Ina Opperman
Business Journalist
5 minute read
16 Jan 2021
7:28 am

Big fight about small business

Ina Opperman

The Minister of Small Business Development and the DA shadow minister are at loggerheads regarding the actual amount of money spent to support small businesses during the pandemic.

File image: iStock

The Minister of Small Business Development and the DA shadow minister for small business development are at loggerheads after the DA started asking question about small business debt relief.

Minister of Small Business Development Khumbudzo Ntshavheni said she is “appalled at the misinformation peddled by the DA” and that a bit of fact-checking would have clarified that the department managed to reprioritise only R500 million for small, medium and micro enterprises (SMMEs) debt relief and not the “purported R1.4 billion” claimed by the DA.

ALSO READ: Government’s small business Covid-19 assistance website a dangerous mess

She said the department had kept the nation updated on the progress with the fund.

“Just to re-state the facts, which are already in the public domain and audited by the Auditor-General of South Africa, the SMME Debt Relief Scheme was administered by Sefa (Small Enterprises Finance Agency), a departmental agency.”

Applications for assistance

According to Ntshavheni Sefa received 35,865 applications for assistance of which 14,451 were fully completed, which equates to 40%. The remaining 60% of applications (21,414) were incomplete and were referred to Seda for assistance to complete their applications.

“Of the 14,451 fully completed applications, Sefa approved 1,497 to the value of R513 million. This means that the funds were fully allocated to 10% of fully completed applications.  To date, R316 million of the R513 million has been paid out, which represents close to 62% of the relief scheme.”

Pay-outs        

The money was released in tranches to approved SMMEs to ensure that they were able to provide proof that the money was used for interventions applied for.

“When the economy started opening with the move to Level 4 and later to Level 3, some of the SMMEs did not come back for the rest of the approved funds as they had started operations and were not in need of the relief support,” the minister said.

She indicated that these pay-outs supported the maintenance of 23,254 jobs in the economy. Of the approved SMMEs, 66.9% are black owned, 32.8% female owned, 20.8% youth owned and 0.3% owned by people with disabilities.

Other complete applications

According to the minister, the balance of the 12,954 complete applications required an estimated budget of R4.4 billion, with most requiring assistance with payment of salaries to the value of R3.6 billion.

These SMMEs were helped by the department of labour and the UIF to register employees for UIF.

“The department and its agencies continue to work diligently and tirelessly to promote the sustainability and economic recovery of  SMMEs and cooperatives in these turbulent times. The department is also committed to clean, open, transparent management of funds and governance. A full report was submitted to the Portfolio Committee on Small Business Development.”

Ntshavheni said she had hoped that “all political parties will commit to the partnership for economic recovery instead of some peddling fake news”.

Funds withheld?

In response, the DA called on the minister to provide not only the DA, but the entire country, with a detailed and up-to-date report that lays out exactly how relief funds allocated to SMMEs were spent, as well as “withheld from those both in dire need and deserving of those monies”.

ALSO READ: DA calls for ‘speedy resolution’ to ‘teething problems’ in small business funding

Jan de Villiers (MP), the DA shadow minister, said in a statement that the minister is “not famous for her due diligence when it comes to performing the duties associated with her portfolio”, such as making sure that all the facts are available to those who pay your “bloated” salary, he said.

The real figures?

According to De Villiers, its assertion that only R107 million out of a budget of R1.404 billion was spent, is borne out by the Auditor-General’s report. However, he pointed out, the DA initially omitted that:

  • These figures were accurate as of 30 September 2020, as per the Auditor-General’s second special report into Covid-19 relief funding and that any new data produced would inevitably differ due to the time that has since elapsed,
  • The R1.404 billion excludes a further R360 million allocation to SMMEs that are funded by the Department of Trade, Industry and Competition through the manufacturing competitiveness enhancement programme, along with savings and reprioritisation across the small business portfolio, with only R202 million spent, and
  • 17.5% of the total amount of R1.764 billion (R1.404 billion plus R360 million) was spent in support of SMMEs.

“The DA never claimed that R1.4 billion was reprioritised for debt relief funding. Instead, the DA merely cited the AG’s figure of R1.404 billion that was allocated towards support to qualifying small, medium and micro enterprises affected by Covid-19, as per page 21 of the second special report, notwithstanding a further allocation of R360 million,” De Villiers said.

Even after their own adjustments of the figures to include the smaller allocation, the facts still do not bode well for the minister, with 82.5% of funds not having been spent as of September 2020, he said.

ALSO READ: Future of SMMEs looks bleak as 90% struggling or closed due to virus

Survey finds 42,7% of small business closed down

“What makes this all the more worrying is that a recent study by FinFind showed that 42.7% of small business have shut their doors during the first five months of the initial lockdown, with 60% of full-time jobs lost, 76.8% of part-time jobs, 54.4% of casual jobs and 41.4% of consultant jobs lost. These figures pertaining to job losses also serve to render the minister’s claim to have saved many jobs as misguided at best and downright arrogant at worse.”

For more news your way, download The Citizen’s app for iOS and Android.