Business expects Covid-19 impact to be worse than 2008 crisis

Big or small, it is not uncommon for any business during this time to feel some uncertainty about its future, and especially its cashflow projections.

South Africa embarked on a national lockdown form March 27; just prior to that there was very little movement of people as fear of Covid-19 spread globally.

According to survey by Stats SA during the lockdown, four in ten businesses said they cannot continue to operate. A total of 707 businesses in the formal sector responded to the survey, outlining the pandemic’s impact on turnover, trading, workforce, imports and exports, purchases, prices, and business survival over the two-week period from March 30 to April 13 2020.

The respondents [on average] have a turnover of R2 million.

Source: StatsSA

When asked about financial resources, as in the graph above, 42.2% of respondents indicated that they are not confident that they have the financial resources to continue operating through the Covid-19 outbreak.

The survey also indicated that only 54% of businesses can continue without turnover between one to three months.

StatsSA notes that about half of the respondents have had to shut their doors, with the majority in construction, manufacturing, trade and mining sectors.

More than half (54.4%) of the respondents don’t expect their workforce size to change, while 36.8% expect it to decline.

“Businesses indicated that they have implemented a range of measures to cope with the impact of the pandemic on their workforce, including decreasing working hours (28.3% of respondents) and laying off staff in the short term (19.6% of respondents). Only about one in four businesses indicated that they had not taken any measures yet,” it adds.

Five in six businesses indicated that they experienced a drop-in turnover over the period.

StatsSA says 85.4% of respondents surveyed reported turnover below the normal range. “Respondents in the construction, real estate and other business services, and transport industries were the most affected by lower than expected turnover.”

A third of the businesses expect to feel a pinch in their businesses, “worse than the 2008/2009 recession”.

“Many businesses (65%) anticipate that the impact of the Covid-19 pandemic will substantially be worse than the 2008/09 global financial crisis. Only 4.3% of respondents indicated that the impact will or could be the same,” StatsSA says.

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