Thursday, 12 August 2021

Eastern Cape launches R40m informal business support programme

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Eastern Cape launches R40m informal business support programme

The Department of Economic Affairs, Environment and Tourism (DEDEAT) in collaboration with the Eastern Cape Development Corporation (ECDC) launched the Informal Business Support Programme (IBSP) early today, a programme aimed at providing support to the informal business.

A budget of R40 million for the 2021/22 financial year has been made available as part of the Provincial Economic Reconstruction and Recovery Plan to bolster the informal economy. The financial injection is aimed at promoting compliance with legal and regulatory requirements that govern business activities in South Africa. The ECDC is an implementing agent of the fund.

Speaking at the launch of the programme, MEC for DEDEAT Mlungisi Mvoko said “the Informal Business Support Programme is a vehicle through which the department seeks to encourage formalisation of informal enterprises in order to access a variety of opportunities that exist for formal enterprises.

“We want to create enabling environment for informal businesses to scale up their activities through the incentives provided by the government”, says MEC Mvoko.

MEC Mvoko adds that the IBSP will stimulate the local economy, especially in sectors that are hit the most by the economic downturn brought about by the COVID-19 pandemic. “The supported informal and micro-enterprises will undoubtedly contribute towards job creation and other developmental goals, this includes addressing the needs of the vulnerable groups such as women, youth, people with disability and Military veterans”, says Mvoko.

The goal for the IBSP is to support 1 000 informal and micro enterprises operating in the Eastern Cape Province targeting four sectors; (1) manufacturing, (2) clothing, leather and textile, (3) automotive aftermarket support interventions, and (4) services sectors.

A more collaborative approach has been adopted to ensure effective service delivery and impact at a local level. As such the Department of Small Business Development’s (DSBD) agencies e.g. Small Enterprise Development Agency (SEDA) and Small Enterprise Finance Agency (SEFA) will be roped in for support of IBSP beneficiaries. Furthermore, ECDC is working closely with local municipalities to collaborate on various aspects of the programme. This includes generation of projects pipeline as well as participation in the rollout of the programme.

ECDC Chief Executive Officer, Ayanda Wakaba shares that the “experience gathered shows that the informal sector was not able to benefit greatly from the government interventions as the small, medium and micro-enterprise relief schemes and other financial schemes required compliance with legal and other regulatory frameworks.

The workers in the informal economy could not benefit from the Department of Employment and Labour Unemployment Insurance Fund’s Temporary Employment Relief Scheme due to the fact that they are not registered or undocumented”.

It is believed that this programme will give impetus to the growth that has been reported by Stats SA in their Labour Force Quarterly Survey for the first quarter of 2021. In that report, the Eastern Cape recorded 65 000 new jobs, resulting in a decline in the Province’s unemployment rate from an alarming 47.9% to 43.8%. The net job increases were mainly in financial services, business services and trade and retail sectors of the economy.

The nature of support that is provided by the IBSP is both financial and non-financial, entailing the provision of equipment, tools, machinery and training of the beneficiaries on entrepreneurship, coaching and mentorship.

To qualify for the IBSP, applying business must meet the following criteria;

  1. operated and managed by the owner on a full-time basis and be in operation for at least 6 months
  2. based in the Eastern Cape townships, rural communities and small towns
  3. owned by someone with a valid SA Identity Document
  4. have a valid proof of residence – municipal bill account, lease agreement, proof from municipal council official or traditional leader
  5. employ at least 70% South Africans in its staff complement
  6. produce three months’ bank statements where applicable depending on availability
  7. submit an application form and a business plan in the prescribed format
  8. must have been issued with a license or permit by a relevant municipality and willing to register through CIPC, SARS and UIF within one month after the application has been received
  9. must be operating in the manufacturing, clothing and textile, automotive aftermarket support scheme and services sectors.

MEC Mvoko concluded by urging Informal Sector Businesses to take advantage of this support. “In this way, we are acknowledging your role in the broader economic activity and we believe that your participation will give a much-needed boost to our economic growth ambitions. We are building the Eastern Cape that we want with you.”

Application forms (https://bit.ly/37Drwwp) can be downloaded from the Department of Economic Development, Environmental Affairs and Tourism website www.dedea.gov.za or the Eastern Cape Development Corporation website at www.ecdc.co.za and be submitted to the nearest regional DEDEAT offices.