Recovering from the destruction of property in KwaZulu-Natal and Gauteng following recent civil unrest and protest action, will require a multipronged effort between the public and private sectors, says Business Leadership South Africa (BLSA) CEO Busi Mavuso.

However, for those who are insured, the State-owned insurer South African Special Risks Insurance Association (Sasria) will be playing a critical role, she adds, though she notes that it will take “a special effort to be able to process claims efficiently” owing to the unprecedented volume of claims that are expected.

Sasria works through commercial insurers, who act as its agents, and claimants will need to work through their insurer to register their claims.

Mavuso also refers to President Cyril Ramaphosa stating in his address on the evening of July 25 that Sasria would accelerate payouts and would have the backing of the National Treasury if needed.

“It is important that claims are settled fast – the sooner companies receive cash, the sooner they can start rebuilding,” she comments, adding that claims from firms which intend to rebuild should be prioritized so that “reconstruction can begin”.

However, Mavuso laments that the challenge is what to do about those who are uninsured, though Ramaphosa did indicate that a facility to assist these businesses would be forthcoming.

“There is a vital humanitarian relief effort under way by both the public sector and nongovernmental organisations, with business playing an important role through the Solidarity Fund, which will now be supported by an additional R400-million from government,” she states.

Schools, clinics and many other public facilities have been damaged with serious social consequences for communities, while damage to supply chains and businesses means food and medical supplies have been disrupted.

In her weekly newsletter, Mavuso says the humanitarian crisis is made worse by the damage to small businesses, both formal and informal, as “such businesses are essential for many to put food on the table for themselves and their families”.

“How can we get them back on their feet, with infrastructure rebuilt and inventory replaced,” she asks.

While she admits that there are “no easy answers” as to how these businesses can be put back on their feet, with infrastructure rebuilt and inventory replaced, Mavuso is feeling positive with news that organisations have rallied together to provide grants to small businesses that have been severely affected.

“Ideally, we’d pull together resources to provide ‘reconstruction grants’ to all of them, but there simply aren’t the resources available and what we have must meet humanitarian needs first,” she notes.

Additionally, BLSA also welcomes the boost to the Employment Tax Incentive by an extra R750 a month for each eligible employee.

“Extending relief to those worst affected while also deferring taxes for three months for the alcohol sector and pledging to set up a fund for uninsured businesses that were affected are also positive moves,” Mavuso comments.

Overall, the government’s package of support announced on Sunday night can be funded from expected additional revenues owing to high commodity prices this fiscal year but Mavuso urges caution, as “this situation won’t last forever and the underlying fiscal problems of government cannot be forgotten in the medium run”.

She suggests that there are other things government can do to help.

“Some resources have not been spent from the Covid response that can be redirected to support damaged businesses. There is also scope for innovative incentives to tilt the odds in favour of businesses rebuilding, such as accelerated capital write-offs and tax holidays,” she notes.

Mavuso also suggests that joint funding mechanisms with the private sector, that government can back with its balance sheet, might be feasible.

“It makes sense for government to use some public financing to support the reopening of businesses that have long been an important source of tax revenue. If they instead close up, that is revenue lost forever and more people join the unemployed ranks,” she comments.

However, she warns that there are going to be businesses that will have to find their own resources to reopen.

“Our banks will help where there are opportunities to lend to viable businesses. Many clients have been affected and will need help from their banks if they are to avoid bankruptcy. The Covid crisis showed how banks can themselves quickly help clients when they need it.”

However, Mavuso is confident that, fundamentally, the willingness of businesses to take on risk by financing rebuilding will depend on the confidence they have in the future.

“Before the violence, that confidence was returning, thanks to important structural reforms government had announced,” she notes.

She refers to the chronic energy insecurity, which was being gradually addressed through initiatives like amendments to allow businesses to build plants of up to 100 MW without requiring a licence and future rounds of the Renewable Energy Independent Power Producer Procurement Programme, besides others.

In this regard, Mavuso says that “addressing the security situation will be an important new task, assuring everyone that the security services will in future be able to be relied on to keep people and property safe”.

That, plus structural reforms, including spectrum auctions, visa reforms and much else, are now key to whether businesses will have the confidence to rebuild. We need to redouble our efforts to get the economy moving, Mavuso states.