Gauteng MEC for Finance and Economic Development, Lebogang Maile has written to South African Reserve Bank (Sarb) Governor Lesetja Kganyago, to request a rehabilitative intervention for local company The Drip Group (Pty) Ltd.
This is according to a statement from the Gauteng Department of Economic Development.
The footwear company is currently facing challenges of non-compliance with domestic tax laws.
According to the statement, Drip is under investigation for the contravention of the provisions of the Exchange Control Regulations, made under section 9 of the Currency and Exchanges Act, 1933 (Act No. 9 of 1933).
In the letter to the Governor, the MEC expressed unwavering respect and commitment to the rule of law which extends to the investigative process the Sarb has undertaken in its legal matter with the company.
The investigation, which was initiated by the Financial Surveillance Department (FinSurv) of Sarb, has been ongoing for just over two years.
Drip Footwear was launched by Lekau Sehoana and has more than 25 retail stories in the country.
The MEC said that it is important to maintain the principle of the separation of power and that the law should never be punitive, but rather rehabilitative.
“When the law is rehabilitative, it makes allowance for business owners, particularly of SMMEs, to understand the depths of tax laws and other laws, which most are not exposed to, and as a result, place their complete faith in third parties who, unfortunately, can take advantage of this limited understanding,” the statement said.
This has happened to many SMMEs, including The Drip Group. Many SMMEs don’t get through such challenges which is a contributing factor to why between 70% and 80% of them fail within the first five years.
Maile said: “We cannot sit back and watch The Drip Group (Pty) Ltd, a company founded in the township of Ivory Park by a young black man who had the odds stacked against him, be liquidated.
“As a government, we must do everything possible to provide the necessary support to The Drip Group and other SMMEs that are facing challenges, particularly when such challenges arise from failures of compliance with legislation, which is not the same thing as blatant and intentional criminality.”
According to the statement, the intervention by the MEC is guided by a commitment to the Township Economy Development Act (Teda).
Teda recognises the major challenges that such businesses face, including the challenge of inadequate tax education on the part of township business founders.
Maile said: “We have an obligation to equip such businesses with the necessary skills and ask that the government, private sector, and civil society all play their part in helping these businesses succeed.
“Part of what that demands is that institutions such as Sarb also assist us to equip these businesses with the requisite knowledge and skills, rather than to apply a punitive approach.”
IOL Business