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The Commerce, Industry and Competition Department is in talks with the National Treasury to obtain additional funding to support struggling businesses as part of the post-coronavirus economic recovery package, Director-General Lionel October said Monday.
The department head, along with Minister Ebrahim Patel, briefed members of Parliament on the performance plan and budget for the year. Both recognized that the impact of Covid-19 would lead to an adjustment in the department’s budget and plans.
Speaking broadly about the economic impact of the pandemic, Patel said there would be damage, but equally new opportunities.
“We can see all the signs of the storm. But the extent of the damage will be clearer once we get through the worst of the storm,” Patel said.
He commented that in the coming months the government will have to focus on the “repair and repositioning” industries.
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Based on statistics from the International Monetary Fund and the Reserve Bank, October said the department expects a contraction of more than 5%. The department has been working with the Treasury to adjust its budget to free up the funds necessary to fight Covid-19.
October said the department was looking for ways the money could “go further,” particularly for the industrial finance program, which provides incentives to encourage investment in particular sectors such as movies, cars and clothing. About 60% of the department’s budget goes to this program.
October suggested that the department move away from grant financing and instead offer interest-free loans to help a broader range of companies.
“We are in talks with the National Treasury to obtain financing for struggling companies as part of the economic recovery package. We must ensure that we maintain the industrial base during Covid-19.
“That is our absolute priority, helping companies receive massive blows,” said October.
The existing industrial financing program budget has R15 billion allocated for 600 companies to benefit. The number of selected companies was reduced to take into account the impact of Covid-19 and the suspension of the 12I tax relief for industrial policy projects.
