Business owner Dale Dodgen applied for funds under the new R40bn relief programme to keep her small enterprise in Cape Town afloat and pay employees missing work during the lockdown to fight Covid-19.

Her company, Chavonne’s Battery Museum, which provides walking tours for visitors to experience the history of Cape Town from the 1600s, is yet to receive a response after an initial request for additional supporting documents for her application to the Unemployment Insurance  Fund (UIF),  which runs the scheme.

“The documents to apply are cumbersome and supporting documents that need to be provided impractical,” says Dodgen, whose company is a training ground for tourism interns and graduates and has been without income since March 15 when it closed its doors.

Dodgen’s is one of thousands of small businesses heading to bankruptcy without short-term funding to maintain payroll during the economic shutdown, and her dilemma underscores concerns that the Covid-19 temporary employee/employers relief scheme administered by the UIF  is off to a rocky start as it struggles to sift through an influx of applications.

The programme, signed into law on April 6, is part of a broader plan to provide a soft landing for small businesses losing income and millions of workers locked down at home forfeiting their salaries. But with small business owners saying the UIF is not disbursing the money fast enough, the risk of thousands of businesses staying afloat during the lockdown — which has been extended through the end of April — is increasing.

Trade union federation Cosatu has similar concerns.

UIF commissioner Teboho Maruping did not respond to requests for comment.  

“We can’t overemphasise the concerns we have around the capacity of the UIF,” said Matthew Parks, parliamentary co-ordinator for Cosatu. “Granted they were not designed to manage an economic meltdown, but we are frustrated at the speed with which they are addressing the capacity constraints.” 

Parks said the labour federation has been inundated with calls from employers telling them the system has crashed and recounting the difficulties they have had in applying for the relief.

Similar concerns are shared by representatives of business. A source close to the discussions at Nedlac, speaking on condition of anonymity, expressed similar sentiments.

“Business and labour have grave concerns that the UIF does not have the technical capacity to deliver the benefit. But they are almost obstinate in their conviction they can do it, and that is what is of the gravest concern. If we don’t get the payments out the door in the first few days after the salary run next week, the country is going to have a major, major problem,” he said.

Small businesses like Chavonnne’s Battery Museum, which submitted its application the day the programme was signed into law, were always going to be hardest hit by the restrictions as the business has weak cash reserves and limited access to capital markets.

Col’Cacchio, a pizza restaurant, has retrenched an unspecified number of people at its headquarters to cope with the closure of 32 franchise chains, on which relies for income from royalty and franchise fees.

The company, which has suspended the fees until after the lockdown has been lifted, had been trying to help staff at head office and franchisees access money from the UIF but to date none has been paid.

“Every day one wakes up with uncertainty ... We have zero access to trade and absolute uncertainty (as to) what lies ahead,” said Greg Mommsen, marketing manager of the chain founded in 1992.

The Centre for Development and Enterprise, a think-tank, conducted a survey of 233 entrepreneurs across 17 industries to determine the effect Covid-19 was having on the sector.

Up to 95% of small business owners surveyed said they cannot afford to pay employees, while 50% did not think their businesses will survive the pandemic.

The extent of the problem caused by the lockdown restrictions was also plain to see — 87% of respondents said they could not run their businesses from home.

The survey revealed big challenges with regard to communication about the various types of relief being offered, with 86% of business owners saying they did not have any idea where to go to access emergency funding.

Other programmes, set up by billionaire philanthropists Johann Rupert and Nicky Oppenheimer, appear to have swung into action but they are too small to make a meaningful difference.

The fund created by the Rupert family has been temporarily shut down as a result of a huge oversubscription from desperate small, medium and micro enterprises (SMMEs). The family’s Sukuma Relief Fund received over 10,000 applications inside of two days for grants and loans totalling R2.8bn, forcing the scheme to temporarily close as it attempts to process requests within seven days. The fund intends to provide an update on Friday.

The Oppenheimer relief scheme, which has set aside R1bn, is being administered through the newly created SA Future Trust (SAFT) which works in partnership with the country’s biggest banks.

By Thursday afternoon, the SAFT had approved R373m in soft loans to SMMEs, which will result in 33,171 employees receiving a stipend for 15 weeks. The first disbursements were paid on April 6.

One the beneficiaries was Dodgen.

“The SAFT fund  administered by Nedbank has been fantastic. The co-ordinating team are to be commended for their easy-to- complete application form and prompt processing. Our application took less than a week until first payout last week,” says Dodgen.

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