The Covid-19 pandemic has created profound disruptions to the South African economy, with the small, medium and micro enterprises (SMMEs) – contributing about 52% to 57% to the country’s national gross domestic product (GDP) – being on the receiving end of the sharp edge, according to Indentureship To the Point (ITP).
In its latest survey on the impact of the virus to the SMME sector, ITP found that:
- Covid-19 created profound disruptions to South Africa’s economy and society; and
- Many local industries experienced an adverse impact from the pandemic, consistent with other countries fighting the disease.
Said ITP: “The impact of Covid-19 on SMMEs has been deeply felt through multiple channels.
“There were responses to the survey, with 43% coming from Gauteng, 29% from Western Cape and 28% from KwaZulu-Natal.
“The respondents played various roles in organisations, ranging from managing director (66%), director (28%) and senior manager (4%).
“The survey critically constructed questions directed to businesses to help analyse the financial performance of the business, productivity of the business, workforce, Covid-19 government relief packages, engaging with clients and working remotely.
“The respondents were predominately male-owned businesses at 69%, with women-owned businesses constituting 31%. Further, 41% of respondents were youth-owned businesses,” said ITP.
It added: “In its response to the crisis, the South African government placed the country under a national lockdown on 27 March to reduce the spread of the virus, resulting in the closure of many businesses, which were classified as non-essential.
“Effective from the 1 May, President Cyril Ramaphosa placed the government on Level 4 lockdown, to ease the restrictions on movement and the type of businesses that could operate.
“Respondents noted that sales were reduced in the past three months and they were expecting it to reduce significantly in the future.
“Similarly, profits had reduced in the past three months and they were expecting it to reduce significantly in the next three months.”
“The survey respondents noted that the employee’s salary is their greatest financial pressure (72%).
“This is followed by loan repayment (10%), purchasing stock material (4%) and rent (4%).