R1.4bn Covid-19 relief funds eludes small businesses while the pandemic surges
Johannesburg – The Department of Small Business Development, under Minister Khumbudzo Ntshavheni, is mum on its failure to distribute the R1.4 billion Covid-19 relief funds to deserving small and medium enterprises in South Africa.
These revelations are contained in the auditor-general’s second special report on the financial management of government’s Covid-19 initiatives.
Small businesses were earmarked for financial support following President Cyril Ramaphosa’a announcement on March 23 last year of a R500 billion Covid-19 fund to help people and companies to deal with the rampant effects of the pandemic.
In the report, however, the Small Business Development Department was shown to have made very little effort to attract and invite small enterprises to apply for the relief fund.
According to the report, support for small enterprises effectively began in 2020. “By June 30, 2020 the programme had received 5 001 applications but only 1 697 were approved.
“On 30 September, 9 122 applications were received but only 5011 were approved,” the auditor-general reported.
The Auditor-General Tsakani Maluleke further said: “In the first special report we reported weaknesses relating to the approval process. The director-general of the department committed to strengthening the approval process by implementing an online approval process and updating the operating procedures.
“While the revised online approval processes have since been implemented, the revision of the operating procedures has not yet been finalised.
“We also noted in the report that the programme received significantly fewer applications than initially anticipated, and Sefa’s chief executive officer committed to taking various actions to increase awareness of, and improve uptake for, the programme.”
All these prompted the DA to write a letter to the chairperson of the portfolio Committee on Small Business Development, Violet Siwela, to ask that Minister Ntshavheni urgently report to the Committee explain why her department has only allocated 8% of the funds meant as Covid-19 relief for small businesses.
DA spokesperson on small business Jan de Villiers said the auditor-general’s (AG) second report on the financial management of the government’s Covid-19 initiatives revealed that 92% of the financial support earmarked for small businesses has not been paid out.
“Of the R1.4 billion that was budgeted for support to qualifying small, medium and micro-enterprises (SMMEs) affected by Covid-19, only 8% of the funds have been spent, meaning that almost R1.3bn of relief lies unspent.
“Minister Ntshavheni has a responsibility to account to Parliament for the reasons as to why the Department of Small Business Development has been sluggish in allocating the relief funds that are so desperately needed by struggling SMMEs across the country,” De Villiers said
He said his party would also seek clarity surrounding the criteria for the allocation of funds and how SMMEs can successfully apply for relief funding while the government continues to enforce extended lockdown regulations, small businesses, and the breadwinners and families it supports will continue to suffer.
“This is especially true in our coastal towns, where arbitrary and irrational beach closures have dealt a heavy blow to our coastal area small business owners. The minister has an opportunity to give small businesses affected by these lockdown regulations a chance of survival, but time is of the essence to ensure that these Covid-19 relief funds are allocated fairly and speedily, De Villiers said.
Contacted for comment, Small Businesses Ministry spokesperson Sendra Mashego said they are not commenting and would be issuing their report on the matter in due course.