Finance: Economic Stimulus

In a bold move to stimulate the cash strapped economy President Ramaphosa announced a stimulus package of R500bn, in April 2020. In addition benevolent individuals and organisations have also contributed upward of a few billion to help businesses through cash flow loss and as a general kick start.

These include, and is not an exhaustive list:     

• Utilisation of the UIF system to assist employers with supporting their employees during this period (TERS).
• Utilisation of the compensation fund where employees are infected with the virus while performing their occupational duties.
• Utilisation of the tax system, where the South African Revenue services will assist with the following tax relief measure:
  • Government will provide a tax subsidy of up to R500 per month for the next four months to qualifying employees.
  • Tax-compliant businesses with a turnover of less than R50 million will be allowed to delay 20% of their Pay as You Earn (PAYE) liability over the next four months, without incurring penalties or liabilities.
  • Tax-compliant businesses with a turnover of less than R50 million will be allowed to delay a portion of the provisional corporate income tax without incurring penalties or liabilities
  • Taxpayers contributing to the Solidarity Fund; and
  • Additional tax relief measures relating to the payment of skills development levy, carbon tax and VAT.
• Making available Covid-19 relief loans / funding / donations which includes the following:
  • The South African Future Trust, which is administered by the Oppenheimer family – total available for distribution is R1b.
  • The Covid-19 SME Fund administered by Business Partners (Rupert Foundation & Remgro) – total available for distribution is R900m.
  • The Debt Relief Finance Scheme administered by Department of Small Business – total available for distribution is R200m.
  • The Business Growth/Resilience facility administered by Department of Small Business – total available for distribution is R300m
  • The Loan Guarantee Scheme in partnership with the major banks, National Treasury and the South African Reserve Bank – total available for distribution is R200b.
  • The Giving for Hope Fund administered by The Willowton Group in partnership with Albaraka Bank – total projected available for distribution is R500m.
  • The National Empowerment Fund -COVID-19 Black Business Funding Solution – total available for distribution is R200m.
  • The MCEP Covid-19 Programme administered by Industrial Development Corporation – total available for distribution is R300m.
  • The IDC Covid-19 Essential Supplies Intervention administered by Industrial Development Corporation – total available for distribution is R500m.
  • The Tourism Relief Funding administered by Department of Tourism – total available for distribution is R200m.

Other initiatives introduced include the:

• The Spaza Shop Grant Funding administered by Department of Small Business Development in collaboration with SEFA – total available for distribution is R30m.
• The South African Reserve Bank dropped the repo rate by 2 percent which now makes borrowing cheaper
• The Financial Sector Conduct Authority (FSCA) is working with Financial Services Providers and SARS to enable employers to apply for a reduction in, or suspension of, employee benefits contributions, without incurring penalties or liabilities 

We can advise on how to access the various stimuli available for individuals and businesses

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