Billions and billions, but not a penny for me

Sandiswa Gwele runs a transport company in Cape Town. (Photo: supplied)

By Sasha Planting

14 Apr 2020

Billions of rands have been made available to support SA’s fragile SME class, yet many feel they have been abandoned.

Sometimes, the best decisions are those born out of adversity, and for Grace Dila and Sandiswa Gwele, this was the case.

Grace was a chef, working nights when her home was robbed while her seven-year-old and 16-year-old son and daughter were home alone. “I couldn’t stop thinking about what if …?” she says, and stops, leaving the thought unvoiced.

Sandiswa was retrenched in 2013, joining her husband who was retrenched in 2012. While she found part-time work at UCT, she wondered if she should stay there and risk losing her job again, or venture out on her own.

Grace Dila, who runs Dila's Corner poses with some of her customers. (Photo: supplied)

Today, Grace runs Dila’s Corner, a restaurant and catering company that operates out of two containers at Philippi Village. She has regular weekly clients, a few corporate clients and the odd large function.

Sandiswa and her husband have been running a transport company since 2017. The business now owns seven vehicles and clients include tour operators, event organisers, companies, tertiary institutions and non-profit organisations.

Both Grace and Sandiswa are proud of their achievements – starting a business is not for sissies.

So watching them disintegrate overnight was a shock.

Sandiswa Gwele runs a transport company in Cape Town. (Photo: supplied)

Sandiswa is lucky – she has registered as an essential business and intends to transport medical products, and people during the lockdown, though she has yet to secure work. Grace’s doors are closed.

Between them, they employ about 14 people – all of whom were paid for the first two weeks of lock-down.

But now they are living on hope and prayers.

“My business is registered and I pay tax, but I’m not compliant in every respect,” says Grace. She’s talking about VAT and UIF. This means she cannot claim UIF funding for her staff.

“My employees are like family to me, if I have a good month, they have a good month. I have told them that if I get the funding, they will be the first to know.”

She has applied to Business Partners for the Sukuma loan and to “government”.

Sandiswa hopes to access the UIF fund for April 2020 salaries and has also applied for Sukuma funding, but is cautious.

“My business does not qualify for a grant. I would like funding, but when will we start up again? And what will business look like? Will people be travelling as they were?”

She has seven vehicles to pay off, maintain and insure, and has applied to her banks for a debt holiday.

“I will hustle, I will think out of the box, but first, I must survive,” she says. “More than me, I’m worried about the small township businesses in Philippi and Khayelitsha. I would like to see them get funding, they are in desperate trouble.”

She recognises that while her business was once informal, it is now technically a formal enterprise, not that that makes survival any easier.

It is estimated that there are over 5 million micro and small businesses in South Africa, most of which are deemed “informal”.

While the National Development Plan envisions that by 2030, nine out of 10 new jobs will be generated by micro, small and medium businesses, it is precisely these businesses that are being decimated by the lockdown.

Yes, there are private and public sector relief measures in place, but for various reasons, many have struggled to access this funding.

Thus, a week into the lockdown, a group of UCT postgraduate students, together with the NPO Phaphama, interviewed about 250 entrepreneurs from developing communities to better understand how Covid-19 is affecting their businesses and where the gaps are in existing funding opportunities.

The report was published by the CDE and is available here.

“What emerges is that while support has been provided, there is a large gap in that support, leaving thriving businesses in townships in a precarious position,” says one of the researchers, Zak Essa.

The definition of small and micro businesses leaves a gap in the middle, through which many businesses fall, he says.

On the one side, there are informal “survivalist” businesses, which are usually not registered, employ few people and have few assets. These individuals are on their own, literally and figuratively.

Then on the other side, you have small businesses with under 50 employees, turnover of R2-million to R25-million and assets of under R4.2-million. Sandiswa is probably in this category.

In between, there are businesses that are falling through the cracks and are particularly vulnerable, says Essa.

Who are they?

According to the research, 77% of the 230 businesses surveyed are female-run, they employ six people on average and have got to where they are with no state support or grants.

Almost all of them, roughly 95%, cannot afford to pay salaries and have no other income sources from which to draw (93%).

Half of them do not believe their business will survive.

“We, the informal traders, were caught off guard by this virus,” says Stanley Skeyi, chairman of the Nonkqubela Informal Traders Organisation.

“But this pandemic was not our first problem. This just adds more salt to the wounds of informal traders. We are financially excluded and now we are told our businesses must close with no indication of when they can restart.”

Skeyi runs a meat business, trading in offal, and had recently opened a construction business.

He now has a permit to operate the meat business. “I’m now open, but it was very difficult.”

He believes informal traders could be better supported by the government. “This sector is sustained by people who are illiterate and have not been to school. They cannot easily apply for funding – they do not even have data. How will they start up again?”

He believes the government should loosen restrictions on micro-businesses.

Mzee Kutta runs a laundry in Philippi and employs four people. He drew money out of his savings to pay his staff. He has applied to the Tourism Relief Fund, to the Covid-19 Ters relief Fund and to the “Oppenheimers,” he says.

It’s not only his own “stresses and strains” that he is worried about. As chair of the Khayelitsha Business Forum, he is concerned about the ability of the many townships businesses to survive.

The first big hurdle was to spread the word about the available funding and support. “There was a lot of discouragement based on past experience – they say nothing will happen,” he tells Business Maverick.

More recently, he has been helping those traders that are eligible to re-open to get the necessary permits to do so.

“Of the businesses surveyed, less than half qualify for funding,” says Essa.

One of the reasons for this is that most funding platforms require businesses to be registered, tax compliant and UIF compliant, with further requirements being six months of bank statements and financial projections.

The researchers made six suggestions to ensure funding gets to those millions of South African businesses that, in their own small way, keep the wheels of SA’s economy turning.

These include simplifying the eligibility requirements for support and include foreigners in this; centralise the information and make it easy and cheap to apply; deploy funding in under seven days; and where possible make grants available, so as to not saddle businesses with debt.

“We are six people in my business,” says Grace. Together, we support six families – we have changed lives and we are making a difference, but sometimes it feels that the government does not see us.”

Let’s hope the government is listening. BM

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