SA business picture bleak, survey shows

Many businesses have had to close as a direct result of Covid-19 and the lockdown. Picture: Brendan Magaar/African News Agency (ANA)

Many businesses have had to close as a direct result of Covid-19 and the lockdown. Picture: Brendan Magaar/African News Agency (ANA)

Published Aug 28, 2020


Cape Town – Over half of businesses across all sectors surveyed during the lockdown are still operating below normal capacity.

Results of the BeyondCOVID Business Survey released on Thursday show that more than three-quarters of businesses have also seen their revenue shrink and a quarter has had to shut down temporarily or permanently.

However, for two in 10 businesses it is business as usual, while only a mere 2% have grown their operations.

The survey was conducted among 1 800 companies between June 7 and August 22.

It has also found that 76% of businesses have seen their revenues drop since March when the national lockdown was introduced to mitigate the health impact of the pandemic.

Sectors which have been most affected include accommodation and food services outlets which recorded a 93% impact.

The construction sector was also hit hard (89%), arts, entertainment and recreation by 87%, service providers such as hairdressers and beauty salons (86%), wholesale and retail (83%), and travel support services companies such as car hire ventures and travel agencies (81%).

Executive director of the National Economic Development and Labour Council (Nedlac), Lisa Seftel noted that the results came as the country was facing the "gravest crisis" since democracy.

"We have seen the disproportionate impact of Covid-19 on the different sectors of society, with other survey results showing that women had suffered the most and.

“There's been widespread impact on businesses particularly on small and micro-enterprises being the worst hit," Sefte said.

She added that although there had been a "significant amount" of financial assistance from the government, there was also a reluctance by the "heavily burdened" businesses to accept loans and would rather prefer grants.

"To manage the impact we need to grow resilience. Things may or may not turn tomorrow. It's a black swan event," Seftel added.

However, the director of Redflank, a specialist management consulting company that conducted the survey, Lings Naidoo, stressed that it was not all gloom and doom.

"About 83% of businesses that have closed expect to open up again at some point. Only 4% of all companies we received feedback from will remain closed.

“Most of these companies operate in the beauty, hospitality, food and agriculture sector,” Naidoo said.

The survey also showed that one in four businesses indicated that in the next 12 months they would need funding for at least six months.

"The beauty industry is in a dire situation," Naidoo noted.

Regarding Covid-19-fuelled retrenchments, accommodation and food services companies topped the list.

Naidoo said about 68% of respondents in those sectors had to let all, most or some of the employees go, followed by hair and beauty salons at 62%.

Construction firms were also hard hit  (61%) and so were entertainment, arts and recreation players (57%).

Another key finding was that an employees’ value to their organisation no longer depended on them working from an office, Naidoo said.

Over half of companies said they were dealing with the pandemic by having 20% or more of their staff working from home.

"This particularly concerns the financial and professional services industries, real estate and the media, information, communications and technology sectors.

“Interestingly, 44% of these companies say this could become a permanent set-up. It’s evident that the Covid-19 pandemic has accelerated the remote working trend, which is quickly evolving into a new way of life,” Naidoo added.

He added that industries such as agriculture, construction, travel and tourism would however not adopt such an approach.

“Only 30% of respondents falling into these categories said they have more than 20% of their staff working from home. They also suffered most retrenchments, revenue losses and cash-flow declines,” noted Naidoo.

About 36% of organisations were reworking their business strategies to overcome and mitigate the implications of the pandemic, while others were working on enhancing their internal skills set.

“The assets organisations view as most critical to help recovery include enhanced customer services (64%), as well as improved financial (56%), marketing and sales (46%), people management (45%) and planning (44%),” said Naidoo.

An average of 20% of the participants expected that it would take over a year to recover from the pandemic.

“Companies in the legal, accounting, finance and education sector are most negative about the future,” Naidoo noted, adding that participants in mining, electricity and air-conditioning, water and wastewater were the most optimistic.

A toolkit which would guide companies adapt and become risk resilient would be made available on September 1.

BeyondCOVID Playbook outlines tangible and workable strategies to help the private sector adapt and respond to the pandemic and mitigate its consequences.

"It will take collaboration to move the economy forward. We need to support  each other," urged Valdene Reddy, Director of Capital Markets at JSE.

A snapshot of key findings:

  • 4% of businesses closed permanently 19% of business closed temporarily.
  • Of them, 83% expect to reopen 20% of businesses are operating as usual.
  • 51% of businesses have 20% or more staff work from home. Financial services companies top the list with 84%.56% of businesses are operating at below capacity.
  • 68% of accommodation and food services companies have had to retrench staff members, and 39% expects more retrenchments.
  • 76% of businesses have seen their revenues drop. Accommodation and foods services companies top the list with 93%.

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