As of today, South Africa reported that confirmed cases of Coronavirus have risen sharply over the last few days. As a result, tonight, 23 March 2020, the president announced further measures aimed at containing and managing the spread of the deadly virus. From midnight 26 March until midnight 16 April, the country will be under lockdown. People are called upon to stay at home, going out only to buy food, medicines or to seek medical care.
Who is exempt?
The army will be deployed to help the police enforce the lockdown. Ramaphosa also said that shops and businesses will close except for pharmacies, laboratories, banks, essential financial services, supermarkets, petrol stations as well as healthcare providers. There are also a few people and sectors that have been exempted from the lockdown. These include:
- Health workers
- Emergency personnel
- Security services
- Food production and distribution
- Essential banking services
- Laboratory services
- Hygiene services
How are businesses affected:
Many businesses will shut down. This will have serious impacts on their revenues and cash flows for the next 21 days. As a result, the governments announced a stimulus package for businesses with a turnover of R50 million or less. These include a 20% PAYE break over the next four months and on Provisional tax over the next six months without penalties or interest for tax compliant businesses. SARS has also been called upon to speed up the process of refunds due to companies. There will also be various support structures for businesses and individuals including the solidarity fund and funding for small businesses affected. Measures are being put in place to prohibit businesses from charging exorbitant prices and to maintain adequate stocks to prevent people from panic buying.
Companies that are able to work remotely have been encouraged to do so. In our view, for this to work, businesses have to make sure they have the tools their staff need to make remote working a success. One of the most important things here is to make sure that everyone is connected and stays in touch. They are various tools to make this happen such as Slack, WhatsApp, Google Meets, Hangouts, Zoom e.t.c. Also, businesses must educate their staff on ways to remain productive while waking from home.
The strategy, vision and direction of the business cannot die because its people are working remotely. Therefore, I cannot underestimate the need to continually communicate the strategy and goals of the business to the staff during this time. This can be done via established channels and platforms that enable and support remote working.
If your business is in the informal sector, do not panic. The government said it will announce more details as soon as they have completed the work of assistance measures that will be put in place.
Employee and business support:
There are plans to put in place a special dispensation for companies that are in distress because of COVID-19. Through this proposal affected employees will receive wage payment through the Temporary Employee Relief Scheme, which will enable companies to pay employees directly during this period and avoid retrenchment. Employees who fall ill at places of work will be paid via the compensation fund.
Role of banks:
Critical financial services will not shut down. What is also important to note is that the banks have been exempted from the Competition Act to enable them to develop common approaches to debt relief and other necessary measures. As you know, Standard bank has already announced debt relief measure for business with R20 million or less in turnover and for students. We wait to see if banks will collectively announce debt relief measures for its customers who without a doubt are affected financially due to the lockdown.
There is no doubt that many small businesses will be left in dire distress. To support these businesses, the government has announced a few support measure that include:
- a tax subsidy of up to R500 per month for the next four months for those private-sector employees earning below R6,500 under the Employment Tax Incentive.
- SARS will also work towards accelerating the payment of employment tax incentive reimbursements from twice a year to monthly to get cash into the hands of compliant employers as soon as possible.
- Tax compliant businesses with a turnover of R50 million or less will be allowed to delay 20% of their pay-as-you-earn liabilities over the next four months and a portion of their provisional corporate income tax payments without penalties or interest over the next six months.
- There are considerations to temporarily reduce the employee and employer contributions to the UIF
- The Department of Small Business Development has made over R500 million available immediately to assist small and medium enterprises that are in distress through a simplified application process.
- Last week the reserve bank cut the repo rate by 100 basis points. This is a welcome development for businesses and consumers.
Whatever your role is in the economy and country, this is a time to work together to curb the spread of the coronavirus. It is a time to be patient, to practice restraint and self-control. Above all, it is a time to show compassion to all affected. For those staying alone, do not migrate into depression. Always stay in touch with your loved ones. Those who can, stay close as families and support each other during these difficult times. Pray for one another. Encourage and strengthen one another in and with love. “Let us never despair. For we are a nation at one, and we will surely prevail. May God protect our people.”