Economic relief for businesses affected by Covid-19 is urgently needed, DA says
The official opposition has urged finance minister Tito Mboweni to come up with an economic plan to support business
The DA has proposed the introduction of a four month payment holiday on loans given out to small and medium-sized businesses to cushion them against the devastating effects of the coronavirus crisis.
The payment holiday, which should cover property loans, business loans and vehicle loans, would help small businesses maintain the cash flow necessary to stay open and keep paying their employees.
Numerous overseas countries have enacted a similar measure, DA finance spokesperson Geordin Hill-Lewis said in a letter to finance minister Tito Mboweni on Wednesday.
Hill-Lewis expressed concern that the government has not come up with a comprehensive economic plan to deal with the pandemic alongside the comprehensive containment plan announced on Sunday by president Cyril Ramaphosa, and hoped that this would be announced soon.
“Let there be no doubt that this health disaster will also mean a full-scale economic recession with devastating consequences for thousands of businesses and millions of employees,” Hill-Lewis wrote in his letter.
“An economic support package is needed that helps businesses, particularly small and medium businesses, to ride out this storm without laying off staff or closing down. The purposes of this comprehensive economic response should be to ensure that economic activity rebounds as quickly as possible once the virus is under control.”
Also proposed was a pause or reduction in rental payments by SMEs and a four-month pause in the payments by small businesses of UIF and workers’ compensation contributions as a form of cash flow support. The VAT threshold for small businesses should also be raised from R1m to R2m.
“Those local governments that can afford it should offer rates relief to businesses in their jurisdiction,” Hill-Lewis said. “To protect businesses from bankruptcy, we propose that business rescue proceedings should receive an automatic three-month extension beyond the three months provided for in the Companies Act.”
Hill-Lewis also called for the immediate cancellation of the R16.4bn bailout for SAA and that the money used for disaster relief.