South Africa’s mediocre growth would only change if there was a “single-minded focus” on developing small businesses. Photo: African News Agency (ANA) Archives
South Africa’s mediocre growth would only change if there was a “single-minded focus” on developing small businesses. Photo: African News Agency (ANA) Archives

‘SMEs vulnerable in this crisis but they require development’

By Edward West Time of article published Apr 30, 2020

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CAPE TOWN - South Africa’s mediocre growth would only change if there was a “single-minded focus” on developing small businesses, and the longer the lockdown lasted the more these businesses would suffer, Black Business Council (BBC) president Sandile Zungu said yesterday.

He spoke at an online event hosted by start-up campus 22 On Sloane, where the impact of Covid-19 on the small business sector was discussed.

A survey by 22 On Sloane between March 22 and 28, found that more than 55000 small and medium sized businesses (SMEs) would not survive the Covid-19 pandemic, with at least 423500 employees working for these companies likely to lose their jobs.

Advocate Mtho Xulu, president of the South African Chamber of Commerce and Industry (Sacci), said some of the challenges SMEs were facing through the lockdown included the lack of viability; difficulties working from home; lower revenue; operating expenses; insufficient government relief; difficulties in accessing private sector relief; supply chain disruptions; and interrupted business operations.

Sacci is a body of regional chambers of commerce and industry with more than 20000 SMEs members.

Dr Pali Lehohla, former statistician-general of Statistics SA, said South Africa did not do any planning for a worst case scenario, which has been brought on by the Covid-19 crisis, so it did not have “any credible benchmarks to say where we are going in the future. This just puts small businesses in dire circumstances”.

The informal business sector, operated mainly by women, suffered from the lack of access to finance and infrastructure well before the Covid-19 crisis, and this crisis simply “sinks them,” Lehohla said, adding that while the informal sector comprised only about 6percent of GDP, it was the biggest employer in the country.

BUSINESS REPORT 

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