Lockdown | 7 in 10 SMEs forced to temporarily close doors

Some 70{e93887a69cdd95d753f466db084bbc3aa0067124675315461d28d68a72842cc2} of small businesses in the country may have not been able to operate during the lockdown, while most of those who were fortunate enough to keep their doors open only did so intermittently.

A new survey commissioned by Nedbank found that the during the initial five-week lockdown, even the few small and medium enterprises (SMEs) that remained operational, mostly  made 75{e93887a69cdd95d753f466db084bbc3aa0067124675315461d28d68a72842cc2} or less of their expected turnover.

Data released by Statistics SA on Thursday also backed Nedbank’s survey findings, showing that nine in ten businesses surveyed by the statistics collector recorded less turnover than their normal expected range. In the previous survey of this nature which Stats SA published on 21 April, 85{e93887a69cdd95d753f466db084bbc3aa0067124675315461d28d68a72842cc2} of businesses said their turnover didn’t match their expectations.

This means the situation deteriorated further between the middle and end of April, because the new sectors that were not surveyed earlier, the agriculture and hunting sectors, indicated that their turnover was above the normal range.

Stats SA said the outliers who did not seem affected much by the lockdown were agriculture; hunting; forestry and fishing; manufacturing; construction; trade; and community, social and personal services. In these sectors, said some respondents reported that their turnover was above the normal range.

However, Stats SA cautioned that observed deterioration only reflects perceptions of business owners surveyed and are based on limited responses. As for how this has affected employment in the short term, StatsSA wrote:

“More than half of respondents indicated either decreased working hours or laying off of staff in the short term.”

It added that some businesses reported to have taken ‘other’ measures, while only 1.9{e93887a69cdd95d753f466db084bbc3aa0067124675315461d28d68a72842cc2} reported increased working hours, and 0.7{e93887a69cdd95d753f466db084bbc3aa0067124675315461d28d68a72842cc2} will be recruiting staff in the short term. Nedbank’s survey showed that almost 3 in 10 of the businesses that were interviewed of said they had already retrenched some or all of their employees.

Nedbank’s survey was also based on a sample. Over 1 000 small businesses generating less than R30 million turnover a year provided input. But these surveys are the only data sources that have provided insight on the state of the economy since the lockdown began.

Nedbank said most business owners don’t have enough confidence that they will be able to recover from the impact of the lockdown.

“The simple reality is that the vast majority of South Africa’s small businesses are finding it extremely hard to survive right now and most are in dire need of a financial helping hand simply to stay afloat,” said Nedbank’s executive for professional and small business banking Alan Shannon.

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