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News

Drip is not forever for Lekau

todayOctober 10, 2024 533

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Another dream has been shattered and a sad story for black business prevails as Drip Footwear enters liquidation.

The company owned by Lekau Sehoana became a household name in 2019 when it broke into the sneaker market.

The retailer had at least 14 stores across the country, with a reported net worth of about R280 million.

Hundreds of employees will be laid off as the company ceases to trade.

Drip allegedly owed R20 million in advertising.

Sehaona has been widely criticised for the large-scale advertising that has now landed him in hot water.

In August, the South African Reserve Bank seized R3.5 million from the company for flouting exchange control regulations.

MEC for Finance and Economic Development in Gauteng, Lebogang Maile, tried in vain to get the bank to not liquidate the company, in a bid to save jobs and the business.

As Drip joins many other black-owned small enterprises that have had to shut their doors in 2024, governance expert, Professor Sam Koma, says it is important for companies to reduce spending on non-core business.

He says non-core business keeps a company running but don’t necessarily grow the establishment.

“It is important to manage costs that may result in overspending while the expected revenue is falling on a monthly basis. Business owners should consider re-investing in the business to ensure expansion and resilience,” adds Professor Koma.

The think tank says Drip will have an uphill task in trying to prove to any potential creditors that it can settle its debt and gain ground.

Koma says Drip, like many other businesses, is in desperate need of financial support from the government.

EFF leader, Julius Malema, has placed Drip’s demise at the doorstep of the government.

He has accused them of failing to invest in black and township economies properly.

“I have a meeting with Drip owner Lekau Sehoana tomorrow [Friday]. I want to understand what is going on, and what is really going on, because at phase value, Drip is doing well, and it is a growing brand found in many shopping malls. Why is there no business rescue, we just go to liquidation, why is there no saving?”

“Where is Patrice Motsepe when we need him? If he is indeed a successful black billionaire when a young entrepreneur with such a promising future is going down?”

 

 

Written by: Lindiwe Mpanza

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