The long walk to Covid-19 financial aid
Financial drip feeding is perhaps the best way to describe the Covid-19 financial aid schemes we have had so far.
The R200m loan guarantee scheme, targeting small and medium-sized enterprises (SMEs), was given to banks to deliver. The underwhelming take-up earned them an unflattering mention by the president. Nothing much is publicly known about the second business aid package, the R175m allocated to the spaza shop and general dealer support scheme, except that there seem to be few beneficiaries.
Large sums have been put behind Covid-19 support programmes, with the apparent belief that delivery will naturally follow the money. But given our circumstances that could never happen, no matter how good the intentions. Working differently and getting dirty in the hard slog and detail of delivery is a prerequisite if the government wants to have an impact where it matters.
We worked with a few Khayelitsha businesses between June and September to find out how easy it is to access funding from the spaza shop scheme, which offers up to R7,000 per business, but not in cash. Instead a card is issued, enabling spaza shop owners to buy from designated stores. It was a frustrating, and at times harrowing, experience that offered a few lessons for both government and business.
Our starting point was the Small Enterprise Finance Agency (Sefa). Its already established programme, the Khula credit guarantee scheme, provided the launch pad for the Covid spaza shop measures in April. Nedbank took on the processing of applications and distributed the cards. Later, Standard Bank joined. Using an existing platform as a foundation was no doubt a good move, but existing fault lines inevitably fed into the emergency effort — and we tripped over those many a time.
We started with three spaza shop owners in May who met the criteria: they were South African, had valid IDs and trading permits. Their Companies and Intellectual Property Commission (CIPC) registration was facilitated through a free service provided by the Small Business Development Agency, a helpful offering. At the start of June, they were ready to apply.
First hiccup: the Sefa Cape Town office knew nothing about the spaza shop scheme, but undertook to look into the matter. When it did, it pointed us in the direction of Nedbank. At a Nedbank branch we were given a one-page application form for the three businesses to complete and attach the relevant documentation. The traders were told to hand the documents in personally at Nedbank’s Khayelitsha branch. One spaza shop owner started the process, queuing for three-and-a-half hours to be told when she reached the front desk that the person responsible was not at work.
After a complaint to the bank manager the spaza shop owner was asked to return, to be told she had the wrong application form. She completed another, submitted her application and received an SMS reference number.
It’s June 22. Better prepared, the other two spaza shop owners join the application process. Three weeks pass, and on following up Nedbank tells us they have done their bit by sending the application to Sefa for approval. The Sefa call centre refers us back to Nedbank.
We eventually track down acting Sefa CEO Setlakalane Molepo, who refers us to the manager of the programme, Letlatsa Lehana. We’re told there is a backlog and no applications have been processed since May. Two months later, in mid-September, we follow up and get good and bad news — one application has been approved and two rejected on the basis of their municipal permits being “invalid”. Yet all three submitted the same permit. None received the promised SMS notifications.
These three were the easy ones as they had valid documentation. A few traders didn’t have trading permits, so the City of Cape Town had to be brought into the loop. The response was quick, but the outcome not always favourable. A few were required to first make alterations to their shops to comply, an impossibility given their lockdown-induced cash crunch.
Standard Bank added more needless administrative hurdles, the biggest being the inability to access any branch without being a Standard Bank client. The spaza scheme does not require this, but the bank staff did not know and were not equipped to deal with applications from “outsiders”.
The extraordinary circumstances justify a bit of slack. That said, support was promised and a scheme put in place, so there was a responsibility to be met. The experience of the traders highlights a few points that are pertinent to the post-Covid recovery.
The Covid spaza programme has implementation capacity and systems in place. Yet from our experience far too much fell through the cracks. Poor communication and a lack of seamless systems left the traders dangling.
The first port of call must be leadership engagement. A second important point is never losing sight of the end goal (in this case getting R175m into the hands of the most marginalised businesses fast). Third, doing what needs to be done well and in time (including communicating with the target market) and having effective systems to track progress and ensure accountability.
A simple transfer of private-sector expertise and resources to support state programmes may make little difference without a new way of working — and a culture shift. If government and business, working together, cannot get a small but important programme working, what are the prospects of implementation of the many, much larger recovery programmes?
• Gaqa is executive chairperson of Strategic Execution Advisers and Cargill CEO and author of Trick or Treat: Rethinking BEE.
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