Agri-businesses who are in distress because of the Covid-19 pandemic can possibly benefit from a debt relief fund announced by government to help alleviate the economic impact of the coronavirus on small businesses in South Africa.
Applications for emergency funding opened just after midnight following the 21-day lockdown announced by Pres. Cyril Ramaphosa. All South Africans – with the exception of those in essential services, including the production, distribution and supply of food – will have to stay home as Covid-19 infections continue to surge and threaten to spiral out of control.
READ: Farmers exempted from 21-day lockdown to curb Covid-19 spread
The department of small business development has made over R500 million available immediately to assist small and medium enterprises that are in distress through a simplified application process. Thoko Didiza, the minister of agriculture, land reform and rural development, has also announced that R1.2 billion will be made available to ensure that food production continues post Covid-19.
Ramaphosa said all small, micro and medium enterprises (SMME’s) may apply for relief on existing debts and payments. In order to be eligible, all applicants will be required to show an impact, or potential impact, of the virus on their business.
The department of small business development said the debt relief fund will assist entities in acquiring raw material, paying labour and other operational cost. All these interventions will be structured to match the patterns of the SMME’s cash flow, as well as the extent of the impact suffered.
Assistance for businesses that may be in distress
- Using the tax system, government will provide a tax subsidy of up to R500 per month for the next four months for those private sector employees earning below R6,500 under the Employment Tax Incentive. This will help over 4 million workers.
- The South African Revenue Service will also work towards accelerating the payment of employment tax incentive reimbursements from twice a year to monthly to get cash into the hands of compliant employers as soon as possible.
- Tax compliant businesses with a turnover of less than R50 million will be allowed to delay 20% of their pay-as-you-earn liabilities over the next four months and a portion of their provisional corporate income tax payments without penalties or interest over the next six months. This intervention is expected to assist over 75 000 small and medium-term enterprises.
- Government is exploring the temporary reduction of employer and employee contributions to the Unemployment Insurance Fund and employer contributions to the Skill Development Fund.
- The Industrial Development Corporation has put a package together with the department of trade, industry and competition of more than R3 billion for industrial funding to address the situation of vulnerable firms and to fast-track financing for companies critical to our efforts to fight the virus and its economic impact.
- The department of tourism has made an additional R200 million available to assist SMME’s in the tourism and hospitality sector who are under particular stress due to the new travel restrictions.
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READ: Farmers exempted from 21-day lockdown to curb Covid-19 spread
Other economic interventions
Following consultation with social partners, government has also set up a Solidarity Fund, which South African businesses, organisations and individuals, and members of the international community, can contribute to. The fund, chaired by Gloria Serobe, a well-known force in rural development, will complement related public sector efforts. Serobe is the founder of the 26-year-old Wiphold, who transformed the lives of agricultural women in the Eastern Cape.
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