24 May 2021
The Sukuma Fund to focus on preventing more restaurant closures
24 May 2021: It is estimated that in South Africa, nearly 30 percent of restaurants were forced to close their doors during the height of the nationwide COVID-19 lockdown in 2020. The hospitality sector – which employs a high volume of labour – was one of the hardest hit by the pandemic, and is in dire need for some kind of relief.
As it stands, thousands of restaurants are still struggling to recover from the devastating economic effects of the lockdown and are on the brink of closure. David Morobe, Spokesperson for The Sukuma Fund and Executive General Manager of Impact Investing at Business Partners Limited explains that this is why The Sukuma Fund – administered by Business Partners Limited – has partnered with FEDHASA (the Federated Hospitality Association of Southern Africa) to ensure that the local restaurant industry can be assisted in a meaningful way, and continue to save much-needed jobs in the sector.
The Sukuma Fund was formed to distribute the R1 billion donated by the Rupert Family and Remgro Limited, long-time supporters of the small business sector, in response to the economic crisis resulting from the pandemic. To date, 1303 SMEs and 2614 formal sole proprietors have received survival grants and/or soft loans from The Sukuma Fund, saving over 32 000 jobs in the process.
Thanks to further charitable donations and some repayments by Sukuma beneficiaries, The Sukuma Fund has grown by tens of millions of Rand.
“In order to make the maximum impact with the remaining funds, we adapted our approach to partner with industry bodies who understand the specific challenges that their members face. We felt this was the most effective way to make a meaningful impact in helping businesses overcome COVID-19 related challenges.”
The Sukuma Fund has allocated R100 million to qualifying restaurants with the aim of providing specific support in the form of rental relief and augmenting working capital where required. “The collaboration with FEDHASA will help identify eligible restaurants that require capital to survive these challenging economic times,” says Morobe.
To qualify for Sukuma relief funding, independent restaurants must be formally registered, regulatory compliant and FEDHASA members. They are also required to provide evidence of financial solvency and future viability, among other criteria. The funding is also available to new FEDHASA members – businesses that would otherwise qualify, but are not currently FEDHASA members, are encouraged to register as a member to become eligible to receive the financial support.
Morobe notes that the programme was designed to ensure the survival of its restaurateur beneficiaries. The unsecured interest-bearing loans of between R250,000 and R1 million are structured over 60 months, and will incur no interest or repayment obligations for the first 12 months. Thereafter, interest will be raised at the prime rate with repayments set to commence from month 13.
“From what we have witnessed, the biggest challenge that struggling restaurants still face is meeting their rental payment obligations. While the rental for many of these businesses has been reduced, it remains a major operating cost that many restaurants are still struggling to cover with current cash flow levels. With that said, once their rental obligations are met, working capital requirements as needed can be considered for funding.”
Morobe notes that the mission of The Sukuma Fund was not only to save as many SMES as possible, but also to create an innovative and sustainable model capable of supporting SMEs through challenging times. “Our vision was always to do more than help today – the intention was to allow Sukuma beneficiaries pay it forward so as to create a self-perpetuating cycle of support for the SME sector,” says Morobe.
“It’s extremely fulfilling to see that this fund has been able to make a difference to struggling SMEs businesses, and that these businesses are now able to move ahead and are dedicated to paying it forward. This is testament to the underlying principles on which the fund was developed, and should hopefully ring true for the FEDHASA collaboration.”
About The Sukuma Fund
The Sukuma Fund was initiated in 2020 to provide widespread and sustainable support for small and medium enterprises (SMEs) that are financially impacted by COVID-19. The Rupert Family and Remgro Limited pledged R1 billion towards establishing this financial aid and since then, thanks to further charitable donations, the fund has grown by tens of millions of Rands. The Sukuma Fund’s goal is to rescue and revive thousands of small businesses across the country – preserving jobs and supporting the people who depend on them. Visit https://sukumafund.org.za/ for more information about The Sukuma Fund.
Founded in 1949, a restructured and transformed FEDHASA (Federated Hospitality Association of South Africa) is recognised by Government as the official representative of the hospitality industry of South Africa. With industry support, FEDHASA remains the umbrella association for hotels, restaurants, conference centres, caterers, self-catering accommodation, home hosting establishments (B&Bs and guest houses), clubs, taverns, shebeens, suppliers and trainers, consultants and service providers to the hospitality industry.
Visit https://fedhasa.co.za/ for more information about FEDHASA.
About The Sukuma Fund administrator: Business Partners Ltd.
Business Partners Limited (Business Partners Ltd) is a specialist risk finance company for formal small and medium owner-managed businesses in South Africa and selected African countries. The company actively supports entrepreneurial growth by providing financing from R500, 000 to R50 million, specialist sectoral knowledge, business premises and added-value services for viable small and medium businesses. Since establishment in 1981, Business Partners Ltd has provided business finance worth over R20 billion in over 71 600 transactions facilitating over 671 000 jobs. Business Partners Ltd was named the 2019 Gold winner in the SME Bank of the Year – Africa category at the Global SME Finance Awards*. Visit www.businesspartners.co.za for more information.
*Business Partners Ltd has had remarkable results within the SME segment in Africa as a financier, even though it does not conduct the business of a bank.