Pretoria, Gauteng, SA – Dr Jaywant Irkhede, Director: Leather & Footwear at the Department of Trade, Industry & Competition (DTIC), last week forwarded this announcement. Dr Irkhede's contact details are +27 (0)66 301 2044, jirkhede@thedti.gov.za.
COVID-19 GUARANTEED LOAN SCHEME FOR SMALL AND MEDIUM ENTERPRISES
As announced by the President, National Treasury, the South African Reserve Bank and commercial banks have jointly created a guaranteed loan scheme. The purpose of this scheme is to help small and medium-sized businesses and the economy. In terms of this scheme, R200 billion will be ultimately made available for new loans to existing customers. The initial phase will be R100 billion.
       The key features of the Covid-19 loan guarantee scheme are:
1. Covid-19 loans will be available from banks to eligible businesses in good standing with their commercial banks with an annual turnover of less than R300 million.
2. Funds borrowed through this scheme can be used for operational expenses such as salaries, rent and lease agreements, contracts with suppliers, etc. Loans will cover up to three months of operational costs and will be drawn down monthly.
3. Banks are not obliged to extend Covid-19 loans, and those that do will use their normal risk evaluation and credit-application processes. A business’ owners may be required to sign surety for the loan.
4. Each business may accept only one Covid-19 loan.
5. Covid-19 loans will be offered at a single, agreed lending rate by all banks participating in the scheme. The rate will track the repo rate.
6. A six-month repayment holiday will commence from the first drawdown, although interest will accumulate from the date on which the first drawdown on the loan occurs.
7. Repayment of interest and capital starts after six months and businesses have a maximum of 60 months to do so. Borrowers can repay the loan ahead of schedule.
8. The scheme will be rolled out by banks over the next few weeks.
       The scheme works on the principle that profits and losses are ultimately shared between government and the banks. The scheme will receive all ‘profits’ on the loans, i.e. the difference between the rate at which banks lend the money (together with limited costs). This will include a guarantee fee charged to the banks in relation to the scheme. These profits will be used to offset any losses that the scheme makes. If the scheme suffers any further losses, these will be absorbed by the banks themselves, capped at 6 per cent of the size of the loan. Any further losses will ultimately be covered by the fiscus.
       Please contact your bank for further details and eligibility criteria.

From today, the leather and footwear sectors, and their suppliers, may resume limited business, from manufacturing to retail, subject to various safety measures. Subject to clarification, it appears that ANY closed footwear qualifies. So far, no mention has been made of leather goods.
       In Government Notices No 43258, April 29 [https://www.gov.za/sites/default/files/gcis_document/202004/43258rg11098gon480.pdf], issued by the Department of Co-Operative Governance & Traditional Affairs, on page 24, Part C: Manufacturing, it states: "Manufacture of winter clothing, footwear, bedding and heaters (and all inputs required, including textiles) permitted, commencing at 25% and scaling up to 50% employment and subject to strict health protocols."
       On page 25, Part E: Wholesale and retail trade, covering stores, spaza shops, e-Commerce and informal traders, point 15, it states: "Winter clothing, footwear, bedding and heaters and the components and fabrics required to manufacture these."

The semi-processing of leather has fallen under regulations for agriculture, according to Ernest Heunis, chairman of the Skin, Hide & Leather Council (SHALC). He said the entire red meat value chain, including ostrich and crocodile, had been working with full workforces throughout, including the processing of hides and skins to wet blue, to prevent waste.
       What changes now is that automotive leather finishing tanneries, which fall under regulations governing the automotive sector, may start work with 30% of their workforces, building up to 50%.
       All other tanneries, including exotic leather tanneries, processing from wet blue to crust and finished leather, may start work with 30% of their workforces, under regulations governing 'other manufacturers'. Mossop Leather has been working throughout, with a small staff, producing leather for contract and tender footwear.

Reacting to the regulations, SAFLIA executive director Jirka Vymetal said: "We're a little disappointed in that they only gave us half of what we asked for."
       National Clothing Retail Federation executive director Michael Lawrence said: "In terms of retail, as far as footwear is concerned, we categorised any closed shoe as winter footwear, but we're waiting on clarification."
       He said the NCRF had included belts in its submission for winter clothing, but not handbags. "We thought about bags," he said, "but we thought they might be a bridge too far. The problem will be enforcement - if we were just dealing with the DTI, it would be simple, but there needs to be a list for the police to follow."

In the document Risk Adjusted Strategy Regulations 29 April 2020, issued by the Department of Cooperative Governance, on page 7, point 4 reads: "Every business premises, including, but not limited to, a supermarket, shop, grocery store, retail store, wholesale produce market or pharmacy shall a) determine their area of floor space in square metres; b) based [on that], determine the number of customers and employees that may be inside the premises at any time with adequate space available; c) take steps to ensure that persons queuing inside or outside the premises are able to maintain a distance of one and a half metres from each other; d) provide hand sanitisers for use by the public and employees at the entrance to the premises; and e) assign, in writing, a employee...who must ensure the compliance with the measures provided for in paragraphs a) and d), and that all directions in respect of hygienic conditions and limitation of exposure to persons with Covid-19 are adhered to."

Dr. Jay Irkhede on behalf of the dtic thanked all sector associations, export councils, cluster, individual manufacturers, organized labour and sector media "S&V" for patience, resilience, very active communication and feed back to the dtic. He said that after the recent publication and dissemination of the Risk Adjusted Strategy Regulation 29th April 2020 (Govt. Notice from COGTA on Alert Level 4) we have received various question for clarity and the following is our responsible response to the inquiries:
1. We may insist that as a "Good Practice" the manufacturers may have internal "COVID-19 company representative" delegated with "development of strict health protocol" and "to monitor and mitigate the risk of virus spread". However, this is not a mandatory requirement.
2. We insist that we adhere to "General Measures to Contain COVID-19" as stipulated on page 9 of the regulation.
3. All manufacturers are required to develop a "Work Place Plan" as per ANNEXUR E on page 38 of the regulation (Item 1, 2, 3, 4, 5a to 5h & 6).
However, we confirm that the Work Place Plan developed does not need any Govt. approval.
4. Table 1 on Alert Level 4 on page no 24:
a. Please demonstrate that all persons who can work from home are doing so.
This will also improve your "on site employment complement" within the scope of Level 4 restriction.
b. Part C: Manufacturing; Item 5: Manufacturing of winter footwear permitted commencing from 25% and scaling up to 50% employment subject to strict health protocol.
You may develop a stricter health protocol while phasing employment up to 50%.
Use "Full Scale Prevention Strategy recommended guidelines for footwear industry developed by Footwear Leather Industry National Cluster (FLIC)".
While manufacturing of "winter footwear" under this provision the manufacturers should demonstrate the manufacturing of appropriate winter articles and that production was strictly meant for "the current winter season" and support such activity traced back to "winter order books".
c. Part C: Manufacturing: Item 9: All other manufacturing, scaling up to 30% employment subject to strict health protocol.
All of the six sub-sectors in Leather, Leather Goods and Footwear manufacturing value chain producing fashion/non-fashion goods will fall under this provision.
d. The manufacturing of essential goods will be allowed phasing in up to 100% employment.
Against confirmed commitments/tenders the manufacturing of products such as face masks, gloves and service footwear by our sectors will require CIPC permit to operate within Level 4 alert.
e. For hides and skins, ostrich, crocodile and taxidermy industry, the regulation Part C: Manufacturing: Item 9: All other manufacturing, scaling up to 30% employment subject to strict health protocol, will normally apply.
However, as part of upstream Agriculture Value chain the provisions of 100% employment under Part A (1) Agriculture, Hunting, Forestry and Fishing should be reviewed.
However, the dtic, is not in a position to officially interpreter these provisions and we recommend that the SHALC, SAOBC, SACIA, SATTA & ELSA to verify such provision on processing of agriculture waste & bi-products during Alert Level 4 through the DEA and DAFF.
During the Alert Level 5, in case of SAPS enforcement on CPC/AHT, we through the dtic Chief Director: Agro Processing had supported the position that "The hides are an end product of animal production more important a bi-product of animal production hence in terms of regulation falls within food industry mainly part of meat value chain".
We acknowledge mails received from these sub-sectors and recommend the following:
(i) Keep a scale of employment phased in to maximum of 30% on the processes further to preservation and storage such as tanning, crusting and finishing, till provisions to operate with 100% employment are reviewed from the DEA and DAFF.
(ii) Obtain a new permit from CIPC to operate to at 100% employment with shift work to process Agriculture waste / bi-product to avoid decay during Alert Level 4.
5. Currently for the sub-sectors without existing shift work system we recommend not to perform manufacturing in shifts since you will be seen as constructing an arrangement to exploit Alert Level 4 regulations.
6. There is absence of clarity on overtime work during Alert Level 4 and the dtic's view is that overtime defeats the purpose of relaxation provided during Alert Level 4.
7. Yesterday during the evening telecast Hon. Minister Patel indicated "rotation".
We would expect that during Alert Level 4 the manufactures rotate employee in phases with an objective to achieve "close to equal distribution of remuneration".
8. For the movement of shift employee particularly for operations with contentious processes the tanneries and taxidermists may seek assistance from Provincial Authorities.
We could not comprehend which agency will offer such permissions to avoid violation of the curfew conditions during Alert Level 4.

30 April 2020 – Agriculture received some positive news this week. Firstly, it was the further upward revision to the country’s crops estimates with the South Africa’s Crop Estimates Committee (CEC) pegging the 2019/20 crop 17.52 million tons of grain and oilseed crops which is up 2.6% from March and 31.3% higher year-on-year (y/y). At 15.22 million tons, the maize harvest will be the third largest on record having been raised by 2.8% from the previous month and 35% y/y. Encouragingly, soybean output jumped 1.7% from March despite earlier yield concerns to 1.29 million tons which is up 10% y/y. While the sunflower harvest estimate came in unchanged month-on-month (m/m), it is still 10% up on last year. This is good news for consumers as food inflation is expected to remain contained in particularly the bread and cereals which decelerated by 3.8% y/y during March 2020.

       Secondly, it is inevitable that fuel prices are going to fall in May and all indications are that it will be by a big margin. This comes at the time when harvesting gets in to full swing for the summer crop areas while the winter crop planting season begins. The implications are reduced costs for farmers from planting, harvesting, and distribution bearing in mind that the distribution of agricultural produce is dominated by road transport with over 80% of grain is transported by road.

       Thirdly, the lockdown regulations have been eased and wine can now be transported for the critical export market to ensure that we retain our markets and improve cash flows for producers. After earlier confusion with some of the provinces, the issue of livestock has been clarified and sales can continue unhindered.

Cape Town, W Cape, SA – Following the announcement that the manufacture and retail of 'winter clothing' will be allowed from May 1, a Government Gazette spelling out the conditions is expected to be published this week.
       "We're busy writing a lot of motivations and product lists which have to be with the government by midday tomorrow [today]," National Clothing Retail Federation of SA executive director Michael Lawrence said yesterday. "The lists include footwear. We've been very specific about the categories."
       He said the NCRF had also asked for time ahead of the scheduled re-opening to be able to "tidy up our stores", and to train staff and install any equipment required to comply with regulations.
       "I suspect the government has already written the notification, and is just waiting to finalise details. They've set the date. They must make it happen, somehow."
       He said retailers were welcome to contact him. (+27 (0)82 496 0126, michaell@ncrf.org)
       On the manufacturing side, Dr Jaywant Irkhede, Director: Leather & Footwear at the Department of Trade, Industry & Competition (DTIC), asked all manufacturers' associations in the leather industry to submit proposals to the DTIC: "We will appreciate if all six sub-sector associations (SAFLIA, SHALC, SAOBC, SACIA, SATTA and GGBB&LEA) can submit their proposal in favour of how the industry in their sub-sector would like to operate during Alert Level 4 by 27th April 2020. We would like to urgently feed all proposals to the DTIC Chief Economist by close of 27th April 2020. We have already received an official draft proposal today from Ernest Heunis of SHALC on behalf of Skins & Hides sub-sector for all tanneries to be allowed to operate under Alert Level 4 and it be gazetted under new regulation."
       One manufacturer said of the recommended preventative measures and procedures for manufacturers produced by FLIC and published in last week's newsletter: "If you look at the list of things your staff and factory have to now comply with, I feel first of all they will battle to work productively and secondly with the expense will it be worth opening?" [Note: FLIC's list was of recommendations, not regulations]
       Said SAFLIA director Jirka Vymetal: "The little I do know is that working conditions will be very strict under COVID conditions, so most of what FLIC state will probably be a requirement. So yes, going forward there will be huge additional expenses for a factory to commence and carry on working."
           So far, leather goods haven't been mentioned in the re-opening dialogue. Said Equator - the Belt Factory™ director Leon Buhr: "Winter shoes might manage to get into that definition [winter clothing], but I doubt belts or bags can make a case to be included as winter clothing at Level 4. Although you do need a belt to hold up your corduroys.... I have lowered my expectations to zero so whatever happens I can only be surprised on the upside. We fully support the extensive safety protocols in work-places and factories and had already implemented many of these soon after 4 March, and are readying for a very stringent environment at the workplace as thinking and suggestions around this evolve. At the end of the day, whether we can re-open now or later, everything depends on consumer demand. Nothing else matters really, does it?"