Newly appointed Small Business Development Minister Stella Ndabeni-Abrahams has had to hit the ground running to ensure that relief packages for SMMEs impacted by July’s civil unrest are implemented. But simultaneously, she needs to consider measures to make it easier for SMMEs to do business in the country at a time when many of them continue to be decimated due to the economic climate and Covid-19 pandemic lockdowns.
Ndabeni-Abrahams, along with her team, recently accounted to Parliament’s committee on small business development on what they were doing to assist SMMEs and informal traders following the unrest. At that time of the looting and destruction of businesses in Gauteng and KwaZulu-Natal, Ndabeni-Abrahams headed up the Communications and Digital Technologies Ministry.
She told the committee that due to the unrest, “South Africa has had to recover from an unexpected tragedy”. It resulted in a loss of income for many small businesses and informal traders, and this had created a significant impact in relevant economic areas, as small businesses were unable to pay taxes, the minister said. The department has drafted a recovery plan for SMMEs and informal traders to “meet them halfway” following the unrest, she said.
But it was also cognisant of small businesses and informal traders that had to bear the brunt of Covid-19 in the two provinces and the rest of the country. Therefore, as one measure, it had decided to introduce a moratorium on permits and licence requirements for informal traders until 31 December 2022 across the country.
It was also considering that it starts issuing permits, as many municipalities were failing to do the job properly. And while the Business Recovery Programme mainly focused on uninsured small enterprises KwaZulu-Natal and Gauteng, the minister said those with existing funding from other lenders would be considered.
SMMEs would receive funding for working capital, equipment, furniture and fittings. The programme offered blended finance, comprising a grant (60%) and a loan (40%). Interest rates on the loan component were limited to 5%. And there was an initial payment moratorium of up to a year for small enterprises in KwaZulu-Natal, Gauteng and six months for other provinces.
The repayment period was a maximum of 60 months and not more than R2-million could be accessed per entity. Also, the Small Enterprise Development Agency would offer pre-investment support for businesses needing assistance, as well as post-investment support that would monitor economic growth and offer customised business development support.
Under the Informal Traders Support Programme, the department’s goal was to offer financial and non-financial support for over 17,667 entrepreneurs and provide them with a once-off R3000 grant to recover their stock. The minister said during her presentation that these measures would make it less costly to do business, and would help unemployment rates, which was currently at an all-time high of 34.4%.
Also, she believed by increasing the grant component and reducing the debt component, funding would be more accessible to SMMEs and co-operatives, especially those in the informal sector.
According to the SA Property Owners Association (SAPOA) and Business Leadership South Africa (BLSA), the estimated cost of the unrest in KwaZulu-Natal and Gauteng has been more than R16 billion, with over 50,000 informal traders and 40,000 businesses impacted. About 150,000 jobs are believed to be at risk.