Private business revenue decline spikes - PwC study
JOHANNESBURG - A STUDY by PwC has shown more than 50 percent of private businesses covering 53 countries in Europe, Middle East and Africa (EMEA) were expecting their revenues to decline this year in the wake of the Covid-19 pandemic.
The auditing firm said just 9 percent of respondents surveyed in February and March expected revenues to decline, but that number had spiked to 51 percent in June. It said the aviation and tourism sectors were most affected by the lockdowns and both industries were forecast to take at least three years to rebound to pre-Covid levels.
PwC Africa’s leader for private company services Gert Allen said businesses’ agility was, however, paying off in improved performance amid headwinds.
“The current operational and financial challenges that private companies are facing make this pandemic an agility stress test for their business models,” Allen said.
“Leaders whose companies have been able to combine flexibility with a focus on people, technology and their customers, report better profitability and expect stronger performance in the future.”
Statistics SA said more than 40 percent of businesses it surveyed felt they could not continue to operate during the hard lockdown in April. The turnover was lower than the normally expected range in 90 percent of businesses as activity and demand stalled. In terms of employment, 36 percent of firms had laid off staff in the short term under level 5 lockdown, but that improved to 26 percent under level 4. There has been an increase in the level of business confidence since the lockdown was eased to Level 2.
Allen said some private businesses were weathering the storm better, with more than 60 percent of companies switching to work-from-home models. He said some of these solutions were likely to support the shift to an increase in remote working while maintaining business continuity.
“In our view, humanising remote work will be one of the biggest challenges private businesses face in the years to come,” Allen said, adding that other solutions may provide the technical backbone needed for other types of cost reduction, such as automation.
“Agility alone isn’t enough to ensure resilience but it can play a strong role. Resilience requires continuing commitment and a willingness to invest time and resources in all the essential agility criteria, so that they become mutually reinforcing,” he said.
“Private businesses will continue to provide critical support for economies throughout Africa. However, government responses to the current crisis have the potential to enhance resilience, or to undermine it.”