https://www.engineeringnews.co.za
Africa|Business|Construction|Manufacturing|Resources|Road|SECURITY|Tourism|Solutions|Bearing
Africa|Business|Construction|Manufacturing|Resources|Road|SECURITY|Tourism|Solutions|Bearing
africa|business|construction|manufacturing|resources|road|security|tourism|solutions|bearing

SMMEs in South Africa in distress

25th May 2021

By: Schalk Burger

Creamer Media Senior Deputy Editor

     

Font size: - +

Small, medium-sized and microenterprises (SMMEs) employing one to ten people represent 72% of the businesses that have approached nonprofit the Covid-19 Business Rescue Initiative (Cobra) for business rescue support, advice and assistance since March 2020.

Its data also reveals that SMMEs based in Gauteng, the Western Cape and KwaZulu-Natal have been the hardest hit by Covid-19 and the impact of consequent lockdowns on economic activity.

The sectors bearing the brunt of this impact are retail, construction, manufacturing, tourism and hospitality.

Cobra was established by management consultancy IQbusiness, law firm Schindlers Attorneys and turnaround specialist company Engaged Business Turnaround and an ecosystem of 90 partner enterprises. It was formed in response to the need to support SMMEs through lockdown and the economic crisis and has helped more than 320 businesses with direct assistance, saving more than 2 000 jobs.

The impact on SMMEs is concerning for South Africa’s economic stability, as SMMEs play an essential role in the economy. According to Business Unity South Africa (Busa), SMMEs employ 47% of the workforce and contribute more than 20% to gross domestic product, the nonprofit notes.

The data available through the Cobra Business Rescue Insights Portal indicates that the road to recovery for these businesses and the wider economy will be exceptionally tough without intervention.

The insights also show that the biggest hurdle for SMMEs is access to finance.

Securing capital or loan financing has become increasingly difficult for SMMEs. This is likely the result of a number of contributing factors, including high risk profiles of the applicant SMMEs, the absence of assets that can be leveraged as security and the lack of a clear and viable business plan.

Up to 62% of businesses seeking rescue assistance through Cobra choose not to first seek funding or assistance from their banks. This depicts an absence of trust in traditional banking and finance structures and lending requirements, Cobra points out.

Of the businesses that do request funding, the most immediate need for funding is found among businesses with a yearly turnover of up to R100 000, comprising 27% of applicants, followed by businesses with a yearly turnover of R500 000 to R1-million, which account for 22% of applicants.

"Businesses in this latter category are particularly important to the economy; if they can be supported to survive and grow beyond R1-million-a-year turnover, value-added tax becomes payable on their turnover and they will play an even more useful role in growing our economy and providing jobs for South Africans," Cobra says.

"It is clear that South African SMMEs require innovative solutions to save and bolster their businesses against the economic ravages of the last year."

WhatsApp-based business rescue advisory platform SMMEstart has joined Cobra as a partner. Together, they offer SMMEs actionable business support and business rescue information and resources on an intuitive and accessible platform to aid them in their recovery from the effects of Covid-19.

There is potential to save thousands more businesses and jobs by sharing the knowledge, skills and expertise available through SMMEstart and Cobra.

"South African businesses will need all the assistance they can get as they continue to navigate an uncertain future in an increasingly constrained economy.

"South Africans are resilient people who continuously adapt in the face of difficulty and change. Together, we can use innovative and home-grown digital resources, such as SMMEstart, to assist businesses left standing after the worst economic contraction our country has seen in over 90 years," Cobra says.

Edited by Chanel de Bruyn
Creamer Media Senior Deputy Editor Online

Comments

Showroom

Booyco Electronics
Booyco Electronics

Booyco Electronics, South African pioneer of Proximity Detection Systems, offers safety solutions for underground and surface mining, quarrying,...

VISIT SHOWROOM 
Universal Storage Systems (SA)
Universal Storage Systems (SA)

South African leader in Steel -Racking, -Shelving, and -Mezzanine flooring. Universal has innovated an approach which encompasses conceptualising,...

VISIT SHOWROOM 

Latest Multimedia

sponsored by

Option 1 (equivalent of R125 a month):

Receive a weekly copy of Creamer Media's Engineering News & Mining Weekly magazine
(print copy for those in South Africa and e-magazine for those outside of South Africa)
Receive daily email newsletters
Access to full search results
Access archive of magazine back copies
Access to Projects in Progress
Access to ONE Research Report of your choice in PDF format

Option 2 (equivalent of R375 a month):

All benefits from Option 1
PLUS
Access to Creamer Media's Research Channel Africa for ALL Research Reports, in PDF format, on various industrial and mining sectors including Electricity; Water; Energy Transition; Hydrogen; Roads, Rail and Ports; Coal; Gold; Platinum; Battery Metals; etc.

Already a subscriber?

Forgotten your password?

MAGAZINE & ONLINE

SUBSCRIBE

RESEARCH CHANNEL AFRICA

SUBSCRIBE

CORPORATE PACKAGES

CLICK FOR A QUOTATION







sq:0.08 0.134s - 180pq - 2rq
Subscribe Now