‘4 in 10 businesses feel that they cannot continue to operate’ – StatsSA Covid-19 Survey
COVID-19: Four in ten business feel that they cannot continue to operate
The statistics paint a grave picture to the extent to which Covid19 is affecting businesses, and while it is comprehensive, it still doesn’t paint the severity of the overall situation. In South Africa, we have a huge workforce that is paid weekly, and is most likely without income while the company they work for still hangs on to survive. For many companies that will try their best to stay alive during this period, they are having to shed their weekly workforce and short pay their full-time workforce. The devastation of the lockdown will be felt for months to come, as many people are putting themselves into further debt just to survive this period.
The devastation of the lockdown will be felt for months to come, as many people are putting themselves into further debt just to survive this period.
More about the survey: http://www.statssa.gov.za/?p=13236
I find it hard to compare the 2008/9 with the current situation only because of the sheer scale of what we are going through. In 2008/9 there were many sectors that were affected to a very small extent, and some countries and regions could ride the wave because of the different stages of economic cycles they found themselves in. This crisis is all-consuming. There is NO person or company on the planet that is unaffected by this, and within that lies both the problem and the opportunity. If everyone is going through this, then the strong, and those who are adaptable and resourceful, will not only survive but thrive after.
There is no person or company on the planet that is unaffected by this, and within that lies both the problem and the opportunity.
Another factor to consider is that the survey was done with companies that turnover over R2 million or more per annum. Once again, in an environment like South Africa, we have thousands of smaller traders, formal or informal. These companies or individuals will be suffering immensely because even though their overheads are low, their liquidity is very tight and they have very little cash on hand to ride out this period. Even if they can survive to feed their family during this period, it is severely impacting their ability to bounce back when the lockdown is lifted because they are most likely living off their working capital.
The bottom line is that the COVID-19 crisis is very quickly shifting from a medical emergency to an economic one. There is just way too little money in the fiscus. Just like a giant machine with many cogs intertwined to make it work, without money in the system, the country grinds to a screeching halt. The longer we wait to lubricate the cogs, the harder it will be to get back up to speed. We CANNOT afford to extend the lockdown in its current capacity.
Seraj Toefy lectures Entrepreneurship at the University of Stellenbosch Business School (USB) and is Head of Africa at Centuro Global.