The future of Drip Group, one of SA’s fastest growing fashion brands, is in peril after the Reserve Bank seized $200,000 of the company’s funds after finding it had breached the country’s exchange control regulations, a move that has seen Gauteng MEC for finance and economic development Lebogang Maile now pleading with the central bank not to liquidate the company.
A spokesperson of the company, founded and run by Lekau Sehoana, refused to comment, saying the group’s lawyers were seized with the matter.
Founded in 2019 as Drip Footwear, which included sneakers made using recycled materials, the group went on to launch different ranges, including collaborating with rapper Cassper Nyovest on the Root Of Fame range. Drip has since opened 25 retail outlets, including a children’s clothing shops.
In statement Maile expressed his acceptance of exchange control regulations but requested a “rehabilitative intervention for The Drip Group” from Bank governor Lesetja Kganyago.
“The investigation, instituted by the Financial Surveillance Department (FinSurv) of SARB, has been ongoing for just over two years. The MEC has communicated that in respecting the rule of law and wanting to maintain the very crucial principle of the separation of powers, it’s important that the law should never be punitive but rather, rehabilitative,” 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. The company provides employment to hundreds of people, many of them from historically disadvantaged groups that include women and youth.”
The Bank has issued more than 300 forfeiture orders in the past five years to scores of individuals and entities found wanting in terms of SA’s exchange control regulations, netting the fiscus billions of rand in the process.
A cursory examination of the notices, legally known as a “notice and order of forfeiture” by the central bank, since 2021 shows the Bank has been on a drive to punish those found to be in breach of exchange control rules after investigations by its financial surveillance department.
The biggest haul to date is the R6bn seized from different accounts of Ibex Investments, formerly Steinhoff.
Maile said small companies such as Drip need to build skills when it comes to complying with the country’s laws.
“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,” he said.
“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”.
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