The Department of Trade, Industry and Competition is in talks with National Treasury to get additional finance to support companies in distress as part of the post-coronavirus economic recovery package, Director-General Lionel October said on Monday.
The department’s head, alongside Minister Ebrahim Patel, briefed members of Parliament on the performance plan and budget for the year. They both acknowledged that the impact of Covid-19 would lead to an adjustment in the department’s budget and plans.
Speaking broadly on the economic impact of the pandemic, Patel said that there would be damage, but equally new opportunities.
“We can see all the signs of the storm. But the extent of the damage will be clearer once we get through the worst of the storm,” Patel said.
He commented that government in the next few months will have to focus on “repairing and repositioning” industries.
Relying on statistics from the International Monetary Fund and the Reserve Bank, October said that the department expects a contraction greater than 5%. The department has been working with Treasury to adjust its budget to free up funds required to fight Covid-19.
October said that the department was looking at ways money could “go further”, particularly for the industrial financing programme, which provides incentives to encourage investment in particular sectors such as film, automotive and clothing. About 60% of the department’s budget goes toward this programme.
October suggested that the department would move away from grant funding and instead offer interest free loans to help a bigger range of enterprises.
“We are in discussions with National Treasury to get finances for companies in distress, as part of economic recovery package. We must ensure we maintain the industrial base during Covid-19.
“That is our absolute priority, to assist companies taking massive hits,” said October.
The existing industrial financing programme’s budget has R15 billion set aside for 600 enterprises to benefit. The number of targeted enterprises was reduced to account for the impact of Covid-19 and the discontinuation of the 12I tax allowance for industrial policy projects.