Gauteng Finance MEC’s Desperate Plea to Save The Drip Group
In a bold move to stave off financial doom for The Drip Group, Gauteng finance and economic development MEC Lebogang Maile has reached out to the governor of the Reserve Bank, Lesetja Kganyago, requesting a “rehabilitative intervention” to rescue the beleaguered company from liquidation.
Upholding the Law, But With a Soft Touch
In his letter, Maile reiterated his commitment to the rule of law while emphasizing the need for a compassionate approach. He stressed that Gauteng has a duty to support local businesses in both material and non-material ways.
When the law takes a rehabilitative approach, it allows business owners, particularly those of SMMEs, to understand the depths of tax laws and other regulations. Most business owners lack exposure to these laws and, as a result, place their complete faith in third parties who, unfortunately, can exploit this limited understanding.. The company provides employment to hundreds of people, many from historically disadvantaged groups including women and youth,” Maile stated.
The $20 Million Elephant in the Room
Earlier this year, reports emerged that Drip Footwear, founded by Lekau Sehoana, faced liquidation. A Johannesburg-based company, WideOpen Platform, filed for Drip’s liquidation over an unpaid debt exceeding R20 million. The high court in Johannesburg received papers seeking to wind up Drip, alleging insolvency and an inability to service debts. Additionally, WideOpen Platform intended to sue Sehoana for failing to pay the debt after signing a surety agreement.
A Call for Rehabilitation Over Punishment
Maile’s spokesperson, Castro Ngobese, shed light on the ongoing investigation by the Bank’s financial surveillance department, which has spanned over two years. Ngobese echoed Maile’s sentiment that the law should be rehabilitative rather than punitive.
“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.
This, sadly, has happened to many SMMEs, including The Drip Group,” Ngobese explained.
The Township Economy Development Act to the Rescue
Maile’s intervention is also rooted in the Township Economy Development Act (TEDA) of 2022, which aims to foster inclusive economic growth and support township enterprises. The act highlights the significant challenges these enterprises face, including inadequate tax education.
Rallying the Troops: Government, Private Sector, and Civil Society
Maile urged for a collective effort from the government, private sector, and civil society to assist businesses like The Drip Group. He called on institutions such as the Reserve Bank to help equip these businesses with essential knowledge and skills instead of taking a punitive approach.
“In this way, we can ensure the sustainability and survival of township businesses and SMMEs broadly, thereby growing and developing the provincial economy to the benefit of all the people of Gauteng,” Maile concluded.