SMMEs in crisis: researching the reality - Destiny Connect

SMMEs in crisis: researching the reality

PRETORIA, SOUTH AFRICA ? MARCH 15: President Ramaphosa addresses the nation following a special cabinet meeting on matters relating to the coronavirus epidemic at the Union Building on March 15, 2020 in Pretoria, South Africa. It is reported that President Cyril Ramaphosa announced a range of extraordinary interventions by his government to try and curb the spread of the coronavirus outbreak. (Photo by Felix Dlangamandla/Beeld/Gallo Images via Getty Images)

As we eagerly await President Ramaphosa’s address this evening which will focus on additional economic and social relief measures one cannot help but wander how a second extension of the lockdown will affect already beleaguered SMMEs in the country?

On 8 April 2020, the National Employers’ Association of SA (NEASA) – which represents a database of over 10 000 organisations and employers alike and has eight branches nationally – conducted research outlining the impact of the COVID-19 pandemic on SMMEs.

At a time when fake news emerging from a range of sources has never been more dangerous, SA fortunately ranks second in the world regarding reliable news and information about the pandemic. In equal vein, NEASA conducted research alongside the Inclusive Society Institute, which is tasked with giving input to government’s public policies and processes.

The analysed responses reflect the following perspectives and insights from SMMEs across various industries:

Among the SMME enterprises surveyed for the full report were those in education, health, hospitality and tourism, construction, services, manufacturing, agriculture, wholesale, retail and those in cross-cutting industries.

According to the scientific methodology applied by the institutions, the lockdown could result in 813 000 job losses, a staggering blow to the already high unemployment rate. To make matters worse, the analysed responses revealed the following:

  • 78% of SMMEs revealed that they didn’t have sufficient cash flow to see them through the lockdown period ending on 30 April. Should the lockdown be extended beyond that, 92% of enterprises indicated that they wouldn’t have sufficient cash flow, while only 29,5% of enterprises were confident they could survive the lockdown.
  • Based on the sectors they represent, only 30% of enterprises in wholesale and retail, 29% in manufacturing and 25% in services believed they would survive should the lockdown be extended beyond 30 April.

While 56% of responders have applied to the various funds set up to assist with the alleviation of business hardships as a result of the lockdown, as of 13 April 2020, only 4% had received approval. With the impact of a paused economy affecting an SMME-dense economy such as ours, the glacial rate at which SMMEs are receiving the funds they desperately need to stay afloat is already creating a crisis.

While the American private sector and states are also desperate for the US federal government to provide more support, in SA only 32% of the respondents supported increased government spending to alleviate hardships on business and the vulnerable in society, even though it would lead to greater fiscal deficits with probable tax increases. This explains why only 3% supported increasing taxes for the foreseeable future.

Despite the uncertainty and stresses they face, the SMME entrepreneurs who responded aren’t willing to make further sacrifices, since they’re aware that business relief won’t necessarily come at no cost. While 34% of responders supported a once-off “COVID-19 recovery levy” on turnover and 44% supported the concept of a once-off “solidarity tax” of 1-2% on personal incomes above a R240 000 per annum threshold, 53% supported the launching of major public-private partnership projects, supported by government guarantees and 48% supported government requesting International Monetary Fund and/or World Bank loans, on the understanding that this would require significant policy reforms.

In an effort to keep its members well informed about their rights, NEASA has launched a 24/7 national hotline service on tel: 086 016 3272 or e-mail:





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Onke “ForeverOnke” Dumeko is the Editor-in-Chief of DESTINY magazine and thebar.Magazine and The Group Publishing Director for The Bar Group.
Onke Dumeko