Page 15 - Q&A

Covid-19 relief – does my race, gender, age or
disability matter? BEE

June 2020
“I am a small business owner and I am hoping to apply for financial relief from
the Covid-19 pandemic. Will my company’s B-BBEE status or factors such as race,
gender and disability be considered when I apply for the relief?”

Following the state of disaster declared in terms of the Disaster Management
Act 57 of 2002 due to the coronavirus pandemic, the Minister of Small Business
Development (Minister) established two funds to provide financial relief to small,
medium and micro enterprises, namely the Debt Relief Finance Scheme (DRFS)
and the Business Growth Resilience Fund (BGRF).
The DRFS fund was designed ‘for businesses which are negatively affected,
directly or indirectly due to the coronavirus pandemic. The scheme aims to
provide relief on existing debts and repayments to assist SMME’s during the
period of the Covid-19 State of Disaster.

The BGRF was designed for businesses who wish to take advantage of supply
opportunities resulting from the coronavirus pandemic or shortages in the local
market. This fund is targeted at SMME’s that are manufacturing what could be
considered essential goods.

The question that arose in respect of these funds is whether a company’s BEE
status or factors such as race, gender and disability could be used to determine
the recipients of the funding? This issue was recently dealt with by the Pretoria
High Court when the Democratic Alliance applied to interdict the Minister from
using B-BBEE status, race, gender, ability or disability as criteria for determining
which persons or entities will receive funds and to declare the decision to use
B-BBEE status, race, gender, ability or disability as a criteria for determining which
persons or entities will receive funds as unlawful.

The Minister had previously confirmed that limited preference was given
to SMME’s owned by “women, the youth and the disabled” but no clarity
was provided as to how these factors were used to make a determination.
The opposition argued that this could not be considered a predictable system
as there was no explanation as to how these factors were measured or how
important these factors were relative to each other or to other factors set out
as criteria to be taken into account in the ultimate decision to distribute funds.

The court found that the criteria were vague and thus legally non-compliant
and set aside the criteria and referred the matter back to the Minister for a
redrafting of the regulations. The Minister would be required to consider the
role of race, gender, youth and disability in the formulation of the criteria to be
applied in the new document which the Minister is now required to prepare as
the guide to the decision to disburse moneys in terms of the two funds.

8