The latest survey from non-profit company, BeyondCovid, estimates that SMMEs in two provinces stand to lose over R3 billion a month. BeyondCovid, an initiative by consultancy firm Redflank set up to help rejuvenate small businesses in certain sectors, released the research following the recent civil unrest in South Africa.
A total of 1070 SMMEs that were impacted by the lootings and destruction of property were interviewed. The survey revealed that SMMEs in Gauteng and KwaZulu-Natal stood to lose R3.4 billion monthly more while needing R16 billion in operational funding to recover. The sectors that were the most affected were retail, accommodation, food, health, and services
“Small businesses now face a 63% drop in revenue since looters ran rampant through the streets, over and above their struggles with access to markets and affordable funding during the Covid-19 pandemic,” the survey reads. “(Approximately) 62% of riots impacted SMMEs do not have business insurance and, of those that have closed their doors in recent weeks, only 5% have business interruption insurance.”
Redflank director Lings Naidoo said that what was alarming was the revelation that more than half of the impacted businesses in Gauteng and KwaZulu-Natal have closed permanently or temporarily. According to the study’s results, only 6% of impacted businesses were open as usual, while 51% of them in both provinces had closed. Of these 7% had shutdown permanently and 44% were closed temporarily.
“Businesses have been forced to retrench, on average, 10% of their staff; for SMMEs, the retrenchments are even higher, at 11% of the workforce,” Naidoo said. He also said that the total cost of the damage based on the extent listed by the respondents could be around R126 billion. And, the cost to the informal businesses was estimated to be around R4 billion.
“Businesses that have to repair damage to their properties say that it will take six to eight months to recover; for others, it will take about five months to get back into the business.” Big businesses had fared better compared to SMMEs, according to the survey. Of the large businesses that were surveyed by BeyondCovid, 73% said that they had some form of insurance cover
However, the research showed that one out of four of these businesses would have to reopen without the income compensation from business interruption insurance. BeyondCovid said that its board of directors, led by Advocate Fay Mukaddam, was engaging with the government, private sector and civil society for help.
“While government and large business interests are critical to the success of BeyondCovid, it is also true that all citizens can contribute,” Mukaddam said.