Coronavirus: DA calls for subsidies, a suspension of BEE and other measures to protect industry, businesses and the public

20 March 2020

The Democratic Alliance (DA) has made a commitment to offering innovative ideas for Government to combat Covid-19. As such, I have written to Trade and Industry Minister, Ibrahim Patel, to submit urgent steps that will act as an economic buffer to the incredible impact that the virus will have on businesses in South Africa, especially those in the retail, manufacturing, agri-processing and credit markets.

South Africa must brace itself for a massive downturn in local and international demand with the inability of the workforce to consistently produce goods due to health and safety concerns.

With all industries requiring intense amounts of capital to be continually rotated through their business, the majority of which is borrowed (if not all, including credit for banks from the Reserve Bank), this could lead to large-scale defaults, a cash flow crisis and eventual closure.

That is why the DA has written to Minister Patel to suggest urgent steps that should be taken to mitigate against the economic fallout currently being experienced by businesses in South Africa. These include:

A suspension where possible, on all state-administered prices affecting manufacturing, imports and exports for rail, port, toll fees, water and electricity costs. This should also apply to all rents that are paid to the state where businesses find themselves on state-owned land, in state-owned property, industrial parks, Special Economic Zones (SEZs) and Industrial Development Zones (IDZs)

Development Finance Institutions (DFIs) like the Industrial Development Corporations (IDC), Development Bank of South Africa (DBSA) and the National Empowerment Fund (NEF) to make available 0% bridging finance to small and medium sized enterprises.

Regulatory entities such as the National Regulator for Compulsory Standards (NRCS) , South African Bureau of Standards (SABS) and South African National Accreditation System (SANAS) must not in any way be a blockage to business and should do everything possible to fast track all applications that are with them especially for those items which are low risk and for import and export as well as those goods critical in the fight against Covid-19.

The Credit Amendment Act should not be operationalised to allow for low-income South Africans to access much-needed credit to survive day to day. This will loosen credit providers risk which has increased since the Act was signed and already had a major impact on credit provision to low-income people.

A moratorium on BEE to allow for state funding and incentives to go where needed and not only to majority black owned businesses as defined by Government. This is because the BEE Codes classify entities based on their annual turnover. Entities with a turnover of less than R10 million are regarded as an exempted micro enterprise (EME). Entities whose turnover is more than R10 million, but less than R50 million are regarded as qualifying small enterprises (QSE). This means that any funding based on BEE qualifying criteria or ownership which is what all incentives are measured on, will miss over 93% of all companies which have a turnover of less than R10 million per year or not 51% black owned.

Zero rated duty on alcohol for sanitiser production in South Africa as there is no local stock from SASOL as well as zero rated duty on medical devices and equipment like masks and gloves used in the fight against Covid-19.

We urge Minister Patel to take immediate action on these suggestions with his counterparts in Cabinet such as Finance Minister, Tito Mboweni, Public Enterprises Minster, Pravin Gordhan and Public Works Minister, Patricia de Lille.

All of these interventions can be taken quickly, and we are of the view that it will go a long way in protecting businesses and jobs in South Africa.

The DA trusts that the Minister will consider our proposals and we are open to engage him on the details therefor.

Issued by Dean McPherson, DA Shadow Minister of Trade and Industry, 20 March 2020