Load shedding decimates small business turnover

By Edward West Time of article published Jul 26, 2020

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CAPE TOWN - Small businesses experienced the biggest drop in turnover since the initial Level 5 lockdown in the past two weeks due to load shedding.

The Yoco Small Business Recovery Monitor showed that small and medium sized business turnover dropped from 72 percent to 60 percent versus pre-Covid levels in the period from July 8 to July 22.

SME’s are facing severe financial difficulties through the lockdown. Yoco, distributor of point-of-sale devices to more than 80 000 merchants who operate mainly small businesses, compiles the Yoco Small Business Recovery Monitor, which as far as is known, is the only live, publicly available, small business transaction data resource.

It tracks the recovery of small businesses in South Africa through the lockdown and can be used by entrepreneurs to benchmark performance and aid decision-making.

Yoco said Friday that 29 percent of SMEs in Yoco’s data base had yet to trade since the outbreak of the pandemic, when compared with the same base and trading time frame in 2019.

This pointed to a potential business closure rate close to the 30 percent mark.

The latest data showed that despite a positive start to the month, the recent amendments to advanced Level 3 and load shedding had hit SMEs hard in the past two weeks.

The Food and Drink industry (F&D) was the most fragile sector -- its turnover levels had dropped back below the halfway point to recovery, losing 7 percent over the last two weeks.

F&D was now at 46 percent of pre-COVID levels. This was attributed to the reinstatement of the alcohol ban, and imposition of the curfew.

“Any hope of a rapid bounce back in this industry is gone, as restaurants, coffee shops and bars fight for their lives. Already many small businesses in this sector have announced total closure with staff retrenchments,” Yoco said.

The declines were also driven by a significant decrease in the Health, Beauty and

Fitness industry (-19 percent), where the initial large spikes in turnover after months of lockdown had caused a run on beauty salons and hairdressers, which had now abated.

This industry was back to 59 percent of their pre-Covid level.

Consumer confidence in this sector could also be affecting turnovers, as people were reluctant to book services outside of “essentials” such as a hair cut, as well as the general tightening of purses as people spend less on luxuries.

The declines were consistent across every province, with the biggest decreases occurring in the Northern Cape (-37 percent), North West (-31 percent) and Limpopo (-30 percent).

Kwazulu-Natal (-16 percent), the Eastern Cape (-19 percent) and Gauteng (-12 percent), all of whom had been battling exponential surges in coronavirus cases, were also hard hit.

The Western Cape, where the pandemic curve was showing signs of flattening was the least impacted (-5 percent), but remained the province with the lowest turnover recovery rate.

This was likely due to the volume of businesses that were impacted by the movement restrictions as well as the number of businesses in the province that relied on tourism for business traffic

“The combined impact of load shedding, reintroduction of the alcohol ban, and curfew as

well as the surge in coronavirus cases has overwhelmed many of the businesses who

were beginning to stabilise,” Yoco said.

As of July 8, weekly SME turnover had had a 2.49 improvement, with the total index at an average of 72 percent vs pre-Covid levels.

This improvement had been attributed to increased trading over the weekend, as well as the Health and Beauty industry reopening under the advanced regulations.

BUSINESS REPORT

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