Support for existing businesses essential during pandemic

Creating jobs is a major South African government focus, according to the 2018 Jobs Summit, but saving jobs in the pandemic is a more immediate and doable task, provided there are funds to prop up businesses that would be going concerns, were it not for Covid-19.

David Morobe, spokesperson for the R1bn Sukuma Fund and executive general manager of Impact Investing at Business Partners Limited, said that the average restaurant employs between 10 and 15 people, with indirect supplier jobs perhaps as high as 10 times this amount.

He questioned how job creation through new businesses, while essential, could compete in cost terms with keeping going concerns solvent.

The Jobs Summit’s framework agreement aimed to create around 275,000 jobs annually, with a focus on the youth.

In terms of a public-private growth initiative, the private sector  committed to invest R840bn in 43 projects over 19 sectors and to create 155,000 jobs by 2024. While the projects were large-scale, the cost per job was over R4m.

Dianne Konig owns Urban Junction, a coffee shop in East London’s Nahoon district.

“I employ nine people, which means I feed nine families,” she said. “I have not had a salary in the pandemic era, but fortunately I have access to funds. My reward is that I am keeping people alive.”

She said setting up a decent coffee shop from scratch cost nearly R500,000, “which means if I went out of business it is unlikely that I would start again”.

“Surely it makes economic sense to keep us small businesses running and people in work now, rather than investing billions in future jobs? The need for immediate work is urgent.”

Morobe said that since the start of 2021, hundreds of restaurants had closed and that employees, both full-time and casual, were now jobless.

“It is estimated that nearly 30% of restaurants closed during the height of the lockdown in 2020. As it stands, thousands of restaurants are still struggling to recover and are on the brink of closure. A phase three total lockdown, similar to the first lockdown, would be a disaster.”

He said the Sukuma Fund had partnered with the Federated Hospitality Association of Southern Africa (Fedhasa) to ensure that the local restaurant industry could be assisted, continuing to save jobs.

“The fund distributes the R1bn donated by the Rupert Family and Remgro Limited. To date nearly 4,000 restaurants have received survival grants and/or soft loans, saving over 32,000 jobs.

“The fund offers loans for rental relief and augmenting working capital. To qualify, establishments with the best chance of trading through the pandemic, and maximising job survival, must have evidence of financial solvency and future viability, among other criteria.

“The unsecured interest-bearing loans of between R250,000 and R1m are structured over 60 months. There are no interest or repayment obligations for the first year. Thereafter, interest will be raised at the prime rate with repayments set to commence from month 13.”

Morobe said the biggest challenge facing struggling restaurants is meeting  rental payment obligations. It remains a major operating cost. Besides rent, working capital requirements can also be considered for funding.

He said the fund’s mission was not only saving SMEs but also creating an innovative and sustainable support model.

“Our vision was always to do more than help today. The intention was to allow Sukuma beneficiaries to pay it forward, creating  a self-perpetuating cycle of support.” 

Morobe said Business Partners had, over the past 40 years, assisted in creating nearly 700,000 new jobs, with loans valued at R20bn in 71,600 transactions.

For information regarding securing a loan visit https://sukumafund.org.za/  or www.businesspartners.co.za.