Small Business Institute joins list urging government to allow businesses to reopen
CAPE TOWN - The Small Business Institute (SBI) yesterday joined a growing list of organisations that have urged the government to allow small businesses to reopen.
Most small firms, from luxury goods stores in the biggest shopping centres to small businesses in townships, have been disallowed to trade during Phase 4 of the National Lockdown.
Small and medium enterprises make up 98.5 percent of the number of companies in South Africa, but many have closed for good through the lockdown, or will do so in the near future, due to capital constraints, and having to pay rent, salaries and other costs despite not being able to trade, and the fact that many of these firms were already struggling in the recession prior to the Covid-19 pandemic.
“It is our duty as the “Big Voice for Small Business”, without further delay, to speak out on behalf of our members – business chambers, informal business organisations and SMMEs. We believe that within guidelines and within reason, this constituency - those still standing - should be allowed to open and run their businesses so that they and their 3.9 million employees can earn their living,” the SBI said in a letter to President Cyril Ramaphosa.
“Even before the lockdown, South Africa fared poorly in the ‘ease of doing business’ and other indices principally because of unnecessary or misguided regulations,” the SBI said.
“Covid-19 and the economic downturn has and will continue to have a devastating impact on SMEs throughout South Africa. SMEs need to pay their workers, rent, suppliers and other key operating expenses, and survive as a family”, National Small Business Chamber chief executive Mike Anderson said recently.
The SBI said 66 percent of formal, employing firms in South Africa are categorized as “micro” and on average, employ fewer than four people. Even more are freelancers, or self-employed.
“Small” businesses, or 26 percent of the total number of firms, employ, on average, 22 people each.
These two classifications (micro and small) of businesses provide 2 234 675 jobs, with “medium” enterprises employing another 1.6 million.
“Certainly the micro and small businesses, the most vulnerable in the economy, should be allowed to reopen – as well as the many, if not more, informal businesses of the same size. The business owners we hear from all express a willingness to work within the confines of rational regulations designed to protect our health and the capacity of our health system,” the SBI said.
“At the very least, they should be allowed to pivot their businesses, where possible, to trade online without further delay,” it said.
Anderson said SME’s were also going out of business due to late payments of bills, mostly by governments and large corporations, with a recent small business survey indicating that late payments are at an all-time high.