Six out of 10 small businesses in SA ‘couldn’t work during lockdown’
Existing debt‚ lack of cash reserves‚ outdated financials‚ no access to relief funding and an inability to operate during the lockdown has forced the closure of 42.7% of small businesses in SA.
This is according to the SA Small‚ Medium and Micro Enterprises (SMMEs) Covid-19 Impact Report conducted by Finfind‚ in partnership with the department of small business development and other stakeholders.
According to the report‚ 60% of SMMEs were unable to trade during lockdown level 5. The report also found that only 47.9% of business that closed had applied for Covid-19 relief funding — and 99.9% of these funding applications were rejected.
Robynne Erwin‚ head of research projects at Finfind‚ said most of the job losses happened a few months into the pandemic.
“For example‚ full-time jobs were reduced by 60% and part-time by 76%. The lockdown and reduced trading opportunities confronting small businesses has also badly affected job opportunities for casual labourers and consultants‚” she said.
More than 75% of all businesses experienced a significant decrease in revenue from the end of March to August. Only 35% of the SMMEs had cash reserves at the start of lockdown.
“This survey shows that the use of casual labour reduced by 53% and small businesses used 41% fewer consultants than they had before the pandemic. The reality is that small businesses do not have the same resources available — and therefore their ability to survive the shock of lockdown is very precarious. This affects significantly their abilities to create jobs and work opportunities for casual labourers and consultants‚” said Erwin.
One of the key findings from the report was that 76.2% of businesses surveyed experienced a significant decrease in revenue in the first five months of lockdown‚ while 35.2% had cash reserves saved and‚ of these‚ 62.6% thought their cash reserves would last between one and three months. However‚ only 29.2% of businesses were confident they could pay expenses the after month.
Eric Sibanda‚ manager for Pheli Shisanyama in Atteridgeville‚ said the business lost close to R800‚000 as it was unable to operate during most of lockdown.
The business was only able to function normally under level 1 and is now still trying to recover from its losses. Sibanda said the business was now doing well since starting to operate again‚ though under strict conditions brought on by Covid-19.
During the lockdown‚ his employees had to sit at home without salaries as there was no revenue being generated.
“Things are becoming better‚ slowly. From 100%‚ I can say we are 50%. I think we are doing good. We were able to hire more staff‚” he said.
Sibanda said they have had to change how their business operates.
“Now people have to book to come so that there can be social distancing. Some people‚ we have to send home so that we don’t violate the regulations. We are losing‚ but not that much‚” he said.
Source: ARENA Holdings.