Financial Mail: SIPHO PITYANA: Flattening the SME curve

Tourism, restaurants, aviation and retail sectors are taking the biggest hit

Small and medium enterprises (SMEs) are at the heart of the SA economy — and for this reason, they are firmly at the centre of the response team set up by Business Unity SA (Busa) to deal with the Covid-19 threat and its impact on the economy.

The next 100 days are crucial. The sector — already buffeted by the downturn in the economy before Covid-19 reached our shores — will be decimated unless the situation improves by midyear. Urgent, focused and agile interventions are needed to avoid this happening, particularly given the massive job losses that will surely accompany it.

At Busa, we have a dedicated work stream specifically looking at interventions for small companies. We believe this — along with the government’s commitment to provide financial aid to affected SMEs, and the steps announced by President Cyril Ramaphosa on Monday — will provide a safety net during the pandemic.

But equally critical: once we have beaten the pandemic, organised business’s interventions should enable small businesses to get back on their feet in the shortest possible time.

Of course, it’s not simple. There is no silver bullet to ensure zero losses — either financial or jobs — in the sort of volatile situation we find ourselves now.

Some businesses, particularly in the leisure industry, have already felt the crunch and laid off large numbers of part-time workers. If there are further restrictions on movement and trade, the situation could become even more dire.

As each day goes on, economic survival becomes more challenging. It illustrates that the deeper we slide during the pandemic, the higher we’re going to have to climb to get back on our feet. This is why it’s crucial to protect the small business sector, and ensure it lives to fight another day.

As organised business, we have working groups looking at the economic impact of Covid-19, its impact on the health-care system, and implications for labour.

We’ve identified the sectors most vulnerable to the first wave of health, economic and social impacts of Covid-19: tourism, hotels and accommodation, fast food and restaurants, retail trade and aviation. What is particularly worrying is that more than 40% of our small businesses fall into these categories.

So, to address this, we’ve initiated a number of responses — some of which have already been taken on board by Ramaphosa:

• Establishing a solidarity fund to solicit and manage financial and other contributions, from both local and overseas sources, which will be used to support small business, among other things.

• Identifying potential supply chain disruptions arising from import restrictions and identifying import substitution and local manufacturing potential.

• Engaging public and private sector infrastructure providers to ensure the integrity of supply of water, electricity and other essentials.

• Working with the banks and real estate sector to support liquidity and promote forbearance.

• Identifying opportunities, in collaboration with the government, to provide tax relief for SMEs.

• Providing best practice guidance on mitigation strategies and workplace adaptation.

• Developing proposals on fiscal support for SMEs.

• Communicating the required steps to access Unemployment Insurance Fund benefits for affected workers, alongside the department of employment & labour.

• Assessing legislative and regulatory changes required in terms of the Unemployment Insurance Act, the law addressing compensation for occupational injuries, and other laws.

In the coming days, business organisations led by Busa will initiate a campaign to mitigate the impact of Covid-19 on small business. Large business and the government will be encouraged to do their bit too by extending longer credit periods, paying suppliers in full, on time, as quickly as possible to help their cash flow, placing orders early, paying in advance, and paying more regularly.

It’s critical that this happens quickly. Thousands of businesses are at stake, as are millions of jobs.

Just like with Covid-19 itself, we need to flatten the curve as quickly and efficiently as we can — in this case, flattening the curve for SMEs can prevent them going out of business.

• Pityana is president of Busa

by Financial Mail –