Business leaders have welcomed the announcement by President Cyril Ramaphosa last night (July 25), of a raft of financial and relief measures introduced by government to support the recovery of the economy.

“We are taking decisive action now to secure the livelihoods of millions of people that have been threatened by both the pandemic and the unrest,” said Ramaphosa as he announced the move to a Level 3 national lockdown (from Level 4).

Business Unity South Africa (Busa) CEO, Cas Coovadia, particularly noted the opening up on interprovincial travel, the partial unbanning of liquor sales and the announcement of a relief package for businesses and employees affected by the recent anarchy, including deferring excise duties for the alcohol industry and delaying PAYE submissions.

City of Cape Town Committee Member for Economic Opportunities, James Vos, commented that the latest relief measures would go a long way towards staving off “complete ruin” for business owners and their employees.

He especially welcomed the extension of the Unemployment Insurance Fund’s Temporary Employee Relief Scheme (TERS) but called on the Department of Labour to urgently respond to concerns raised by people who had applied for payments but had met with numerous challenges.

“Some businesses say they still have TERS payments due from previous phases of the relief scheme,” said Vos.

While many of the details of the relief measures remain sketchy, with Ramaphosa noting these would be announced in “due course”, here are some of the basics he announced last night:

• Funding for SMMEs affected by the pandemic will be reprioritised through a once-off business survival funding mechanism. “We are also working with large business to determine their contribution to the support of SMMEs, job creation and eradication of hunger and poverty,” said Ramaphosa.
• The UIF COVID-19 TERS scheme has been extended for those sectors that were affected by Alert Level 4 restrictions during the past 28 days. Applications for this period are open, and the UIF will facilitate payments as quickly as possible to support workers who have not received an income.
• While the TERS scheme has provided crucial support for many sectors that have been unable to operate, there is a need to provide even further relief to help businesses to recover. “We are therefore expanding the Employment Tax Incentive for a period of four months to include any employee earning below R6 500 (€370) and to increase the incentive amount by up to R750 (€43) per month,” highlighted Ramaphosa. This will encourage employers to hire and retain employees, especially those in the retail and hospitality sectors which have been worst affected.
• Government will also defer payment of PAYE taxes for a period of three months to provide businesses with additional cash flow, with an automatic deferral of 35% of PAYE liabilities for employers with revenue below R100 million (€5.7m).
• The payment of excise taxes by the alcohol sector will be deferred for a period of three months, to ease the burden on the sector as it recovers.

“These interventions are designed to extend as much relief as possible to individuals and businesses that are in need of support, without compromising our fiscal sustainability,” said Ramaphosa.