North Coast businesses concerned about relief fund’s BEE requirements

Note: This report and its headline have been updated. Details appear below.

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 Courier that without financial assistance, layoffs and closures will be inevitable.

One debt relief measure entails establishing a R200 million relief fund assigned to help small to medium businesses in the tourism and hospitality sector. The Department of Tourism has indicated that the fund will be administered in line with the objectives of economic transformation and guided by the sector’s Broad Based Black Economic Empowerment (B-BBEE) Codes of Good Practices.*

The department’s spokesperson, Hlengiwe Nhlabathi-Mokota, addressed local businesses’ fears that only those that are majority black-owned would benefit from the fund. She refuted the allegation.

“Owners of businesses can all qualify regardless of the colour of their skin. Issues of compliance should not be conflated to racial discrimination,” she said.

She said South Africans should not conflate the applicable compliance issues with racial discrimination.

AfriForum on Tuesday announced launching legal action applying for a court order prohibiting race from playing any part in determining who has access to the new fund. According to a press release by the department, it received papers “purporting to be an urgent court interdict” from Afriforum.

“Those papers, which were emailed to us, did not have a court case number, meaning there is no court process…we are not able to respond to court,” stated the release.

Also read: Guideline that Department of Small Business Development will only ‘help ’51 percent black-owned-companies’ is fake

Many bed and breakfast operators in the region are also 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. She employs eight people.

“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 continues, many small businesses would be forced to close their doors in the next few months.

The Ilembe Chamber of Commerce CEO 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 CEO, Cobus Oelofse.

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

Funding aid details are also listed on the Chamber website.

“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,” Oelofse said.

Small Business Institute (SBI) 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.

He said that all of them should receive assistance, regardless of classification. According to Swanepoel, the opposite will lead to “extreme social and economic injustice.”

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.

*This report initially stated in error that, according to tourism minister Mmamoloko Kubayi-Ngubane, prerequisites for benefiting from the relief fund would include a black ownership percentage of at least 51 per cent and that those without favourable transformation profiles would be excluded. No statement to this effect was made by the minister. North Coast Courier apologises to the Minister and the Department of Tourism.

**Based on the erroneous statement above, the report’s initial headline, ‘Relief fund discrimination angers North Coast businesses’ had to be amended and North Coast Courier apologises for the initial headline as well. 

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