Media And News

PRESS RELEASE: Policy interventions required to support SA companies in bridging the COVID-19 crisis

News of Edcon’s cash crisis and inability to pay suppliers is a clear warning of the serious economic damage the COVID-19 crisis is causing. Edcon has said it will work on a reopening strategy, but may fail to find a viable route without Government and other support. Edcon’s current position is not unique and will likely be experienced by many other companies within the economy. 

As an industry that manages R175-billion of investments in private companies, mostly small- and medium-sized businesses, on behalf of pension funds and other investors, the private equity (PE) and venture capital (VC) industry is at the front line in working with companies to confront the challenges presented by the crisis.

It is our responsibility to help these companies confront the current health emergency by expanding capacity in needed supplies and working to ensure public health and safety, and access to required resources. Additionally, supporting employees to protect jobs and manage the impact of the measures to be taken; supporting the economy by protecting supply chains and shifting the strategies of companies to support the public effort; and preparing investee companies for a return to growth and contribution to economic recovery. We are also working to support companies’ balance sheets in order to survive the crisis.

The economy urgently needs policy interventions to enable it to survive the crisis. The South African Venture Capital and Private Equity Industry Association (SAVCA) has prepared the attached paper detailing proposals to consider. These include:

•            For the Unemployment Insurance Fund to be used to help companies retain workers on payroll during the crisis while they cannot work;

•            The Solidarity Fund to be leveraged through a guarantee scheme to enable the lending industry to support individuals and businesses through concessionary loans to bridge the period of the crisis and ensure they return to full production at the end of it; and

•            Business and end consumers, where possible, to keep up purchasing and expenditure to minimise the knock-on effect on the broader ecosystem. Priority should be given to shoring up vulnerable labour and communities as well as suppliers and customers so that we can give effect to a sharper recovery on the other side of the crisis.

We stand ready to work with policy makers, other business groupings, labour and civil society to identify interventions that can best use our scarce resources to defend the economy during this challenging time.

More details are contained in the position paper which can be accessed here: https://savca.co.za/wp-content/uploads/2020/03/SAVCA-Paper-Covid-19-1.pdf

For more details, please contact:

Tanya van Lill

CEO

SAVCA

T: +27 11 268 0041

E: tanya@savca.co.za

W: www.savca.co.za