On 23 March 2020 Nicky and Jonathan Oppenheimer announced their commitment to tackle the unfolding health crisis in South Africa, and highlighted the exceptional challenges that small businesses were facing. They pledged to donate R1 billion to extend a financial lifeline to employees of small, medium and micro-sized enterprises (SMMEs).

On 31 March 2020 the South African Future Trust (SAFT) was established with this initial donation through the Oppenheimer Generations Foundation, and it has subsequently attracted further donations from foundations, corporates and individuals to the value of just over R134 million. The Trust’s immediate aim was to extend direct financial support to SMME employees at risk of losing their jobs or suffering serious loss of income due to the pandemic and subsequent national lockdown.

SMMEs traditionally tend to fail due to unexpected cash-flow constraints, and the Covid-19 crisis created a perfect storm. As small businesses faced closure or trading with severe market disruption, employees were likely to be the first affected as employers struggled to find the cash to pay salaries. The speed with which SAFT could start to distribute a basic income to enable them to afford essential goods – including food – was critical.
The first priority was to establish SAFT as an independent trust with public benefit organisation (PBO) status. This process would normally take months but it was achieved in under two weeks, and the Trust was registered only days after the start of lockdown level five.

Next up was to establish an effective distribution model for disbursing money quickly to the employees. Partnering with six major banks – ABSA, FNB, Investec, Mercantile Bank, Nedbank and Standard Bank – solved the complex issue of how to distribute the funds through interest-free loans to qualifying SMMEs which were existing clients of these banks.
Qualifying criteria were deliberately kept simple and required little supporting paperwork, which would have been difficult to obtain during lockdown level five. The banks, acting as agents of SAFT, required their clients to sign a loan agreement confirming the following: the business had been trading for 24 months or more; it had a turnover of less than R25m per annum; it had been financially sustainable at the end of February 2020; and it had been adversely affected by Covid-19.

Qualifying SMMEs supplied a list of all employees on behalf of whom they were applying for the relief, and their bank account details. The partner banks then initiated weekly payments of R750 directly to each employee for a 15-week period. The employees carried no liability to SAFT for these payments.
As a result of the dedication, commitment and drive of all the parties involved, including the government, the partner banks who waived any fees for administering the loans, and internal teams across Oppenheimer Generations, the first payments to employees were made on 06 April 2020, only a week after the establishment of SAFT. By the middle of July, about 9 000 SMMEs had signed SAFT loans valued at a total of R1.04 billion, which translates into payments to about 90 000 employees.

The loans advanced by SAFT have a five-year term and, as such, it is hard to predict the timing of their repayments, and indeed whether all or how many of them will be repaid. As the shutdown continues to devastate the economy and damage businesses, big and small, it is almost certain that not all SMMEs who have taken out the loans will survive. This makes the next phase of SAFT all the more important, as the trust starts to formulate a strategy for disbursing the funds it still holds to continue to support the SMME sector.
In the longer term SAFT will play an ongoing role in accelerating inclusive economic growth and employment creation in South Africa until all its funds have been disbursed and the Trust is wound up on 31 December 2040.

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