Amid government’s strategy to “flatten the curve” of Coronavirus infections, government departments have shared more details on the measures that would be implemented to support businesses during the national declared lockdown time and afterwards. 

Health Minister Zweli Mkhize delivered an opening speech during an economic cluster briefing on March 24, stating that globally there had been more than 380 000 confirmed cases of Covid-19, while South Africa stood at about 550 cases.

Trade and Industry Minister Ebrahim Patel during the briefing noted that government was trying its best to minimise damage to businesses and the economy, while protecting the wellbeing of people.

During President Cyril Ramaphosa’s address on the evening of March 23, he announced several measures that would be taken to help mitigate the impacts of Covid-19 on businesses and the economy; Patel said more information on interventions and programmes would be communicated in the next few days.

In the meantime, Patel mentioned that the Department of Trade, Industry and Competition (DTIC) had asked the Industrial Development Corporation (IDC) to established a package valued at more than R3-billion to be used in the next quarter for “industrial funding”.

The Minister said the facility would help to address the situation of vulnerable firms and to fast-track funding for companies that are critical to South Africa’s efforts to fight the virus and the virus’ impacts.

Patel explained that the facility would be available to South African businesses and that the elements to the package included a special intervention of R500-million that would allocated for trade finance to import essential medical products, and secondly a R700-million facility for working capital, equipment and machinery.

“We are also addressing surges in demand to prioritise food security, including support for supply chains that are interrupted by large companies closing down; working capital to ensure energy security; and working capital for component manufactures,” the Minister added.

He further noted that essential services that fall outside of the normal IDC sectors would now be considered for funding, since their considerations have been “relaxed”.

Additionally, for existing IDC clients, the IDC had already been in contact with its business partners to consider repayment deferments on a case-by-case basis.

Patel said details of these deferments would be published on the IDC’s website over the remainder of this week.

Moreover, Patel confirmed that the Competition Commission was already investigating 11 firms that had been ordinary consumers had complained about in terms of unreasonable price increases for essential products, including face masks and hand sanitisers.

More firms would be investigated and prosecutions would follow, the Minister assured.

Patel said South Africa would take the necessary steps to keep open trade links with neighbouring countries to ensure food supply across the region and get through the pandemic together.

Small Business Minister Khumbudzo Ntshavheni said the department had several instruments in place to assist small businesses across the demographic spread during the Covid-19 lockdown.

These included a resilience and growth facility that had been created specifically to make sure that local manufacturers and suppliers had sufficient opportunity to supply the medical and food industries.

She said the facility would fund working capital of qualifying companies that were able to supply the critical industries at this time.

To qualify, these companies must be South African-registered and tax compliant, employ 70% South African nationals and priority would be given to businesses owned by women and people with disabilities.

“In addition to banks announcing support for small and medium-sized enterprises (SMEs), the Small Enterprise Finance Agency would introduce a payment holiday for a maximum of six months to reduce the instalment burden of loans for relevant businesses registeerd by the agency,” said Ntshavheni.

She pointed out that SMEs that were already in distress before the Covid-19 outbreak would not be assisted by any of government’s outbreak-related interventions.

FINANCIAL SERVICES SUPPORT

In terms of financial services support, Patel said competition exemptions had been made for banks. Patel confirmed that the DTIC on Friday issued an exemption for banks under the Competition Act to coordinate on measures that can be used to support businesses and ordinary account holders during this period.

The exemptions would allow banks to work together to devise programmes and relief measures which could help firms, small businesses and consumers that were in distress during these financial challenges amid the Covid-19 outbreak period.

In particular, the exemptions would enable the banks to coordinate on matters such as payment holidays and debt relief measures for individuals and businesses in distress, as well as the extension of credit lines and putting limitations on asset repossessions. 

“The exemptions would allow the banks to work together and ensure continued functioning of the payment system as well as sharing information and resources to ensure continued availability of bank notes at ATMs, branches and businesses.

“We have done extraordinary things to enable the banking system to remain strong and intact, so that South Africans could look to accessing the banks in the next three weeks,” Patel noted.

RETAIL SUPPORT

Patel further confirmed that government would on Tuesday publish a special gazette to enable shopping mall owners and tenants to consider coordinating their actions and reaching agreements to address matters that would assist tenants in navigating through this difficult time.

These matters included payment holidays or rental discounts to tenants, limitations on evictions and other measures that were necessary to ensure that shops - and others whose income would be falling sharply during the lockdown - would have the necessary flexibility and space to sit through this period with as little requirements on them as possible.

Shops and stores that would be particularly impacted within shopping malls included clothing stores, restaurants and personal care functions – salons, for example.

AGRICULTURE SUPPORT

Agriculture, Land Reform and Rural Development Minister Thoko Didiza during the economic cluster briefing said the department had set aside a R1.2-billion funding package to address the effects of the coronavirus and ensure sustainable food production post-pandemic.

She confirmed that the department would soon communicate more details around the package, as well as more information around the application channels that will be made available.

Further, the department was working with the Land Bank around a R100-million facility to assist farmers who are in distress, while supporting farmers who have loans that need to be repaid. “I hope that the other financial institutions will also make arrangements to ensure that farmers who have loans with them are supported during this time.”

Didiza asked that agriculture industry players continue to help and serve the nation to ensure that food security at this critical time is retained.

Moreover in terms of food security, Forestry, Fisheries and Environmental Affairs Minister Barbara Creecy said fishing-related companies and operations with existing rights and permits would be granted a three-month permit renewal exemption so that operators were not forced to go into offices to do renewals.

Additionally, forestry-related companies, including sawmills, would also benefit from these permit renewal exemptions. 

TOURISM SUPPORT

Considering that tour agencies and hospitality service providers had been assed to stop operating, Tourism Minister Mmamoloko Kubayi-Ngubane said the department had set aside R200-million that would support small and medium enterprises in the tourism sector.

“I understand that this was not sufficient, considering the tourism sector had come to a complete standstill and various businesses had been affected. While bigger businesses in the sector would be supported by tax relief and loan payment breaks, the Department of Tourism would specifically look to support small business that were unlikely to survive in these circumstances,” she said.

The support would be extended to fully registered, tax-compliant small businesses active with hospitality and travel-related services that had a yearly turnover lower than R2.5-million, while having been in business for at least a year.

She warned that businesses should not apply that had already been in financial distress before Covid-19, as these applications would not be granted.