WHILE South African small, medium and micro enterprises (SMMEs) have proven to be resilient through the Covid-19 crisis with many remaining optimistic about their financial future, however, they remained extremely vulnerable to external shocks, such as lockdown restrictions and civil unrest.
This translated to them requiring significant support, if they were to survive and play a role in the country’s economic recovery and job creation.
This was revealed in “From Survival to Opportunity through Covid-19 and Beyond: SA Future Trust Baseline SMME Report” released, last week, by the South African Future Trust (SA Future Trust).
The SA Future Trust provided financial assistance to SMMEs hit by the Covid-19 lockdown, last year, in the form of interest-free loans to facilitate direct payments to their employees for a 15-week relief period.
A survey of the SMMEs which took up the SA Future Trust loans, was conducted between October last year and March this year to assess the impact of this funding and what support these businesses required to help them survive and thrive longer term. Of 9 656 businesses surveyed, 2 849 responses (26 percent of the total) were received.
According to the authors of the report, one encouraging finding in the report was that most of the businesses that participated in the survey had remained operational - 2 772 were still operational at the time of the survey, representing 97 percent of respondents. Furthermore, across all sectors and skill sets, more jobs were preserved than lost.
Data collected from the survey indicates that the various lockdowns depleted the small reserves respondents had on hand, with 69 percent indicating that they had less than one month of savings accessible.
Oppenheimer Generations Philanthropies Social Investment Associate Ashleigh Fynn-Munda said, in assessing the SA Future Trust’s role in supporting these SMMEs through the Covid-19 crisis, it was interesting to note that, for at least 50 percent of respondents, the SA Future Trust loan was the only relief they reported to have taken up.
The SA Future Trust was established in March 2020 and has extended loans worth R985 630500 to 9 656 SMMEs. This in turn facilitated direct financial support to more than 90 000 employees, it said.
“Another interesting finding is that, while the SA Future Trust loan was available to qualifying SMMEs with an annual turnover of less than R25 million, micro businesses with fewer than ten employees and a probable turnover of between R5-R20 million made up 71.84 percent of the loan holder respondents. This is most likely attributable to the SA Future Trust making it easier for smaller businesses to access credit,” said Fynn-Munda.
The survey revealed that a significant number of women-owned businesses took up the loan made up 43 percent of survey respondents. Furthermore, women-owned businesses proved to be more resilient of those that closed as 45 percent were women-owned and 55 percent were men-owned businesses.
The report highlighted how Covid-19 had changed the economic environment that SMMEs in South Africa operated in and how it would continue to impact businesses and industry for years to come. Encouragingly, most respondents felt that their total turnover and profit before tax would increase by the end of this year and that their debt servicing costs would decrease.
The Brenthurst Foundation Deputy Director of Research Dr Emmanuel Owusu-Sekyere said it would take some years for the South African economy to recover from the impact of the Covid-19 crisis.
“The SMMEs that emerge will need to operate more efficiently, with more targeted strategies to return to sustainable growth. At the same time, the survey has clearly revealed the need for further funding and access to working capital or grant capital, from organisations like the SA Future Trust, if small businesses are to fulfil their potential as the backbone of our economy and one of the main contributors to job creation,” Owusu-Sekyere said.
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