Relief fund angers BEE non-compliant business owners in KZN

EDITOR’S NOTE: This article has been updated to reflect that government support for small businesses will be dispensed using broad-based black economic empowerment (B-BBEE) criteria, but this will not exclude white-owned businesses as a matter of policy, according to the tourism department.

The department of tourism has asked for a correction and an apology, a response to which can be read at the end of this article.

The shutdown of the country three weeks ago to contain the spread of the Covid-19 pandemic has plunged the Dolphin Coast into economic crisis, leaving many small businesses gasping for air.

While a range of debt relief measures have been put into place by President Cyril Ramaphosa to help small and medium-sized businesses, some have already been overwhelmed by large overheads and without any income to the end of April, when the lockdown is scheduled to end.

The stringent measures to curb the spread of coronavirus, however necessary, have hit the hospitality and tourism sectors particularly hard.

Never has the future appeared so uncertain for many small restaurants in the region which do not have a large franchise to shield them.

Many have told the North Coast Courier that without financial assistance, layoffs and closures will be inevitable.

However, business owners who fail to meet the black economic empowerment (BEE) criteria stipulated by government may struggle to access the R200 million relief fund assigned to help small to medium businesses in the tourism and hospitality sector, which is capped at R50,000 per qualifying entity.

Many bed-and-breakfast operators in the region are facing bleak times.

The owner of a popular Ballito coffee shop, who asked not to be named, said without any relief to help her through the protracted lockdown, she would have no option but to close her doors permanently.

“Even though I am a woman and employ eight staff, I do not qualify for financial relief because I am not a certain race. I do not have a cash buffer to keep me going and will have to close my doors permanently. The effects of this are far-reaching,” she said.

Many bars and restaurants with daunting rents exist on a margin of profit and with the closures, they may never recover.

For workers living from paycheck to paycheck, the pandemic has thrown their livelihoods into doubt overnight.

“I do not know what the future holds,” a Shaka’s Head waitress told the Courier.

“I feel nervous and scared, not about the sickness, but about being left without a job.”

Ballito restaurant general manager Brad Hort of Mozambik said if the lockdown continued, many small businesses would be forced to close their doors in the next few months.

Ilembe Chamber of Commerce CEO Cobus Oelofse said: “We have urged the government structures that we participate in not to aggravate the circumstances of destitute workers purely because their employers are white-owned businesses. Unfortunately, the funds that are uniformly available have been oversubscribed and in some instances closed for applications.”

The Chamber would like to see an industry-specific or even business-specific approach, allowing the businesses in the hardest-hit sectors to be assisted.

“We have urged our members to do their homework and apply for debt relief measure where they can on their own. However, UKZN’s Graduate School of Business and Leadership have offered to assist Ilembe-based businesses with their applications,” said Oelofse.

Those that need support can approach the Chamber for the contact details.

Funding aid details are also listed on the Chamber website.

Small Business Institute director Bernard Swanepoel said they had commissioned research two years ago that found that formal micro, small and medium-sized firms employ 3.9 million people in South Africa.

“Unless we help them all, regardless of classification, this will lead to extreme social and economic injustice. Perhaps exclusion is not the best way to honour the president’s call for togetherness in what amounts to war,” said Swanepoel.

President Cyril Ramaphosa last Thursday evening announced the extension of the lockdown period which was supposed to come to an end on April 16.

The lockdown will now be lifted on May 1.

Ramaphosa said government would evaluate measures to allow for a phased recovery of the economy and called for South Africans to unite during the crisis.

Editor’s note and apology

An earlier version of this article stated that “According to Tourism Minister Mmamoloko Kubayi-Ngubane, to qualify, businesses must be at least 51% black-owned and those without a favourable transformation profile will be excluded.”

The minister and her office has clarified that this has never been their policy, nor has anything been said that businesses would be excluded based solely on race.

The tourism minister’s spokesperson, Hlengiwe Nhlabathi-Mokoka, has said that it is incorrect to report that Kubayi-Ngubane “is admitting there is racial bias in allocation of relief funding, which is incorrect”.

He said the minister had never said that, to qualify, businesses must be at least 51% black-owned and those without a favourable transformation profile would be excluded.

“We have been consistent to explain SMMEs in the sector will benefit regardless of the colour of their skin. Compliance to BEE policy cannot be erroneously conflated to ‘racial discrimination’ as expressed by parties who have since gone to court, a matter which we are challenging.”

He added that since the launch of the fund, there had been a lot of “misinformation about the fund for SMMEs in the tourism sector negatively affected by the pandemic”.  

“The misrepresentation further causing confusion and the attacks are unwarranted.”

Although the article was run as a syndication from another news source, The Citizen nevertheless regrets the error of fact and apologises to the minister.

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