By Chris Bishop.
President Cyril Ramaphosa urged South Africa business not to throw in the towel in the face of COVID-19 for fear that it could many other send companies under.
Several times in his speech, President Ramaphosa referred to the damage COVID-19 is doing to an economy already reeling from a down grade to junk by Moody’s last week. This week, the South African Reserve Bank warned that the lockdown could cause 370,000 people to lose their jobs and force 1,600 businesses to go under.
“I would like to appeal to all large businesses not to resort to force majeure and stop paying their suppliers and rental commitments , as such practice has a domino effect on all other businesses dependent on that chain,” says President Ramaphosa in a broadcast to the nation.
President Ramaphosa said cabinet would be working towards a comprehensive support plan for the economy during the lockdown that has been extended to the end of April.
For now, the government is trying to pour tranches of cash into the economy to try to keep money in workers’ pockets and food on the table.
President Ramaphosa applauded employers who continued to pay salaries during the lockdown and said R40 billion was in the UIF – unemployment insurance fund – to help workers who had lost income. He said R356 million had been paid out since the lockdown.
Small businesses could claim from a R500 million relief fund and R1.2 billion would be put up to help small scale farmers survive the lockdown, in which the food supply is a huge concern.
The Solidarity Fund – set up at the lockdown by the President – gathered R500 million in its first week and has now raised R2.2 billion. It has spent a billion Rand on gloves, test kits and will set aside R400 million to help poor households.
On top of this, Vodacom has given 20,000 cell phones to health workers to help them use an app in the fight against COVID-19. The Industrial Development Corporation has set aside R3 billion to buy essential medical supplies.
President Ramaphosa also pledged that his deputy, ministers and their deputies, plus the provincial premiers, would all give a third of their salary for the next three months to the Solidarity Fund.
“We shall recover. We shall overcome. May God bless South Africa and protect her people,” concluded Ramaphosa as he concluded his speech announcing the two week extension to the lockdown.
Certainly, South African business is likely to welcome all the help it can get.
Get the best of CNBC Africa sent straight to your inbox with breaking business news, insights and updates from experts across the continent. Sign up here.