Confirmed: Guideline that government will only help ‘51%-black-owned companies’ is fake

The government’s website set up to provide relief for small, to medium-sized and micro businesses went live on Tuesday morning and many applicants claimed to have run into the previously unpublicised requirement that in order to be granted state assistance a business would need to be majority black owned.

READ UPDATE: DA welcomes withdrawal of ‘51%-black-owned’ ‘mad proposal’ from ‘rogue official’

However, the department of small business development’s spokesperson, Sarah Mokwebo, confirmed to The Citizen on Tuesday morning that this was fake information.

Update: Minister of Small Business Development Khumbudzo Ntshavheni at Tuesday’s interministerial briefing also confirmed it was “fake news”, adding that all businesses would be considered, though demographic and provincial factors would play a role.

It has also subsequently become clear that the document causing the confusion was drafted by an official in the department but was a draft and should not have been publicly circulated.

Minister Ntshavheni says "demographic spread that is representative" must be applied wrt applications of small businesses & entrepreneurs for economic relief. Does this mean 80-9-9-2 applies? Does the demographic spread of the whole SA apply to determine who qualifies for relief?

— Alida Kok (@alida_kok) March 24, 2020

Numerous people have been tweeting their outrage about the false fact, and civil rights organisation AfriForum even launched a campaign against what its CEO, Kallie Kriel, called a “racist policy”.

#KORONAVIRUS / #COVID-19: ANC misbruik COVID-19 om rasse-agenda teen KMMO’s te dryf https://t.co/5MuyQZ53sF

— AfriForum (@afriforum) March 24, 2020

They claimed to have seen a document from the department listing requirements that businesses needed to meet before they would be eligible for financial assistance from government’s Covid-19 emergency fund, including that they should be 51% black owned.

“One of these is that a business must be 51% black-owned to qualify,” said AfriForum.

AfriForum even threatened to head to court to fight the requirement.

Update: AfriForum said in emailed correspondence on Tuesday that they were not ask for donations on the issue, “we simply ask businesses to contact us regarding this so we can assist them; the R1/SMS refers to standard SMS-rates and not a donation”.

Spokesperson Carina Bester said: “AfriForum received confirmation that a government document about financial support to SMMEs that currently circulates on social media was indeed drafted by a government official. AfriForum demanded in a letter to government that any racial criteria in terms of financial aid to SMMEs be removed immediately. The application form for SMMEs on the government’s website clearly requests a racial criteria, which further confirms the ANC’s racist agenda.”

They included a screenshot of their correspondence:

Supplied by AfriForum.

It was announced days ago that government would be assisting small businesses impacted by the coronavirus via a debt relief fund following President Cyril Ramaphosa declaring a state of national disaster in response to the Covid-19 global pandemic.

On Monday night, Ramaphosa announced more stringent measures, including a 21-day lockdown that would effectively make it more difficult or even impossible for the majority of businesses in the country to operate. Only people deemed essential would be allowed to move more freely.

The department of small business development said last week in a statement that it was finalising its SMME support intervention comprising of a Debt Relief Fund and a Business Growth/Resilience Facility.

“The Debt Relief Fund is aimed at providing relief on existing debts and repayments, to assist SMMEs during the period of the Covid-19 State of Disaster,” it said.

At the time, nothing was mentioned about black economic empowerment guidelines playing a part, and this has remained the case. People are, however, required to list their BEE and empowerment credentials through filling in various fields on the application site. It’s unclear how this information will be used.

“This facility will assist entities to acquire raw material, pay labour and other operational costs. All these interventions will be structured to match the patterns of the SMMEs’ cash flows, as well as the extent of the impact suffered,” said the department.

For small businesses to be eligible for assistance under the Debt Relief Fund they would have to demonstrate a direct link to the impact or potential impact of Covid-19 on their business operations.

“The department’s insistence on the use of the SMME database is based on the need to track, monitor and strengthen the impact of business development support to SMMEs by both government and the private sector during this period and beyond,” the department said last week.

It added that it would be guided by the National Command Council in determining the sectors deemed severely impacted, in order to qualify for the Debt Relief Fund.

The website has been experiencing some demand issues on Tuesday.

Good Morning,

Please note that the website https://t.co/OGk0DMfduO is currently experiencing technical difficulties, and our IT team is working on it. As soon as it’s resolved and back up we’ll let you know.

We apologize for this inconvenience.

— Department of Small Business Development (@DSBD_SA) March 24, 2020

In future, the database will also be used to apply for both financial and non-financial support, access information about business opportunities and market access support.

The tweets below were reacting to the “government document”:

#SMMERelief #CoronaVirusSA #Ramaphosa SMME Relief is only for those businesses that are 51% black owned. What about all the small “one-man band” types that are 100% owned by other races? 😭 SA🖕🏻 pic.twitter.com/KZnqY17pZU

— J9 🇿🇦🏴󠁧󠁢󠁷󠁬󠁳󠁿🇩🇪🇬🇧 (@J9intheRSA) March 24, 2020

BEE in times of COVID: just received call from small business owner. He saw that government likely to reserve SMME relief for black-owned companies. Realised he has no choice. Retrenched 16 employees this morning. Choice is simple: BEE and crisis, or free economy and recovery.

— Piet le Roux (@pietleroux) March 24, 2020

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