Small businesses battered by Covid-19 — survey

The ongoing Covid-19 pandemic has decimated the country’s small business sector, according to the recently released BeyondCOVID survey by management consultancy Redflank.

The BeyondCOVID survey questioned nearly 4,500 businesses, 56% of which were classified as micro to small, and the results were not good.

According to their findings, 16% of businesses had been forced to close due to the pandemic, with 5% saying they had closed for good.

16% of businesses had been forced to close due to the pandemic

Meanwhile, 54% said they were operating at a reduced capacity.

Only 21% of businesses surveyed reported that they were continuing as usual.

Compared to their corporate counterparts, small, medium and micro enterprises (SMMEs) were 26 times more likely to have closed.

The survey estimated that roughly R1.1 trillion in relief funding would be needed to prevent more SMMEs being shut down.

“In South Africa, the small business sector is a critical part of the national economy, with the government’s National Development Plan (NDP) 2030 looking to SMME’s as a major source of employment and simulator of growth, reducing unemployment against a backdrop of a formal sector that continues shedding jobs,” said BeyondCOVID chairperson Fay Mukaddam.

In South Africa, the small business sector is a critical part of the national economy

This plan has been seriously threatened with Covid-19, with 13% of surveyed SMMEs saying they planned on retrenching staff in the next six months.

“SMME respondents indicated that they plan to retrench an average 13% of their staff – or 1.2 million people – in the next six months, against a 5% figure for corporates,” Mukaddam said.

“At face value, businesses appeared to be in a slightly better position this year, but closer examination showed that this applies only to corporates. The situation is worsening for SMMEs.”

It’s not just businesses that are feeling the pinch.

The situation is worsening for SMMEs

As reported in the Daily Dispatch on Wednesday (“Household spending decimated in 2020 as lockdown batters SA economy”, March 31), the Reserve Bank revealed that real final household consumption had shrunk by 5.4% last year, compared to the 1% increase in 2019.

“With more than 1-million jobs lost and many workers having to take pay cuts, demand slumped,” the Dispatch reported.

Overall, the BeyondCOVID survey found that the top performing sectors during the pandemic have been financial services, professional services and real estate, while the sectors hardest hit have been in accommodation and food; arts entertainment and recreation, and; water and waste management.


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