Business

Covid-19 will be deadly to small businesses

2020-03-23 01:18

Gilbert Mosena, the National Federated Chamber of Commerce and Industry (Nafcoc) acting president, has cautioned small businesses that the effects of the Covid-19 coronavirus could bring them to their knees should the number of infected people continue to rise.

As the virus continues to hit in an environment that has already seen a sharp rise in insolvencies over the past year, Mosena said that Nafcoc expected the coming months to be particularly tough on the country’s small businesses.

“In the next two weeks, if the number of infected people increases, there will be closure of many businesses, including in the taxi industry. We hope we will be able to manage the situation in the townships and the rural areas. The danger is that if a small business closes, this could be a permanent closure because the economy is already struggling,” he said.

In the next two weeks, if the number of infected people increases, there will be closure of many businesses, including in the taxi industry. We hope we will be able to manage the situation in the townships and the rural areas. The danger is that if a small business closes, this could be a permanent closure because the economy is already struggling

On Friday the number of confirmed cases broke through the 200 mark.

Speaking to City Press, Mosena said that it was unfortunate that Covid-19 came at a time when the economy of the country had hit its lowest point.

Before the announcement of the first Covid-19 case in the country, President Cyril Ramaphosa had announced that the economy was in a technical recession.

Early last week, Nafcoc deployed its leaders to all nine provinces to assist struggling businesses and entrepreneurs.

Nafcoc has expressed its concerns and its demand that the government and the SA Reserve Bank return African Bank to Nafcoc to extend credit and loans to its members.

Mosena said that Nafcoc was engaging with the Reserve Bank and the Banking Association of SA to provide support for small businesses.

Nafcoc raised demands on behalf of its members. These include the provision of financial packages, including tax holidays, to affected businesses, as well as the provision of water points in high-risk areas such as taxi ranks “where people can wash their hands from time to time”.

Think about those who take three to four taxis to work

Mosena said part of the strategy that Nafcoc had to come up with was to communicate with employers.

The organisation was “working with bosses who expect their maids to come in every morning using taxis” and asking these employers to tell their staff to stay at home but still pay them. “It is easy for them to catch the disease in the taxi. Think about those who take three to four taxis to work – they will be exposed,” said Mosena.

Calls to assist small businesses have come from all political platforms. These include calls for employees to work from home to encourage social distancing.

DA interim leader John Steenhuisen called for a four-month rental forbearance for small businesses. He suggested that government provide small businesses with immediate rates relief in their jurisdictions.

“We propose that business rescue proceedings should receive an automatic three-month extension beyond the three months provided for in section 132 of the Companies Act.

“South African Airways’ R16.4 billion bailout should be cancelled immediately and the budget amended to allocate this money to disaster management,” Steenhuisen said.

On Thursday, Small Business Development Minister Khumbudzo Ntshavheni announced that the department would donate support packages worth R1 billion to assist small, micro and medium-sized enterprises to produce more of the critical consumer goods needed to control the spread of Covid-19.

Ntshaveni said that part of the R1 billion package would be used to produce face masks, tissues and sanitisers that have run out due to panic buying.

The small business development department would institute a debt relief fund and a business growth facility. The debt relief fund would be aimed at providing relief for existing debts and repayments to assist businesses, she said.

For businesses to qualify for the relief fund, applicants from the SMME sector must demonstrate a direct link to the impact or potential impact of the Covid-19 pandemic on their businesses.

Businesses that require support will have to apply on the small business development department’s website, which is set to go live on Tuesday.

Last week, citizens filled up supermarkets, panic buying essentials following Ramaphosa’s announcement on Sunday that the Covid-19 pandemic was a national disaster.

Mosena told City Press that Nafcoc would continue to go to townships and rural areas to offer hygiene products and educate entrepreneurs on how to interact with customers during this time.

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March 29 2020