SMEs are at the heart of the R500bn stimulus, says industry
Business is pleased with the package announced by the president, but says speedy access to the funds is paramount
The R500bn stimulus package to keep SA’s economy going during the Covid-19 pandemic has been hailed as a brilliant idea by business because, at its core, are measures aimed at rescuing small and medium enterprises (SMEs).
“If there is no deliberate effort to rescue and support our SMEs, we are heading towards economic collapse,” Business Leadership SA CEO Busi Mavuso told Business Day.
She said about 70% of SMEs employ about 6-million people and that they had been “greatly impacted” by the outbreak of coronavirus that has infected 3,465 and killed 58 people in SA.
SMEs affected by the coronavirus lockdown have had to apply to the special Covid-19 relief fund administered by the Unemployment Insurance Fund (UIF) to stay afloat.
On Tuesday night, President Cyril Ramaphosa announced, among other things, the continued assistance to these enterprises through loans, grants and debt restructuring. “The value of assistance to date is over R100m,” said Ramaphosa, adding that an additional R2bn will be made available to support SMEs.
He said a further R100bn will be set aside to protect and create jobs, while R40bn has been set aside for income support payments for workers whose employers are not able to pay their wages.
The stimulus package is a necessary intervention, said Mavuso, adding: “The monetary policy committee [of the Reserve Bank] has really come to the party in a big way by reducing the interest rate by 200 basis points. It was time the government announced a stimulus response in the form of a package.”
It is remarkable that the focus is on the disadvantaged and on jobs preservation, she said. “You can’t stimulate the economy if people don’t have disposable incomes. I think the government has hit the nail on head to say, let’s reignite economy, let’s make sure people are sitting with cash on their hands, which is absolutely brilliant.”
Mavuso said that the government needs to “intentionally and unapologetically” invest in SMEs as they will be big enablers for a job creation drive in the country.
Violet Siwela, chair of the portfolio committee on small business development, said the additional R2bn for SMEs will go a long way in providing much-needed relief to the “most vulnerable but yet so important sector of the economy”.
“Though the Covid-19 pandemic has placed the country and the world on an uncharted path that requires extraordinary measures to ease the effect on small businesses and other sectors of the economy, the government is doing its best under the circumstances,” said Siwela.
George Sebulela, president of the SA United Business Confederation (SAUBC), said the manner in which SMEs are going to survive during the lockdown is “very critical”.
“We need a variety of financial facilities that will help these companies to address the short-term consequences of this outbreak,” said Sebulela, adding that it is easy for Ramaphosa to mention the figures he spoke about, but access to such funding “is of greater concern”.
“Nevertheless, the stimulus package has good intentions under difficult times. But we still reiterate that access to those funds must be speedily made available. It should not be a difficult process for SMEs to access them.”
Meanwhile, Ramaphosa said the UIF Covid-19 Temporary Employee/Employer Relief Scheme (Ters), had paid out R1.6bn by the end of Tuesday, which assisted more than 37,000 companies and 600,000 workers.
Ters was established by employment and labour minister Thulas Nxesi on March 25 to provide relief to those in formal employment expected to lose their income due to the lockdown.
Nxesi said the UIF has received more than 55,000 applications from employers representing about 1.6-million employees. However, he said that nearly 10,000 applications could not be processed due to errors and that the affected companies have been notified to correct their applications and resubmit them.
“The UIF is working round the clock to meet the extraordinary volumes of requests for assistance presented by the Covid-19 pandemic,” said Nxesi. “The Covid-19 benefit scheme will provide much-needed relief to employees who have been laid off work or unable to earn an income due to Covid-19.”