Staff Reporter
The government is working on a special fund to support companies that may fall into distress because of COVID-19.
President Cyril Ramaphosa said consultations with different stakeholders were underway to find ways of assisting not just businesses but also individuals that will be affected by the effects of the coronavirus to the economy.
“We are going to support people whose livelihoods will be affected,” Ramaphosa said in a televised national address in which he announced a 21-day lockdown starting Thursday.
He said through the proposal employees will receive wage payments through the Temporary Employee Relief Scheme, which will enable companies to pay employees directly during this period and avoid retrenchment.
Any employee who falls ill through exposure at their workplace will be paid through the Compensation Fund.
The president said some of the large companies that are currently closed have accepted their responsibility to pay workers affected.
“We call on larger businesses in particular to take care of their workers during this period,” Ramaphosa said.
“In the event that it becomes necessary, we will utilise the reserves within the UIF (Unemployment Insurance Fund) system to extend support to those workers in SMEs and other vulnerable firms who are faced with loss of income and whose companies are unable to provide support,” he added.
Ramaphosa said the government will provide a tax subsidy of up to R500 per month for the next four months for those private sector employees earning below R6 500 under the Employment Tax Incentive. This will help over four million workers.
Tax-compliant businesses with a turnover of less than R50 million will be allowed to delay 20 percent of their pay-as-you-earn liabilities over the next four months and a portion of their provisional corporate income tax payments without penalties or interest over the next six months. This intervention is expected to assist over 75 000 small and medium enterprises.
“The Department of Small Business Development has made over R500 million available immediately to assist small and medium enterprises that are in distress through a simplified application process,” the president said.
Ramaphosa said a Solidarity Fund to which South African businesses, organisations and individuals as well as members of the international community can contribute has also been set up.
The Fund will focus on efforts to combat the spread of the virus, help track the spread, care for those who are ill and support those whose lives are disrupted.
The Fund will complement what the government is already doing.
The government has provided seed capital of R150 million and the private sector has already pledged to support this Fund with financial contributions.
The president also announced that the Rupert and Oppenheimer families have contributed R1 billion each to assist small businesses and their employees affected by the coronavirus pandemic.
