The South African government is concerned that many Black-owned companies will be forced to close shop as a result of the devastating impact of the Coronavirus pandemic.
This was expressed by Deputy Minister of Trade, Industry and Competition, Nomalungelo Gina.
She was speaking at a virtual seminar hosted jointly by the Broad-Based Black Economic Empowerment (B-BBEE) and Commission for Employment Equity (CEE).
“The effects of the Covid-19 pandemic on B-BBEE 100% Black-owned companies is likely to reverse the strides that we have covered over the last 20 years in the deliberate efforts made to build Black-owned companies.
“Black-owned businesses will be in a difficult conundrum because of their fragile balance sheet with no collateral to assist them in accessing credit even in times where government had cut the base for lending rate,” said Gina.
She added that there was also a real danger that because of liquidity challenges, some of the companies may face closure and be forced to sell the larger percentages to non-Black companies and thereby lose their B-BBEE 100% ownership.
“Small and medium enterprises (SMEs), which is where the most of the Black women-owned businesses are found, are the hardest hit by Covid-19.
It is by no exaggeration that many of the SMEs will not survive after this pandemic. Many are facing closure and some have already closed shops. This is a troubling reality for government.
As government we are concerned about this because these realities represent the potential reversal of the very foundations for the B-BBEE and transformation of our economy.
The full scale effects of Covid-19 on black businesses will be felt through the numbers of retrenchments that have already began from these companies because of loss of trade.
Small and medium enterprises are the locomotive engine of our economy and employment because most of them are labour intensive,” said Gina.
However, Gina said it was not all doom and gloom as various sectors of the economy and government were already working out plans for the post-Covid-19 economic recovery.
“This is an opportune moment for women to seize the opportunity as part of this new economic rebuilding. Let us build businesses as women and create value in them. Let us hold hands and support each other instead of competing, in order to grow the SMME sector that will respond to the new post-Covid economy which will be characterised by digitalisation, innovation and various types of economic factors as brought about by the Fourth Industrial Revolution,” she urged.
She urged women corporate leaders to insist on compliance in the preferential procurement processes in government, municipalities, state-owned enterprises and the private sector that women-owned companies, in the post-Covid environment, must occupy a prominent position for preferences in awarding tenders.
“President Cyril Ramaphosa recently announced an important intervention that government will make a 40% set-aside on procurement for women-owned companies. This is a huge step in the right direction.
“Our task is to monitor, track and enforce the implementation of this initiative. As women we must use the battle cry that ‘there must be nothing without us’, and ensure that we are part of the decision-making processes,”she concluded.