Government measures in key jurisdictions 5th edition - Flipbook - Page 120
South Africa
Janene Meiring | jmeiring@werksmans.com | +21 809 6159
Contributor: Werksmans
120
Loans and
financial
support
•
Has the
government put
in place any new
bank funding
schemes?
•
Both the Government of the Republic of South Africa (“RSA”) and the private sector have
introduced a number of financial schemes aimed at assisting businesses, in particular small
and medium sized enterprises (“SMMEs”), negatively affected by Covid-19. These schemes
are being updated from time to time. Some of the schemes have since closed or been fully
subscribed.
The Government has created a number of Covid-19 loan funding schemes which are
specifically aimed at SMMEs generally (annual turnover restrictions are dependent on the
industry), namely the:
– SMME Debt Relief Finance Scheme – this scheme is available to SMMEs in order to assist
them with existing debt repayments, acquiring raw materials, paying labour and other
operational costs, and
– SMME Business Growth / Resilience Facilities – this scheme is available to SMMEs
classified as ‘essential services’ assisting in producing or supplying ‘essential goods’
during the lockdown.
– Restructuring of SEFA funded loans – the Debt Restructuring Facility is geared towards
SMMEs funded by the Small Enterprise Finance Agency (SEFA), which are negatively
affected by the pandemic (SMMEs will be required to illustrate the direct linkage). A
payment moratorium/holiday will be given to qualifying SMMEs for a maximum period
of six months, in an effort to reduce the instalment burden of loan obligations on
affected SMMEs.
•
Certain industry specific schemes have also been introduced, such as the:
– Spaza Shop Support Scheme aimed at spaza shop owners and general dealers selling
essential goods;
– National Department of Sports, Arts and Culture Relief Fund aimed at practitioners in the
fields of arts, culture, sports and recreation;
– Covid-19 Tourism Relief Fund provides once-off capped grant assistance to SMMEs in
the tourism value chain to ensure their sustainability during, and post, the
implementation of government measures to curb the spread of Covid-19 in South Africa.
The grant is capped at R50,000 per entity and can be utilised to subsidise expenses
towards fixed costs, operational costs, supplies and other pressure cost items.
– Covid-19 Agricultural disaster support fund for (i) smallholder and communal farmers
with a minimum turnover of R20,000, but not exceeding R1million, and (ii) South
African citizens who have already been farming for at least 12 months and (in respect
of both) that are producing poultry, vegetables, fruits, other livestock and winter field
crops. This fund provides grant of up to R50,000;
– Industrial Development Corporation (IDC) Assistance and IDC MCEP Covid-19
Programme, which provide funding to businesses for the acquisition or
manufacturing of essential medical supplies;
– National Empowerment Fund Black Business Funding Solution, which provides loan
funding to black owned SMMEs which manufacture medical products.
•
The Government also announced the Covid-19 DTI Relief Fund, which aims to provide R3 billion
in relief funding to vulnerable businesses involved in the battle to roll back Covid-19. This fund
is not restricted to SMMEs only. Of these funds, R500 million has been allocated for importing
medical products and R700 million for financing equipment and working capital requirements.
•
In addition to the Government funds which have been in place, a Solidarity Fund has been
created (to which the public can donate), a number of prominent business men and women
have created dedicated funds and banks have offered certain reprieves to clients (e.g. payment
holidays).
•
For the duration of the national state of disaster, the Competition Act has been amended to allow
banks to provide payment holidays etc. to their debtors.
•
The South African Reserve Bank has also reduced the repo rate (with reference to which bank
lending rates are determined) on a number of occasions since the start of the Covid-19 crisis.
Government measures in key jurisdictions
