Friday, January 21

Aid funding of over R1bn already approved for businesses affected by riots – Patel


Two key development finance agencies under the Department of Commerce, Industry and Competition (dtic) have already approved 77 applications for more than one billion rand in financial aid for businesses affected by the riots and looting in KwaZulu-Natal and parts of Gauteng in July, Dtic Minister Ebrahim Patel confirmed Tuesday.

The funds, approved collectively through the Industrial Development Corporation (IDC) and the National Empowerment Fund (NEF), are part of the dtic’s broader aid package for businesses, announced by the minister after the riots.

Read: Mboweni and Mogajane announce R36.2bn in new financial support after riots

“The first approvals were made in August and have been growing steadily, reaching the R1 billion milestone on Monday,” Patel said in a statement.

Ebrahim Patel, DTIC, July Riots, Financial Aid

Ebrahim Patel, Minister of Commerce, Industry and Competition. Image: Moneyweb

“The July 2021 riots hurt growth, jobs and transformation and affected investor confidence in the national economy. To mitigate the damage caused, the dtic and its entities launched a special fund to support companies, “he said.

“These financing approvals help inject liquidity into companies, provide bridging financing where insurance claims are still being evaluated, and allow companies to begin trading fully …

“We have seen many small businesses rebuild their operations and businesses small and large have provided essential goods to affected communities,” added Patel.

According to the dtic, while the more than R1 billion covers 77 companies that have approved applications, the funding covers 164 separate properties or sites that were affected by looting and destruction.

He noted that the funding approved so far would support 7,797 jobs in the two affected provinces.

So far, just over R512 million have been disbursed to the most affected companies.

Read: JP Morgan deposits R340m in SA SMEs

One such company that will benefit from financial support is Durban-based Kingsgate Clothing, which had four of its properties affected during the riots.

Forms of financing

IDC and NEF have noted that support to affected businesses comes in the form of interest-free term loans, bridge financing, and converting portions of selected services into grants.

“These dtic entities are busy evaluating a number of additional funding proposals and we will make further announcements on the progress made and on specific projects that have been approved,” said Patel.

The dtic is working with various stakeholders to streamline and coordinate contributions to reconstruction.

These include:

  • Gauteng and KwaZulu-Natal Provincial Economic Development Departments;
  • The Ithala Development Finance Corporation; and
  • South African Association of Special Risks Insurance (Sasria).

The figure of more than 1 billion rand does not include insurance payments made so far by Sasria.

Read:

The dtic noted that it also continues to receive applications under the Critical Infrastructure Recovery Program aimed at assisting in reconstruction efforts and restoring production and employment in the Ezakheni, Isithebe and Madadeni industrial parks in KwaZulu-Natal.

He said IDC is also working alongside various stakeholders to support rebuilding efforts in the retail sector.

“Collaboration and exchange of information between [the IDC and NEF] It has also allowed us to identify other infrastructure rebuilding opportunities. ”

Large and small companies

The dtic said its financial aid plans extend to formal and informal small businesses in rural and municipal areas, with funds available to six intermediary organizations, including Afrika Tikkun, the South African Cinnamon Producers Association and the South African National Stokvel Association. .

“These funds will be used to help uninsured small businesses in affected municipalities with working capital and inventory backup to restore their operations.

“The dtic, together with its sister entities and departments, remains committed to providing the necessary support to companies of all sizes, in urban, rural and municipal areas to restore what has been lost, preserve jobs and continue our efforts. to reindustrialize our economy. . ”

Palesa Mofokeng is a Moneyweb intern.


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