A Table View businessman has started a petition calling for Covid-19 to be included in business-disruption insurance.
The South African small-business economy will be crippled if insurance companies refuse to treat the ordered closure of businesses as business interruption, says John Litten, owner of Montague Arena in Montague Gardens.
The online petition has nearly 1 000 signatures.
The popular sporting venue has been open since 1991 and includes, among other things, five action-cricket courts, two action-soccer courts and an indoor kids playground.
“When President Ramaphosa addressed the country on Sunday evening March 15 about the dangers of the pandemic, we immediately realised that our business offered the sort of venue that could become a hot spot for the spread of the virus, and so we immediately closed our doors,” said Mr Litten.
However, the closure, as for many other small local businesses, has put the business in a tight squeeze.
According to Mr Litten, Montague Arena has 20 full-time staff and about 40 part-time and casual staff who are being fully paid during the lockdown. The monthly wage bill is just short of R 180 000. The rent is almost R220 000 a month and the other expenses bring the total to more than R 600 000.
“If we cannot reopen within the next two months, we might never recover. Our business has insurance for business interruption, but they are refusing to pay due to the virus,” said Mr Litten.
On March 24, Minister of Small Business Development Ntshavheni Khumbudzo Ntshavheni introduced three measures to support small, medium and micro enterprises (SMMEs) affected by Covid-19:
– The business growth and resilience facility is for SMME manufacturers or suppliers of hygiene and medical products needed to manage the spread of Covid-19. It will offer working capital, stock, bridging finance, order finance and equipment finance. The funding will depend on a business’s needs.
– The SMME relief finance scheme will provide soft-loan funding for Covid-19-distressed businesses in distress due to Covid-19. The relief will be for a period of six months, starting on April 1.
– The Small Enterprise Financial Agency (SEFA) debt restructuring facility is for Sefa-funded SMMEs hurt by the pandemic. A payment moratorium on loans will be given to the qualifying SMMEs for up to six months to reduce their instalment burden of loan obligations on the affected SMMEs.
Geoff Jacobs, president of the Cape Chamber of Commerce and Industry, said the City should follow Stellenbosch municipality’s example and give small businesses reeling from Covid-19 should be granted “breathing space” by suspending rates payments during lockdown.
He said the City of Cape Town should follow the example of Stellenbosch municipality that has suspended rates during the lockdown.
“Rated and rents are a substantial cost of doing business. With all non-essential businesses being forced to close during the lockdown, continuing to pay them will be the nail in the coffin of many small enterprises. Many will be forced to shed staff as the only way to survive, if survival is at all possible,” said Mr Jacobs.
He asked the City and municipalities elsewhere in the province to recognise that they must share the economic burden the lockdown is imposing.
“It is in all our interests that when this crisis is over, there will still be an SMME- business sector able to play its vital role in providing employment, and continuing to grow our local economy”, he said.
But Mayco member for finance Ian Neilson says suspending rates to give Covid-19 battered businesses a break risks undermining the City’s ability to provide services.
“The City is assisting residents where it can, but unfortunately is not able to offer complete financial relief to all residents. The City cannot take on the task of significant economic support beyond its mandate, when that is the task of the national government, which sits on the national fiscus income of R1.5 trillion versus the City’s R50 billion which must be used to deliver services.”
Mr Neilson pointed out that the City’s cash reserves are fully allocated in the municipal budget.
“They could not be used for a new purpose without cutting expenditure and risk service delivery in an already committed budget.”
The City’s primary responsibility was to ensure basic services, including water, sanitation, electricity, cleansing, were secured, he said.
“The reality is that the City cannot risk these services. In this crisis, it becomes our overwhelming responsibility. Payment holidays to our customers will risk this service provision, because it is, at first, a cash-flow issue.”
The City could not speak for the financial positions of other municipalities offering payment holidays, he said.
The City’s priority right now, he said, was to remain “financially healthy” to continue providing essential services to its residents.
“Please pay your dues to help us function and fight Covid-19,” he said.