2018 Minister of Communications Stella Ndabeni-Abrahams

R300 million allocated to assist small businesses impacted by rioting and mass looting

The Department of Small Business Development (DSBD) has set aside R300 million to assist 150 small businesses in the formal sector impacted by the widespread rioting and mass looting that erupted in July.

17 667 entrepreneurs in the informal sector who were also affected by the civil unrest will each receive a R3000 once-off grant.

This was revealed during the DSBD’s presentation on Wednesday to Parliament’s portfolio committee on small business development on the department’s business recovery programme for businesses operating in the formal and informal sectors who were affected by the riots and looting in July.

The programme will mainly focus on businesses based in KwaZulu-Natal and Gauteng, where the riots and looting were most intense.

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The Minister of Small Business Development Stella Ndabeni-Abrahams said the civil unrest in July compounded challenges formal and informal businesses were already faced with due to the Covid-19 pandemic.

Ndabeni-Abrahams said the recovery packages offered by the DSBD have been advertised to alert potential beneficiaries, and that clear criterion of which businesses qualify have been outlined.

The minister assured committee members that the law will be followed to the letter and that the Public Finance Management Act (PFMA) will be adhered to during the disbursement of funds.

The department is aware that already there are scammers, some who are demanding that businesses looking for recovery assistance pay an upfront fee, that are sending out messages, Ndabeni-Abrahams said, adding that beneficiaries of the recovery programme will not be charged a fee.

The DSBD Director-general Lindokuhle Mkhumane said the recovery support initiative will be implemented by the department and its agencies, the Small Enterprise Development Agency (Seda) and the Small Enterprise Finance Agency (Sefa) to ensure stabilization of the economy.

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The DSBD’s presentation revealed that about 50 000 informal traders and 40 000 businesses were impacted during the civil unrest, placing an estimated 150 000 jobs at risk.

The presentation further stated that uninsured small enterprises and those requiring funding for working capital as well as those with existing funding from other lenders will be considered for the recovery programme.

Beneficiaries will be offered a blended finance package made up of a 60% grant and 40% loan, the latter having an interest limited to 5%.

Mkhumane gave an example on the loan component of the finance, saying that should a business be offered R2 million, which is the maximum amount, it will only be required to pay back R840 000.

The recovery programme, which is available to businesses owned by South Africans, will also offer non financial support.

Some committee members raised concerns on how municipalities take long to issue licences and permits to street vendors who, in the interim, have their goods confiscated by metro police, especially in the Cities of Cape Town and Johannesburg, in the name of enforcing bylaws.

Ndabeni-Abrahams pointed out that a moratorium on permits and licences will be implemented until 31 December 2021.

The Democratic Alliance’s (DA’s) committee member Jan de Villiers said it was crucial that the DSBD’s recovery programme is executed effectively and that the department, and its agencies, “go to the ground” to identify the businesses impacted by the riots and looting.

A suggestion was made that the department enlist unemployed graduates on a short term basis to help informal traders with the digital application for accessing the programme, a suggestion the minister said the department will consider.

Ndabeni-Abrahams said it is important to invest more in small businesses because this will help with addressing the high level of unemployment in South Africa.

The minister further said it is important to enhance localisation as the country seeks to participate in global trade.

Where red tape can be reduced without undermining the law, this will be done, Ndabeni-Abrahams assured, adding that Sefa and Seda are working on assisting the many unsuccessful applicants with correcting their noncompliance issues.

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