Covid-19 – EACCI on the Department of Small Business Development debt relief fund
"People are learning new things and ways of doing things because they have to. And surprising, in some cases it is making them more effective."
The Ekurhuleni Aerotropolis Chamber of Commerce and Industry (EACCI) took a closer look at the Department of Small Business Development debt relief fund and its effects on small businesses during the Covid-19 21-day lockdown.
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CEO of EACCI Vincent Marino from Edenvale believes all businesses in the Small and medium-sized enterprises (SME) space will be affected, especially those where owners have no succession plan.
“Any business who closes its doors for 36 days will be affected, remembering problems will arise only a month or two later, if the lock-down is lifted, if not, we are definitely heading into uncharted territory,” said Marino.
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On the Department of Small Business Development debt relief fund, Marino questions whether it will get to the people it is intended to help.
“Currently there seems to be too much red tape, and the debt relieve announcement by the president was painted with very broad strokes.
“I would think if we’re in an emergency, government needs to minimise the steps to get the relief,” said Marino.
Marino believes the demand may not be enough to sustain all small businesses affected.
He examined how a small business will be able to demonstrate the impact up until the end of April.
“The impact of the lockdown will only start to manifest itself possibly after April, which may be too late for businesses.
“Many, if not most businesses, operate on a limited cash flow, question is, will this debt relief alleviate cash flow problems?
“Most businesses will be scrambling to get their debtors to pay, and this cycle will carry on until a businesses can’t pay.
“The knock-on effect is going to be chaotic,” said Marino.
Marino sees a potential problem, if government puts many obstacles in the way of accessing the funds.
He wonders how these funds will be distributed, and suggests government gets assistance from bona fide chambers of commerce with the distribution of the relief funds.
Effects on our economy in the long run, Marino said may come from the SME’s trying to pay back the loans, while also trying to catch up with other credit payments, such as rent, water and lights and leases.
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“The bulk of our economy is made up of SME’s.
“The fund is only going to support registered, which will cut out a large slice of the township economies,” said Marino.
He suggests other big South African multinationals help out, although many are keeping quiet at the moment.
According to Marino, local businesses are going to have to change the way they do business.
“They are going to have to get more creative in the way they attract and retain customers.
“Each business will be different, there will be no ‘one size fits all’, what’s important is a strategy needs to be an immediate and short-term implementation,” said Marino.
He added this is an opportunity for employees to learn to sell products or services online, which doesn’t conflict with their current job.
“Businesses can start by getting rid of unwanted household items, turn hobbies into cash generators, and start a blog and monetise it, set-up an E-commerce site, self-publish.
“A simple search will find a host of opportunities,” said Marino.
On how Covid-19 and the lockdown has affected the EACCI, he said it is a new situation for everyone.
For the moment, he said the EACCI is waiting on SACCI/government to confirm if they are allowed to carry on issuing Certificates of Origin (CoO).
Although he said this will affect only one staff member, as all other staff is on paid leave.
In the meantime, he said the chamber has been offering moral and social support, as many businesses have asked a number of questions.
The EACCI has tried to assist with information as well as debunking fake news on Facebook: Aerotropolis Chamber of Commerce and on their Whatsapp group.
He added people are saving money by video conferencing and not travelling and can be a definite choice in the future for many.
Marino included larger organisations as they look at the impact on their hotel, flights, car hire, meals and general motor vehicle expenses.
“The world will change dramatically in certain respects going forward.
“People are learning new things and ways of doing things because they have to.
“And surprising, in some cases it is making them more effective.
“Until we are un-caged, try to look at different aspects of business life and how you believe it will change, and how you can turn it into a positive,” said Marino.
Marino recommends businesses register for the relief fund, although they must meet several criteria: (Box)
•They must be 100 per cent owned by South African citizens
•They should employ at least 70 per cent SA nationals
•They must be registered with the South African Revenue Service (Sars) and tax-compliant.
• Priority will be given to businesses owned by females, the youth and persons with disabilities.
Some of the details which companies are required to share include:
• Annual turnover;
• Shareholders (including current BEE standing);
• Number of employees;
• Employee demographics;
• Sub-sectors.
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