Almost 90% of businesses hurt by unrest were SMMEs - survey

Almost half these businesses didn't have insurance and have closed permanently, while 10% have retrenched staff.

2021-08-03 05:34:00 PM

Almost half these businesses didn't have insurance and have closed permanently, while 10% have retrenched staff.

Almost half these businesses didn't have insurance and have closed permanently, while 10% have retrenched staff.

A total of 89% of businesses impacted by the recent unrest in the country were SMMEs according to the latest NPC BeyondCOVID survey. These businesses also suffered the most under the lockdown restrictions that were in place since March last year. The key findings of the survey, done shortly after the riots by specialist management consultancy Redflank during July, specifically investigated the impact of the riots on businesses across various sectors and found that: only 6% of impacted businesses are open as usual51% of impacted businesses in KwaZulu-Natal and Gauteng have closed7% of these businesses have closed permanently44% have closed...

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A total of 89% of businesses impacted by the recent unrest in the country were SMMEs according to the latest NPC BeyondCOVID survey. These businesses also suffered the most under the lockdown restrictions that were in place since March last year.The key findings of the survey, done shortly after the riots by specialist management consultancy Redflank during July, specifically investigated the impact of the riots on businesses across various sectors and found that:

only 6% of impacted businesses are open as usual51% of impacted businesses in KwaZulu-Natal and Gauteng have closed7% of these businesses have closed permanently44% have closed temporarily89% of the businesses impacted are SMMEs46% of impacted businesses do not have insurance headtopics.com

10% of the staff at impacted businesses were retrenched8% of businesses had their premises completely destroyed.ALSO READ:IN PICS: Looting and violence in Gauteng and KZNSMMEs create most jobsThe impact on SMMEs is important, because this sector provides more than 70% of the jobs in a country where almost a third of the population is unemployed. These small businesses stand to lose a staggering R3.4 billion a month in revenue as they try to resume operations, and will also need at least R16 billion in operational funding to recover.

SMMEs were already battling to get access to markets and affordable funding during the pandemic and they now face a 63% drop in revenue since looters destroyed their businesses. According to BeyondCOVID’s second survey results released in March 2021, SMMEs already had to deal with a massive drop in revenue since March last year.

ALSO READ:A looting shock to SA’s economic recovery – economistsChallenge to reopenIt will be a considerable challenge for many small businesses to reopen, since 62% of those impacted did not have business insurance, with only 5% that had business interruption insurance. Therefore the BeyondCOVID board, led by adv. Fay Mukaddam, is engaging with government, the private sector and civil society to grow BeyondCOVID into a national cause.

“While government and large business interests are critical to the success of BeyondCOVID, it is also true that all citizens can contribute and we are making available avenues for crowd funding contributions, along with the innovative approach to derisk SMME collectives and related funding partnership opportunities,” says Mukaddam. headtopics.com

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ALSO READ:Bigger businesses also strugglingUnfortunately, it is not only SMMEs that need help.The latest survey, based on 1 070 responses from informal, micro, small, and large businesses, shows that the unrest has left businesses across sectors in dire financial straits.

“As expected, the most affected businesses are in KwaZulu-Natal, where 76% of the participants said they have been affected in some way. In Gauteng, the percentage is slightly lower at 54%, but this is still more than half of businesses in the country’s commercial and economic hub,” says Lings Naidoo of Redflank.

“It is alarming that more than half (51%) of the affected businesses in Gauteng and KwaZulu-Natal have either closed permanently (7%), or temporarily (44%). The impact of these closures has a significant impact on the economy and the livelihoods of communities in those areas.”

ALSO READ:SAB looted: ‘Total collapse’ of liquor industry imminent, says BasaOnly 6% back to businessNaidoo says it is particularly worrying that only 6% of businesses affected during the riots are back to business as usual. “Businesses have been forced to retrench, on average, 10% of their staff and for SMMEs, the retrenchments are even higher, at 11% of the workforce.” headtopics.com

He points out that damage to property was extensive. “Our survey showed that 42% of the businesses reported damage to their premises and 8% said they have lost everything. Their premises were completely destroyed.”ALSO READ:These businesses were mostly affected

Businesses in the retail, accommodation and food, health, and social services sectors were mostly affected.Naidoo says nobody can forget the looting and vandalising of the South African National Blood Service in Durban, indicating that the unrest affected not only businesses, but the provision of health care as well.

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He estimates the total cost of the damage to property, based on the extent of the destruction listed, is about R126 billion. “SMMEs are looking at damage of about R55 billion, while the cost to informal businesses alone is R4 billion.”The stock of more than a third (39%) of the businesses surveyed was looted and more than half (55%) of those that lost revenue through looting were large corporates. It will take six to eight months for damaged businesses to repair their premises, while others say it will take around five months to get back to business.

ALSO READ:IN PICS, WATCH: Bare bones all that remain of Alex malls after mass lootingRole of insuranceBigger businesses are in a better position than SMMEs because 73% of the respondents indicated they have some cover. However, even in this group, one in four will have to reopen without the income compensation offered by business interruption insurance.

All revenue dropped across sectors by 59% since the riots, with informal businesses trying to deal with a decrease of up to 70%.ALSO READ:Ramaphosa announces return of R350 grants, assistance for looted businessesA lifelineWith the country currently in the grip of the third wave of the pandemic, it is clear that affected businesses need an urgent lifeline. “Unfortunately, it is impossible to help all businesses at once, but the SMME sector particularly requires attention.

BeyondCOVID will help by initially focusing on several key sectors to build momentum before expanding to other industries, but its goal is firstly to grow the number of small business collectives and provide a safe harbour for small businesses, Mukaddam says.

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barrybateman Great job guys....mission accomplished way to go. Now let's play the famous victim card.... barrybateman More blood on hands of instigators. And still CyrilRamaphosa is motionless in acting barrybateman That stat makes no sense If half have closed and only 10% have retrenched staff? 🤔

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