The Local Enterprise Authority (LEA) has through the Industry Support Facility disbursed just over P47 million to informal sector enterprises to help them mitigate the effects of Covid-19.
Launched in 2020 by the Ministry of Trade and Industry as part of the Government Economic Recovery Plan, the intention of the Industry Support Facility (ISF), is to help businesses in mitigating the hard-hitting effects of the pandemic.
The Industry Support Facility for the Informal Sector which was facilitated by LEA was specifically targeted to the Informal sector as a once-off cash benefit/grant amounting to P1000.
LEA’s head of Corporate Affairs and Market Boikhutso Kgamanyane, says the financier has disbursed just over P47 million of the P100 million they received from the ISF to 47 029 applicants in the informal sector out of 47 831 that applied for the grant. This grant, she says, has shown to be instrumental in the revival of many informal sector businesses that were distressed by the pandemic.
A snap survey conducted by LEA on 382 businesses found that 63% had suspended operations as a result of the pandemic. The sampled companies also reported average drops in monthly revenue of 47%. The grant according to her, improved cash flow challenges that were occasioned by Covid-19 lockdowns and restrictions. Adding on she said that the P1000 also resuscitated businesses that had collapsed.
She further explained that, the 2% who applied but did not receive the grant did not come up to scratch with LEA’s requirements for eligibility of the grant. The incentive’s mandate was to provide support to businesses that were affected by the pandemic, therefore a key requirement was proof of the business’ existence before the pandemic. According to Kgamanyane, “some of the Informal sector businesses lacked proof of having been operational before the Covid-19 outbreak which in turn affected their eligibility for the grant.”
She said that during the course of disbursing the funds another challenge they faced was that “Most informal sector businesses are unbanked (do not have bank accounts) and LEA resorted to using mobile money payment options.” Furthermore she said some credited applicants did not collect their funds on time.
The Telegraph spoke to Lesego Khumalo who is involved in the business of broilers and is also a beneficiary of the P1000 grant. She acknowledged that the pandemic affected her business in several ways saying, “prior to the first lockdown, I had people owing me and many were not able to pay me on time, while others paid in bits and pieces. In addition to that, the closure of borders meant some scarcity in the availability of chicks and feeds and it took up to three weeks to secure an order for chicks.”
Khumalo also said that sales reduced drastically as most of her clients who are in the informal sector also suffered a lack of income. She went on to say that this interrupted her cash flow severely as the little income she got was now being used to satisfy her basic needs and not being injected into the business.
Post lockdowns and various restrictions, Khumalo says her business is currently doing well however, she says not much of that success can be attributed to the grant. She said, “Do I feel the grant helped? Not very much: it was P1000, I still needed about P4000 more to get back into business; but half a loaf of bread is better than nothing.”
Kgamanyane said as an authority designated to service the informal sector, LEA is currently programming to service the informal sector. She has encouraged Informal sector businesses who want to be assisted with formalizing their businesses to access the LEA business development services menu.