LIFESTYLE - SOUTH African business owners are feeling the pinch of the coronavirus (Covid-19) on their coffers, with losses anticipated to run into billions of rand - and they fear the worst is yet to come.
Nigel Ward, president of the Durban Chamber of Commerce and Industry, said several members in the event management and conferencing space have already indicated that, because of the mass cancellation of events, they have already started restructuring processes, including retrenching staff.
“The chamber is deeply concerned about the impact of Covid-19 on our airline members, hotel operators, facilities owners and strongly urges all business to adhere to Department of Health directives in order to help contain the spread and impact of Covid-19 on business,” he said.
He said while a figure quantifying how much losses businesses had already suffered cannot yet be adequately quantified, the South African economy will not be immune to the effects.
“A recent article by Moneyweb indicated that the JSE plunged by more than R2.3 billion since mid-February, which is alarming.
“While markets are not performing well, we encourage investors to perform the necessary technical and fundamental analysis to identify opportunities,” said Ward.
Solly Suleman, president of the Minara Chamber of Commerce, said pharmacies and supermarkets have been busy with the need for essentials. But with the closure of schools, universities and more people working from home, many businesses would soon feel the full impact.
Suleman said gyms, restaurants and family entertainment businesses were hardest hit after the prohibition of gatherings of more than 100 people. He said at this point, it was difficult to say how much some businesses lost but that the figure would run into billions of rand.
Ward said Durban is home to some of the busiest tourist nodes, such as the Golden Mile with its new promenade, Florida Road and uMhlanga Rocks, with social activities that contribute positively to the economy. With a resultant notable decline in economic activity, this translates into revenue losses for businesses and the city; and with large events cancelled, he said South Africa will forgo the opportunity of reaping the socio-economic spin-offs that these events bring.
However, both praised President Cyril Ramaphosa and the government for decisions taken to help reduce the spread of the virus.
“As seen in overseas case studies, if the public adheres to all the recommendations, control measures and regulations enacted by government to combat the outbreak, we can minimise the effects and reduce the spread of infection. We are aware some businesses are migrating to online solutions to ensure operations continue as normal. Businesses need to adopt and enact business continuity plans that are agile and adaptable to cope with the evolving nature and circumstance of the current crisis. We encourage businesses to act responsibly and ethically,” said Ward.
Suleman said: “We are, however, far from the peak... A complete shut down will destroy this country. Unfortunately, the wheels of the economy cannot stop and have to be driven by our employed population, or else South Africa, already in a recession, will be forced to borrow money from external sources to keep the country afloat.”
The National Employers’ Association of South Africa said Covid-19 added another dimension to the storm that South African business already found itself in.
It called on the government to consider making Unemployment Insurance Funds available to staff who had to be away from work as a result of the impact of the virus.
Gerhard Papenfus, the chief executive, said: “The Eskom crisis is already having impact, not to mention all the other factors contributing to the low growth rate and 40% unemployment rate.
“The decline in business activity, as a result of Covid-19, will be an additional blow to business. That’s the one side of the coin.
“On the flip side, there is a business’s legal and moral obligation towards its employees. The decline in production as a result of the drop in business activity, combined with large numbers of absent employees as a result of either being diagnosed with the virus and booked off on sick leave with full pay or being in compulsory isolation, will negatively impact the sustainability of a business.”
Papenfus said the economic effect of Covid-19 on business would be felt long after the pandemic passed.