Relief efforts the government can provide to the ailing SMME sector, which has suffered a double blow due to the lockdown and recent civil unrest, should be similar according to economist Gilad Isaacs. Isaacs, who is the co-director at the Institute for Economic Justice, said that while the SMMEs, were staring down the barrel of a gun if the state committed to tangible relief measures, it was not too late to help rebuild the sector.
Isaacs, who also lectures at Wits University, told Vutivi News that there was a ripple effect being felt across various value chains due to the unrest and stricter lockdown measures, which were introduced weeks ago to combat the third wave of Covid-19 infections and deaths.
He said that it was not only the retail sector that had suffered from the lootings and destruction of property. “We have heard from unions in the clothing and textile industry in Newcastle, KwaZulu-Natal, that they were badly affected. Pharmaceutical companies have also greatly suffered,” Isaacs said. “This ripple will be felt by farmers that are supplying (the) small restaurants and fast-food chains (that were looted), wholesale stores and even truck drivers.”
The impact of the Covid-19 restrictions on SMMEs would also cause job losses and reduce turnover in the construction, manufacturing and wholesale sectors. “Within the manufacturing sector, businesses affected were textile, footwear, chemicals and plastics companies, as well as those linked with construction,” the economist said.
“In the retail sector, the hospitality-linked industries that were incredibly hard-hit include transportation, vehicle rentals and tourist infrastructure.” Last week President Cyril Ramaphosa warned that poverty and unemployment would increase across the economy, which Isaacs concurred with.
“Workers who do not have the Unemployment Insurance Fund (UIF) or do not have a contract are twice as likely to lose their jobs, and the informal sector was also hit in this regard,” he said. Isaacs said the relief measures that he had proposed for the lockdown, were similar to those that should be implemented following the unrest.
“The first thing that should be done is (to expand) the Temporary Employment Relief Fund, which must not only be available on a rhetorical level but the ease of application and administration must be made easier for SMMEs,” he said.
“In all of the measures taken, SMMEs are excluded mostly because the requirements are too onerous. There should also be an increase in the tax relief, targeted business funds, the tourism relief fund, a fund for small-scale farmers and a small retailers’ fund.”