Economy: Patel announces raft of business support measures

Two ‘special interventions’ have been made enabling the Industrial Development Corporation (IDC) to respond to ‘sector challenges’ expected to arise during the impending lock-down and the introduction of other Covid-19 ‘state of disaster’ measures. Only South-African-owned businesses will qualify, notes Pam Saxby for Legalbrief Policy Watch. Focusing on the consequences of ‘surges in demand’ and financial distress, according to Trade, Industry & Competition Minister Ebrahim Patel the IDC has allocated R500m ‘for trade finance to import essential medical products; and R700m … for working capital, … equipment and machinery’. This is over and above the R3bn made available to support businesses during ‘the next quarter’. In a media statement on his input at yesterday’s ministerial media briefing, Patel said the IDC will prioritise support for ‘agriculture and food value chains’; working capital for the tourism sector; bridging finance to address ‘supply chain interruptions’; support for the suppliers of ‘primary energy’; and working capital and bridging finance for small and medium enterprises supplying components to motor vehicle manufacturers. Support for essential services falling outside ‘normal IDC sectors’ will be considered, along with ‘repayment deferments on a case-by-case basis’.

Legalbrief Today has already reported on measures introduced last week to facilitate co-operation between the private and public healthcare sectors in providing services during the ‘state of disaster’; and regulations and ‘directions’ on ‘pricing and supply matters’ aimed at preventing ‘unjustified price hikes’ and ‘stock-piling’. A block exemption for banks from certain provisions in the 1998 Competition Act were gazetted late yesterday afternoon and will be used to ‘support businesses and ordinary citizens’ during the ‘state of disaster’. In this regard, the Minister referred to ‘payment holidays and debt relief’; ‘limitations … on asset repossessions’; and ‘the extension of credit lines to individuals and businesses subject to financial stress’. ‘The exemptions will (also) allow banks to work together in ensuring (the) continued functioning of the payments system,’ Patel said, adding that, among other things, banks will be required to share ‘information and resources’ to facilitate the uninterrupted ‘availability of bank notes’ at ATMs and branches. Regarding the lock-down’s impact on non-essential shops and other businesses, regulations enabling tenants in shopping malls to negotiate ‘payment holidays or rental discounts’ and ‘limitations on evictions’ were gazetted late yesterday afternoon. According to the Minister, they focus on three categories of retailers: ‘personal care functions’; restaurants; and clothing, footwear and home-textile outlets.

Turning to businesses providing non-healthcare essential services during the lock-down, the Minister confirmed that grocery stores, supermarkets, pharmacies, healthcare-related enterprises and spaza shops ‘will remain open’. ‘All essential items … will remain available throughout the lockdown and the period of the national disaster’. In that regard, the Minister referred specifically to food and beverages; medical supplies; and personal, hygiene and cleaning products. The list of essential services in last week’s directives will be amended to include those providing care to the elderly and sick; ‘private security services for the protection of property and persons’; animal welfare and emergency veterinary services; ‘those who assist in transporting food and other essentials to people’s homes, including on-line retail’; the ‘key maintenance systems required … to avoid serious damage to economic assets’; those employed across the supply chains necessary to ensure the availability of basic supplies; transport systems supporting any essential service; and the back-office services necessary for ensuring the ‘smooth management of wage and salary payments’. All affected businesses will be required to implement the ‘necessary protocols … (for) adequate hygiene and social distancing’. This will be especially important in businesses where ‘the limit of 100 people does not apply’.