As we approach the anniversary of South Africa’s lockdown and State of Disaster declaration, it’s important to look back on the destruction that COVID-19 has brought about directly and indirectly through lockdowns.
While many SMEs have been able to turn their business around or at the very least get it up-right, many more are starting to feel the longer term effects of the hard lockdown.
This is according Business Partners Limited’s SME Index from Q4 2020.
In this quarterly survey, 75 percent of respondents said that the festive season had been quieter than usual while 71 percent of respondents noted that the pandemic had negatively impacted their business confidence for 2021.
Nowhere is this sentiment more visible than in the tourism sector.
Data from the Airports Company South Africa for Cape Town International Airport reveals that in total, throughout 2020 there were 1 979 615 arrivals and departures. If we look at international arrivals those numbers worrying.
Even under a less strict lockdown in October only 9 049 international travellers arrived at Cape Town International Airport. You can also clearly see the effects a stricter lockdown had between traveler numbers during January and December.
With those numbers in mind it’s evident that tourism has taken an almighty hit during the pandemic.
But it’s not just tourism that is affected according to chief operating officer at Business Partners International, Mark Paper.
“35 percent of SMEs surveyed noted that their business is struggling and may not survive due to COVID-19 disruption – a 10 percentage increase from the third quarter of 2020. While a third and even fourth wave are anticipated, we trust the vaccine roll-out will not only protect South African citizens from the COVID-19 health risks, but that it will protect businesses against its devastating economic effects,” explains Paper.
Further to this SMEs don’t feel like the private sector is doing enough to help. This was represented by a seven percentage point decrease in this confidence measure between Q3 and Q4 2020.
This is compounded by the fact that SMEs don’t foresee access to relief finance getting easier. The trouble, according to Paper, is that pre-pandemic, finance was geared toward growth capital for expansion rather than for relief
“The approach to relief capital is very different to that of growth capital,” explains Paper. “Relief capital requires smaller ticket sizes; quicker turnaround; elements of patient capital; and the due diligence to focus on whether the underlying business will remain solvent and liquid.”
The trouble is that traditional mechanisms don’t really allow for easy access to relief funding. Ingenuity is needed to find new solutions to insure SMEs are able to access funding when they need it most.
According to Business Partners, as many as 28 percent of SME respondents were unable to receive aid in the form of relief.
And this is where things are going to get concerning moving forward, because the aftershock of COVID-19 and lockdown are only now starting to be felt.
“Not only do SMEs create a high volume of employment opportunities in a country crippled by high rates of unemployment; due to their size, they have the ability to be agile, innovative and are better positioned for growth. Support from both the private and public sector is vital for these businesses to survive and hopefully thrive,” explains Paper.
Further waves of COVID-19 are almost inevitable and if SMEs are unable to receive the relief they need to survive, we are definitely going to see the unemployment figures climb.
Despite vaccines being rolled out, we are far from out of the woods.
[Image – CC 0 Pixabay]