Government to pump R3.9 billion to help businesses affected by unrest

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Government is working around the clock to get businesses affected by looting and damage to property in parts of the country back on their feet and set South Africa on a path of economic growth.

Trade, Industry, and Competition (DTIC) Minister Ebrahim Patel said key interventions have been identified to boost investor confidence and assist businesses that were casualties of the recent unrest in Gauteng and KwaZulu-Natal.

The Minister, who was also speaking on behalf of the Department of Small Business Development on Thursday, said a R3.9 billion response fund has been reprioritised from various departments.

However, Patel believes that the capital is expected to grow to over R4 billion with the support of other entities.

The funding will immediately support businesses to get back into full operations, while they await either longer-term funding possibilities or insurance money.

In addition, where necessary, it may supplement what the State-owned insurer, South African Special Risk Insurance Association (SASRIA), is currently doing.

“They may include grants where warranted, source of working capital for raw material replacement, stock replenishment and can be used in some cases, for equipment purchases, and small scale repairs.”

In addition, he said, teams have been meeting with SASRIA to discuss how they can fast track insurance claims.

“We want the economic benefit of that insurance cover to manifest itself as quickly as possible. They will also be looking at what support we can provide … to uninsured businesses. And all of those discussions are well underway.”

Damage

He told the media that a survey conducted by government with companies shows the extent of economic damage and disruption.

Of the 1 070 companies that responded, about 900 indicated they were directly or indirectly affected.

The Minister said these businesses had damage to property, stock was looted or they experienced disruptions in their supply chain.

“The preliminary estimates of the damages indicate that it’s significantly more than R5 billion of these surveyed companies in loss of assets and a significant loss of business.”

In addition, Patel announced that 10 200 jobs are potentially affected.

Meanwhile, of these businesses, 255 are in manufacturing, 265 in retail, and close to 300 provide services, while 68% were from KwaZulu-Natal.

“All the businesses that we surveyed 60% had insurance, and 40% of them were uninsured for an event of this nature.”

Forty-three percent of these companies said it would take them anything from a week to a month to re-establish their normal business activity, while 7% believed it would take more than a year.

Interventions

Patel said government is working to re-establish the supply lines in the economy as quickly as possible while looking at immediate repairs of buildings that will lead to the resumption of business.

Government is also speeding up the construction and structural repairs, which were vital to South Africa’s economic recovery. However, he said it might take some time.

“Some of those will take some months to do. But the work has to start immediately and we’ve been working on how to fast track them.”

Patel told the media government was looking into addressing the loss of wages of workers during the period of reconstruction and rebuilding, which Minister of Employment and Labour, Thulas Nxesi will lead.

This comes after President Cyril Ramaphosa also announced the extension of the COVID-19 Temporary Employer-Employee Relief Scheme (TERS).

“Many of these businesses have indicated the need for bridging funding; funding that can be made available in the short-term until insurance pay outs.”

Engaging with businesses

Government has interacted with more than 200 businesses and investors, business organisations, and top 100 CEOs and individual companies.

“I must say that we were struck by the support and view many businesses, particularly global businesses took about the rebuilding period, and their commitment to work with government and South Africans in rebuilding the economy,” he told the media.

The DTIC and national government also met with Toyota after the company raised security concerns.

Because of those engagements, Patel said Toyota was convinced that their grievances have been addressed and that the company is ready to resume business.



“The purpose of all those engagements was to ensure that we can send a message around the security of businesses and the infrastructure that we can coordinate the actions we need to take to get the economy back on track.”