Jobs Stimulus Fund gets extra R75m from Eastern Cape Treasury

Government has set aside an additional funding to the tune of R75 million, to assist businesses that are in distress as a result of COVID-19. The additional funding is augmented in the current Eastern Cape Jobs Stimulus Fund programme administered through the Eastern Cape Development Corporation (ECDC), aimed at providing financial support to businesses in distress to enable the saving and retention of jobs by Eastern Cape based businesses.

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This amount will augment the R17,4 million that was initially allocated to the Jobs Stimulus Fund for the 2020/2021 financial year, as a response given the onset of the COVID-19 pandemic which has necessitated that additional funding be made available to mitigate its impact on the provincial economy. The ECDC has thus reviewed the Jobs Stimulus Fund policy to allow for participation of distressed businesses affected by COVID-19 in all the provincial priority sectors. Businesses operating in the following targeted sectors will be prioritised for participation: agro-processing and beneficiation, green economy, tourism and hospitality, manufacturing, capital goods producers and construction. Companies in the services sector may be considered to participate in the programme if the economic and social impact due to prevalent job losses is significant.

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In its initial form, prior COVID-19, the fund provided a once-off incentive to qualifying companies of R10,000 per job saved or retained, with a minimum of 10 Jobs. This minimum requirement has since been reduced for COVID 19 intervention to 5 jobs saved or retained, to allow for participation of relatively more businesses. “In an attempt to respond to the current pandemic (COVID-19), the Jobs Stimulus Fund will provide special consideration in the form of a three months working capital incentive to businesses that are negatively affected (directly or indirectly) by the coronavirus with effect from the 01 April 2020 until the 31 March 2021. The additional incentive will cater for three months working capital for rental, salaries and other key operational expenditure. Companies will be required to provide a detailed cost breakdown and motivation for the working capital over the three-month period.

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This additional “working capital” incentive will only apply to all business with an annual turnover of R20Million and below and will supplement the normal once-off R10 000 per job allocation” says ECDC head of development finance and business support Tandeka Rozani. All businesses with an annual turnover above R20Million, will only be entitled to apply for the normal R10 000.00 per job saved or retained, and will not qualify for the additional working capital incentive. Already, applications from distressed businesses have been approved to the value of R5.81M which translates to 581 jobs being saved/retained, with a large number of applications currently in the pipeline for consideration as from 1st of August 2020 due to high demand for COVID-19 relief support.

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In order to qualify, the following will be highly considered:

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• Companies with100% South African shareholding;

• Companies must Retain/Save a minimum of five jobs;

• Employees must be permanent or with a two-year fixed-term contract;

• Employees to be 70% South African;

• Companies must be compliant with tax and legislation with entities such as the South African Revenue Service and the Unemployment Insurance Fund.

 

For companies applying for distress and the retention of jobs at risk, they are required to submit two years of signed financial statements by a registered accountant, creditor accounts and/or management accounts indicating that the company is “distressed.”

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Rozani says in addition, companies must submit a distress project execution plan, 12 months cash flow projections including estimations for the incentive, key financial indicators for the current and past two years in the form of revenue, net profit, labour expenses (wage bill), net assets, net current assets, current & total liabilities. They will also be required to submit operation costs, as well as a list of creditors, inclusive of debt and relevant arrangements for “distressed” companies.

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----ENDS

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For media enquiries contact:

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Nobulali Myataza

The ECDC Spokesperson

Cell: 064 850 8655

Email: nmyataza@edcd.co.za