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Ebrahim Patel – Looting and destruction affect entire value chain

Updated: Jan 27, 2022

The widespread unrests and incidents of looting in KZN and Gauteng during July brought devastation on an economy already weakened by the impact of the Covid19 Pandemic.

The Minara Chamber of Commerce has expressed it concerns on the resultant loss to economy and the impact the cost of living which will lead to a widening of the income inequality gap.

Ebrahim Patel, Director of the Chamber said that while initial figures indicate that the total cost of the unrest on the country’s GDP was about R50 billion with the GDP loss at about R40 billion of which as much as R20 billion would be a loss to Durban’s GDP, the actual figures could be far higher.

Estimates that damages to the retail industry alone amount to more than R5 billion with more than 200 malls targeted and over 800 stores looted and 100 completely burnt. Within Durban more than R1.5 billion was lost in stock with R15 billion in damages to property.

However, Patel said that these figures reflect the formal economy and that the Minara Chamber was extremely concerned by the impact on informal traders, micro businesses, rural economy and the value chain. The figures also do not reflect the knock-on financial impact to creditors when businesses are unable to pay their suppliers or service debt.

Larger and more formal businesses may have the resources and insurances to return and restart their businesses. These businesses require the confidence and assurance that the State will ensure protection against a recurrence of the unrest. The value chain is impacted by the losses in the retail industry. For instance, the closure of a supermarket affects the wholesaler, the distributor, the manufacturer, the packaging industry, the transport industry and even the farmer and could lead to job losses at all levels. With some businesses completely destroyed and the owners unable to meet their credit obligations, the suppliers are at risk as well.

Smaller businesses and informal traders are finding it difficult to restart as they have limited resources and for most their businesses were their entire life savings. These are survival businesses whose daily takings put food on their tables. He warned that as many as 150 000 jobs are at risk and 1.5 million more homes could be without incomes.

The Minara Chamber recently partnered with the Rebuilding for Hope and Prosperity Fund and the City of Durban to assist informal traders in the Isipingo Market to restart their businesses through a grant scheme. More than 100 traders are being assisted with stock to open their business and begin trading. Training in business management is also being provided to upskill and build capacity so that these businesses become more formalised. Patel hopes that some of the businesses could grow and become wholesalers and distributors themselves.

While there has been much focus on the urban economy, research by agricultural union Kwanalu indicates that the unrest and looting has completely destroyed economic activities in more than 55% of rural towns in KZN with more than 80% of businesses in these towns having being severely damaged. 64% of rural towns are experiencing food shortages while the closure of agricultural suppliers, shortage of feed for animals, fertilizers and fuel will impact on the food security chain.

The Chamber welcomes the Business Recovery Packages launched by the National Government and the Financial Relief Plans announced by the City of Durban to assist businesses affected by the unrest. The SEFA’s Business Recovery Support Packages are aimed at uninsured small businesses and informal traders. The Small Business Recovery Package offers a maximum of R2 Million in funding for working capital, stock, fixtures and fittings and delivery vehicles. The funding is a blended finance of a 60% Grant and 40% Loan that is repayable over 60 months with a 6 month moratorium on the initial payment. The Informal Traders Program will provide 8000 informal traders with a once of R3000 grant each.

The NEF’s Economic Recovery Fund will provide bridging finance for businesses that have insurance or SASRIA cover and will support working capital, building improvements, fixtures and fittings, machinery, vehicles and stock replenishment. The funding is a maximum of R10 million per entity and payable over 60 months. The City of Durban has made provision for Rates Rebates for six months, suspension of utilities and services and the creation of a fast-track one-stop office for planning and approvals for buildings that were damaged.

“It is in the nature of business to be resilient and overcome adversity. We urge all businesses that were affected to make use of the various financial support packages from Government to restart their business. It is imperative to the long term recovery of our country and economy that these businesses must be rebuilt and this will require the support of Government, the private sector, labour and civil society” said Patel.


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