We’ve got your back, Cyril vows as businesses start to struggle
The government is planning to swoop in with an economic relief package as Covid-19 takes its toll
President Cyril Ramaphosa says companies in financial distress will have to be helped by the government as part of its relief programme to minimise the economic impact of Covid-19.
Ramaphosa made the announcement after a meeting with all parties represented in parliament, which was held at Tuynhuys in Cape Town on Wednesday morning.
During the meeting, attended by 14 political parties, Ramaphosa said several proposals were made to him about what the government should do to mitigate the economic impact of the coronavirus.
The government, which was in continuous consultations with business leaders and other key multisectoral stakeholders, was expected to announce an economic relief package as Covid-19 takes its toll on businesses.
“All social partners, specifically government, business and labour, need to jointly develop and implement measures to mitigate the economic impact of Covid-19. Companies in distress need to be helped ... there’s a proposal that has come from the leaders of political parties.
“A number of very useful and positive proposals were put forward, and political leaders have also said that they want to add to some of the proposals that we need to shore up our economy, because we all realise that the impact on the economy is going to be quite devastating.
“So as government, we’ve said we’re open to suggestions.”
Ramaphosa said a UIF contribution holiday and accelerated processing of VAT refunds had also been proposed.
As South Africans come to grips with measures implemented by President Cyril Ramaphosa to prevent the spread of coronavirus, many are panic buying, filling their trolleys with goods and leaving other citizens with no options. Consumer journalist Wendy Knowler provides insight on the phenomenon.
The DA on Tuesday proposed that there be a pay freeze on the loans owed by businesses and families to help them cope financially, as Covid-19 directly affected their lives and operations. The DA said its proposed four months’ payment holiday should cover business loans, mortgages, bonds and vehicle finance loans.
What do the banks say?
Banks surveyed by consumer journalist Wendy Knowler said it was too soon to make a call.
SA’s banks are committing to more subtle forms of financial breaks for their clients, who are suffering huge income losses as a direct result of the pandemic.
Absa said while it was too soon to speculate about possible defaults, “we are looking at various possible scenarios and related actions that may become necessary should customers find themselves in financial difficulty”.
“We would like to heighten our call to our customers to approach us directly in the event of any form of uncertainty, including financial distress, during these unprecedented times.”
Nedbank said it was mindful of the economic impact the Covid-19 pandemic was likely to have on its clients, “many of whom are already under pressure due to the country’s low levels of economic growth”.
“We will assess each case on its own merit and continue to be guided by our existing lending policies, which include a number of solutions designed to assist clients experiencing payment difficulties.”
These would include: tailored payment arrangements, allowing consumers to repay their arrears over time; restructuring of debts by means of term extensions and reduced instalments; and suspending or stopping legal action “under certain instances”.
“We encourage clients to contact the bank to provide assistance when in need.
“Due to the extraordinary times we currently operate in, we will also continue to engage with regulators and industry bodies, and be guided by what government is looking into in terms of a comprehensive set of measures to mitigate the expected impact of Covid-19 on the economy”.
The Banking Association SA (Basa) said the organisation was urgently consulting banking regulators and competition authorities to determine how best the banking industry could protect its customers, small businesses and staff from Covid-19 and its social and economic impact.
“While we are fully cognisant that the country is facing a crisis that demands an urgent response, we need to ensure that our actions are fair, legal, effective and sustainable for the duration of the pandemic and afterwards.
“Any steps taken by the association or its member banks to alleviate the effects of the crisis will be detailed as soon as possible.”
First National Bank referred queries to the Banking Association: “We’ve been advised this is the industry’s position at this stage.”
‘It is stressful because bills must be paid’
Small business owners will probably be among the first to feel the economic impact. Jacob Ndoro, a Johannesburg street vendor, hopes it could be contained soon or else his family may go hungry.
Ndoro, based in Parktown, relies on office workers to visit his mini-tuckshop to buy fruit, cigarettes and snacks.
With the outbreak, he has seen a decrease in customers, which affects his total earnings.
“I am running at a loss now because I had stocked up, but since Monday people coming in are fewer,” he said.
Ndoro said if more people decided to work from home, he would be forced to close down.
Asked what he planned to do, he responded: “For now, I don’t have any plan, this came as a surprise.”
With more than three people financially dependent on him, Ndoro said, he could be forced to approach his bank and withdraw his savings. After this, he would have no savings and no means of making a living.