Posted: July 23, 2020
Government is concerned by the troubling reality that many of the Small and Medium Enterprises (SMEs) may not survive the COVID-19 pandemic. This was said by the Deputy Minister of Trade, Industry and Competition, Ms Nomalungelo Gina. She was delivering a keynote address at the visual Top Empowerment Conference today. The theme of her address was “How Will Covid-19 Affect Your Level 1 B-BBEE scorecard?”
According to Gina, in terms of the Statistics South Africa March 2020 report, out of 10.2 million employed South Africans, more than nine million are employed by SMEs, which she described as the engine of the economy and employment because most of them are labour intensive.
Gina added that the full-scale effects of the COVID-19 on black businesses will be felt through the numbers of retrenchments that have already began due to the loss of trade.
“Black-owned companies will face challenges because they are mostly fragile in their balance sheets with no collateral to assist them in accessing credit even in times when government had cut the base for lending rate. There is also a real danger of liquidity challenges, some of the B-BBEE Level 1 companies may face closure and be forced to sell their larger percentages to non-black companies thereby losing their B-BBEE 100% ownership. We are undoubtedly concerned about this as these realities represent reversal of the very foundations for the B-BBEE and transformation of our economy,” added Gina.
“We now have to rise and drive massively the growth levels of black companies, especially those built from scratch by blacks creating assets base over and above those obtained through shares equities,” added Gina.
“The pandemic has also taught us that infrastructure investments, industrial investments, and new economies such as those that arise from innovation and 4th industrial revolution can be leveraged for the country’s prosperity,” added Gina.
According to Gina, the Department of Trade, Industry and Competition’s (the dtic) economic response includes the R500 billion made available as a relief to the businesses under pressure. The Department of Small Business Development also has a set of relief fund interventions for the Small and Medium Enterprises. The Industrial Development Corporation has set up a Distressed Funding and the Essential Suppliers Intervention of R3 billion for business support.
Gina outlined that the post COVID-19 phase will require that both government and business to work together on the recovery interventions.
“It is now more important to adapt, embrace innovation and technology solutions. Like Asian tigers rise like a typhoon in the ashes of the post Second World War, South Africa can lead the continent to build a resilient economy driven by a stable and rising environment for SMEs, especially black-owned enterprises,” said Gina.
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Issued by: The Department of Trade, Industry and Competition