Nearly R4bn recovery fund set up to help businesses after looting

The government has earmarked R3.9bn to support the restoration of businesses devastated in violent looting and unrest, which spread from KwaZulu-Natal to Gauteng in July, the trade, industry and competition minister said.

At a briefing this week, Ebrahim Patel said the fund, which is part of the broader R38bn relief package announced by the finance minister earlier this week, included reprioritised monies from other programmes. He said with further pledges, it would soon exceed R4bn.

Patel explained R1bn was previously earmarked for programmes in the department of small business development and the trade, industry and competition department); R1.4bn stemmed from reprioritised funds from the Industrial Development Corporation (IDC); the Treasury pledged R1.bn; and the National Empowerment Fund (NEF) gave R200m to the cause. 

Patel said the funding would be used in various ways, and “may” include grants where warranted, offering businesses working capital for raw materials, stock replenishment, buying equipment and small-scale repairs.

The two departments also established a centre to help businesses secure permits for recovery builds and obtain regulatory approvals, expedite the release of goods at points of entry, recommend alternative suppliers where necessary, and dispatch engineers and quantity surveyors to assess business sites needing repair. 

A fund established to house penalties from companies for anticompetitive pricing of stadiums built before the 2010 Fifa World Cup had offered to help rebuild infrastructure, including schools.

Other measures intended to mop up the damage caused to SA's reputation globally included a business expo in Dubai, United Arab Emirates (UAE) promoting SA exports, along with a virtual investor conference. 

The small business development department's director-general, Lindokuhle Mkhumane, said the recovery finance for business would combine a grant of 60% and a 40% loan, and was available to identifiable businesses that were registered, for example, with the SA Revenue Service (Sars). “We can’t support people who don’t want to be known because we have to account for taxpayers’ money,” said Mkhumane.

He said support for businesses with more than one affected site was contingent on further monies from the Treasury. Loan repayment would only commence after 12 months and the payment plan could last up to five years, with post-investment support.

According to Mkhumane companies including Hewlett Packard, Cisco Systems and other IT businesses were creating packages and finalising agreements, which would be announced in weeks to come.

Patel said during a recent meeting with motor manufacturer Ford, its expansion in SA — including electric car production and strengthened export logistics — came up. 

He said: “They took the view that from the long view all they needed to see is that there is going to be a clear security plan going forward.”

Ford was committed to an investment of R16bn, which was “on track” and would be completed, he added.

While not wanting to underplay the devastation cause by the civil unrest and looting, Patel said there were stories of collaboration, hope and solidarity: “South Africans are standing together to rebuild.”

“If we are to change the conditions so that those who subvert the democracy cannot find broader purchase, cannot find broader support, then it must be through more jobs and more local economic development,” said Patel.

He referred to a survey of 1,070 companies of which 900 were directly affected by the riots, in terms of damage to property, stock theft and/or broken supply chains. “The preliminary estimates of the damages indicate that it is significant. In excess of R5bn of these surveyed companies in loss of assets and a significant sum in loss of business,” said Patel.

Patel said the trade department, working with the small business department, had identified eight urgent focus areas for business and economic recovery: restoring supply lines; making immediate repairs to shops (such as replacing broken windows) so they could reopen in weeks; accelerating construction and structural repairs where larger builds were needed, some of which would take months to complete; securing workers' wages with assistance from labour minister Thulas Nxesi and his department; providing short-term bridging funding until insurance claims paid out; supporting local businesses as suppliers of goods and services throughout the rehabilitation process, and rebuilding investor confidence.

According to the participants’ input, mostly from businesses in KwaZulu-Natal, at least 10,200 jobs were affected across manufacturing, retail and service businesses. Patel said 43% of respondents estimated they could recover in less than a month, whereas 7% predicted it would take a year or more.

Businesses can contact the centre by e-mailing: recovery@thedtic.gov.za.

batese@businesslive.co.za