JOHANNESBURG - About 55 000 small, medium and micro enterprises (SMMEs) will not survive the Covid-19 pandemic, resulting in more than 42000 jobs being decimated, according to a study released yesterday by 22 on Sloane, Africa’s biggest start-up campus.
The report, which surveyed 120 respondents between March 23 and 28, said 11percent of them had indicated that they did not see their businesses surviving during the national lockdown, which at the time of the survey was expected to be 21 days. It has since been extended to a five-week period.
The sample included business owners aged between 31 and 40, with 83percent of them located in Gauteng mainly in the retail, consulting, ICT and media sectors.
The survey said: “If we consider a report by the Small Business Institute, which claims that South Africa has a quarter-of-a-million formal SMMEs, there could potentially be 55000 SMMEs who do not survive this pandemic.”
Of the 11percent of the SMMEs that did not see their businesses surviving, 77percent of them employed between one and 10 people.
“This means that at least 42350 working for the SMMEs will lose their jobs and at most, more than 423500 working for the SMMEs could lose their jobs as a direct result of Covid-19,” said the report.
Kizito Okechukwu, 22 on Sloane’s executive head, said yesterday that the Unemployment Insurance Fund’s R40billion intervention for Covid-19 would go a long way to alleviating the plight of small businesses.
“However, the projected number of job losses can be more because of extension of the lockdown by a further two weeks,” he said.
The survey also found that the majority of businesses did not have enough cash to maintain their business operations in the next three months due to a lack of income and measures put in place to curb the pandemic.
Businesses that did have enough cash would be tapping into reserves, while others would capitalise on loans.
“With overall macroeconomic uncertainties looming over the coming weeks, these reserves may run low. Salaries and wages (63percent) will be most affected, seeing a few companies being able to pay partial salaries due to reduced sales (59percent),” said the survey.
It said 56percent of businesses had indicated there was at least a 10percent likelihood they might retrench due to reduced sales and lack of income to cover operational expenses.
Although only 2percent indicated a 100percent likelihood of retrenchment, it was still a dent in the country’s socio-economic development, including achieving various aspects of the National Development Plan.
Most of the respondents indicated that the lockdown had limited travel, resulting in a lot of activities such as training, meetings and even contracts being cancelled and some projects being put on hold.