interventions which include a postponement of repayment instalments of up to six months in both capital and interest.
The deal also involves the restructuring of debt and provision of additional funding to clients who are seeking relief post the Covid-19 lockdown.
Ntshavheni said the additional funding will be offered at prime less 5% to ensure that the already funded SMMEs are protected from high interest rates and are offered an opportunity to survive post the COVID 19 pandemic.
She said the private sector has also been approached to assist SMMEs to recover from the lockdown period and to modernise their operations.
Businesses that have benefitted from loans will also be capacitated with skills to help them comply with corporate management demands through the placement of unemployed graduates.
“We are not dropping money and running away. We walk the journey with you for 24 to 36 months,” Ntshavheni said explaining how SMMEs will be supported to handle the funding.
She said there will be an ongoing evaluation on repayments of the soft loans and that in cases where there were challenges to repay there would be a consideration on the causes of the failure to keep up with payments.
Ntshavheni said all SMMEs that apply for government funding would need to comply strictly with the legal stipulations of BEE and BBBEE.
She advised that SMMEs need to adjust to changing times by embracing and streamlining their operations with e-commerce and social media for advertising, sales and marketing.
“Social media is a very strong e-commerce platform,” she said.
Ntshavheni’s deputy Nokuzola Capa said in the department’s budget vote speech that it was allocated R2.4 billion for the 2020/21 financial year which was reduced during the Special Adjustment Budget process by R67 million to R2.3 billion.
“Transfers and subsidies consume 90.3% or R2.1 billion whilst operations are provided 9.7% or R227.7 million of the allocated resources,” said Capa.
She said the R2.1 billion of transfers and subsidies provide for Seda’s allocation of R859.1 million, which is 40.7% of the transfers and subsidies. She said Sefa’s allocation was set at R1.2 billion, which is 54.7% of the transfers and subsidies.
Capa said the department administers the remaining R98.5 million through the incentives that are internally administered by the department which include the Cooperatives Incentive Scheme (R63.7 million), Black Business Supplier Development Programme (R13.7 million), Craft Customised Sector Programme (R11.1 million) and National Informal Business Upliftment Scheme (R9.8 million).