EACCI comments on the impact of the pandemic and protests

The pandemic has affected all South Africans, but some would say those affected the most are business owners hindered by Covid-19 regulations.

As SA faces reimplemented adjusted level four lockdown and protests in parts of the country, the NEWS spoke to CEO of the Ekurhuleni Aerotropolis Chamber of Commerce and Industry (EACCI) and Edenvale business owner Vincent Marino to learn more about the impact on businesses.
Marino said Covid-19 is having and will have an impact for at least the next four years on South Africa’s economy and the livelihoods of many.

“In 2020, the world bank estimated the South African economy contracted by 7%,” said Marino.

“However, being on the ground and seeing the impact of Covid and the government’s policy on handling the pandemic, I believe the economic contraction to be far greater.
“Too many small businesses have closed their doors and many livelihoods decimated.”
Speaking on how the pandemic has affected the EACCI’s growth, Marino said the chamber cannot survive in a vacuum and it and its members are part of a national economy.
“The pandemic has had far-reaching economic consequences beyond the spread of the disease itself and efforts to quarantine it,” said Marino.

He said it has badly impacted the local and national economy and financial markets.

“We’ve seen significant economic impact already occur across the globe due to a reduction in productivity, loss of life, business closures, trade disruption, and decimation of the tourism industry.
“This caused a reduction in income, a rise in unemployment, disruptions in the transportation, services and manufacturing industries are among the many effects of the disease.”

Industry worst affected by the pandemic
Last year Marino said the industry worst affected by the pandemic was the service industry and companies which provide services, such as fitness, entertainment and beauty services, to others. He said this remains the case.

Marino said they will remain hardest hit during the pandemic because government defines them as non-essential businesses.
Marino believes defining the service industry as non-essential is incorrect as thousands are employed by businesses in this industry.

“You can’t call anyone who is working as non-essential.

“Fitness-related businesses may be classed as non-essential but how many people does the fitness industry employ when you think about the gyms, the private and boutique gyms where they do specialised training.
“Entertainment, the restaurants and musicians those genres of the industry are decimated even the beauty industry.”
Marino said each time a lockdown or tightened regulations is implemented those types of businesses are the first to get affected.
“It’s sad to see, as those businesses employ a lot of people.”

Marino believes because of the extended lockdowns and adjusted regulations, more and more businesses are taking risks to cover their overheads.
“This time around a lot of businesses are taking risks by staying open, providing meals, alcohol, doing whatever they can do to keep alive and cover overheads because no one is going to cover those overheads but them.”

The dark side of the market
Marino believes continued negative effects on small businesses could lead to a rise in the black market.

“Where anything gets locked up the black market will thrive, which doesn’t do any good for the economy because that money doesn’t go anywhere except into the pockets of people running the markets. It won’t be generated back into the economy like through taxes.”

The survivors
On the other side of the coin, Marino said several industries thrived and grew as a result of the pandemic.
These included technology, education and sanitation.
He said with the shift in how businesses operate, many employees started working remotely so there was a greater need for software related to allowing that.

“I know of business owners who run businesses from their phones, all their documentation is in the cloud, everything is in place for them to operate. It definitely has pushed the technology side of business.”

Also Read: Unrest places more pressure on already constrained healthcare services

Speaking on education, Marino said with the increase in learners doing schoolwork from home there has been an increase in online learning.
Marino said the sanitisation industry and PPE industry has become massive since the pandemic started.
In his opinion, it will remain large for some time.

How to ride out the pandemic
Advising on how business owners can keep their businesses going, Marino said the service industries, especially the small “mum and pop” shops, need to show resilience during this pandemic.

“One thing it has taught many is not to have all your eggs in one basket,” said Marino.
“Have a side hustle and keep it going once this pandemic is over.”

He described a side hustle as an income generator that a business owner can do on top of their day-to-day business.

“It can be considered a flexible second income that brings in money, but it is also typically something that one is passionate about and won’t interfere with your main business.”

The effects of the recent protests
In light of recent protest action, which has occurred nationally following the arrest of former president Jacob Zuma, Marino said the protests impacted a large section of the township economies, which are mostly micro in nature.

“Protests are part of our democracy and enshrined in the constitution, but the rioting and looting need to be condemned in the strongest terms,” said Marino.

“Any type of violent protesting has short- and long-term effects on the local and national economy.”
He explained that supply and value chains are disrupted and take time to be restored.

“Manufacturing can’t create, wholesalers can’t buy in bulk and retailers can’t pack the products that are convenient for customers, creating a shortage of goods and basic foods on the shelves, as customers go on a panic-buying spree during the unrest.”

When asked about the effect the protests would have on international investment, Marino said South Africa’s credit rating by Standard and Poor’s stands at BB- with a stable outlook. Moody’s credit rating is set at Ba2 with a negative outlook. Fitch’s credit rating for South Africa was last reported at BB- with a negative outlook.

“This means South Africa’s credit score is at three notches below investment grade, meaning it remains bogged down deep in junk territory.
“This does not bode well for foreign direct investment, which has a direct impact on local businesses.”

He said the current political turmoil caused in part by the pandemic may be a driver by the rating agencies to place the country’s ratings on review for possible downgrade.”

Marino said although there have been examples of lawlessness, there have been examples of communities uniting to protect and rebuild their properties.

“I believe it has set a precedence for future unrest.
“The country saw taxi associations band together with communities to protect property, bread and milk being transported from Johannesburg to Durban, and people uniting, bringing mops and brooms to help clean up the mess left behind.”

Finding a way forward
Although the EACCI could not speculate what businesses should do during this time, Marino recommended that small-to-medium businesses should obtain South African Special Risk Insurance Association (SASRIA) insurance.

“SASRIA is the only insurer in South Africa that provides cover for loss or damage to insured property as a direct result of social unrest, including rioting, strike action and public disorder.
“I think you’ll see communities and businesses working together with more involvement by all.
“This could have positive spin-offs for the businesses in the area and communities as a whole.”

Also Read: Education sector discusses the stressful outcomes posed by the Covid-19