Business organisation Sakeliga says the next three weeks will be the most acute challenge ever faced by businesses in South Africa, while the Small Business Institute (SBI) questions whether all small businesses that need help will be supported.
Sakeliga adds that the health and prosperity of millions now depend on the ability of businesses to do “business unusual”, in reference to the President’s declaration of a national lockdown starting at midnight on March 26.
This follows after 554 cases of Covid-19 have been confirmed as at Monday, while more than 9 000 people have been tested.
Cyril Ramaphosa on Monday announced various funds and support mechanisms that have been put in place for businesses and disadvantaged people during this difficult time, but Sakeliga CEO Piet le Roux warns that the government’s relief measures must be made available equally and not in a politically divisive way.
Sakeliga will provide its support to businesses, chambers of commerce and customers to help them connect digitally and remain operational until the Covid-19 period can be recovered from.
“A far more free economy will be indispensable for restoring social stability, employment, food security and production for the needs of the population,” Le Roux states.
Meanwhile, business organisation Business Unity South Africa (Busa) acknowledged the call for immediate and extraordinary action to curb the spread of the coronavirus.
“The accompanying public health management programme will be supported by business to significantly increase screening, testing, contact tracing and medical management as a critical imperative.
“All members of the various business bodies have unreservedly endorsed the Solidarity Fund announced by the President. The nationwide call for funding will contribute in a meaningful way to support the vulnerable in this time of need,” Busa comments.
The organisation explains that funds received from corporate and other entities, such as stokvels, as well as willing and able individuals, and the international community, will drive social cohesion.
Funds will be directed toward mitigating the spread of the virus and caring for South Africans whose lives have been severely disrupted over recent weeks.
The fund will assist with the cost of supplies and help identify opportunities for local manufacturers of products that are experiencing global supply chain disruptions, particularly in the medical, pharmaceutical and personal protective equipment industries.
Busa strongly welcomed the President’s announcement of financial support by way of taxation and other relief for small and medium-sized enterprises (SMEs), particularly those that will be negatively impacted by the economic impact of Covid-19.
“Business will work alongside numerous social partners to mobilise support to businesses, particularly SMEs, the vulnerable and those whose livelihoods are now threatened,” Busa says.
SBI director Bernard Swanepoel says although businesses are grateful for the promise of relief in the country, many questions remain unanswered.
“Ramaphosa made a courageous decision and delivered a powerful message in his address to the nation, suggesting that we act together to get through this catastrophic threat to our collective health, economy and society.
“His announcements that government will seed a fund for SME relief with R150-million as well as a R2-billion Solidarity Fund endowed by donations from the Oppenheimer and Rupert families were welcome.
“Small businesses were reassured to hear that they are receiving special attention in discussions about protecting our economy. Since 98.5% of all firms in South Africa are small or medium, we face an unprecedented emergency with their very livelihoods, and those of all they employ, on the line. But the devil – or saving grace – will be in the detail,” says Swanepoel.
SBI notes that the Department of Small Business Development has launched an online portal for businesses to apply for government assistance, but it is unclear if the assistance is available to all businesses, regardless of race, gender, ownership and citizenship, or whether it will be targeted only to majority South African black-owned businesses.
Swanepoel says Johan Rupert confirmed the money he, and presumably the Oppenheimers, was donating would be available to all South African businesses.
“It boils down to two fundamental questions. Will all businesses struggling to stay afloat receive help, or just those the Minister identifies as worthy of government assistance?
“How will the private sector funds be distributed? Will it all become one pool of money open to other philanthropic donations for which the President called and therefore the minister’s potential exclusionary inclinations?”
Swanepoel stated that, two years ago, SBI did research which found that formal small, medium-sized and microenterprises employ 3.9-million people, so unless they are all helped, regardless of classification, this will lead to extreme social and economic injustice.
“We accept and promote black economic empowerment as a worthy and important goal for South Africa, but perhaps exclusion is not the best way to honour the President’s call for togetherness in what amounts to war.”
North West University business school Professor Raymond Parsons said the President’s lockdown declaration and supportive measures were a timeous, data-driven and proportionate response to the global pandemic.
He added that the response had to be seen in tandem with a range of key economic measures designed to soften the impact on SMEs and other vulnerable groups in society. These must be rolled out out as soon as possible to limit deterioration beyond repair.
Parsons hoped that ratings agency Moody’s would postpone its decision on the investment rating of South Africa until the exogenous Covid-19 impact was clearer.
“It is imperative for all stakeholders to cooperate with the new regulations to maximize their success. No government other than the most repressive will believe it can keep the country on lockdown for months – and then the economic effects, despite the exemptions, become devastating,” he said.
National Employers Association of South Africa (Neasa) said the lockdown could be regarded as a balancing act between containment of the virus, protection of South Africans and measures aimed at fortifying the economy against the inevitable disruption to manufacturing, productivity, growth and employment.
“Some may argue that this measure amounts to an overreaction. However, taking cognisance of the situation in Italy, the current global epicentre of the pandemic, this seems not to be the case.
“The Italians blame inaction regarding restriction of movement and a lack of appreciation of the seriousness of the pandemic, as the reasons for the life and death predicament they find themselves in,” the association explained.
Neasa added that owing to government’s fiscal constraints, the financial burden on SMEs had to be shared between government, business and workers.