Sunday Times: JOHN DLUDLU: Post-riots reconstruction is a chance to help SMEs recover


On Wednesday, after a tumultuous week in SA that saw huge swathes of KwaZulu-Natal and Gauteng engulfed in mayhem, I reached out to Mike Nkuna, the billionaire black African property mogul. Ordinarily, the purpose of the call would have been to commiserate with him, in his capacity as an owner of Kaizer Chiefs, over the team’s defeat
in the CAF Champions League final last weekend.

However, the mayhem of the past fortnight quickly turned the call into a more sombre affair. Nkuna ’s shopping malls in Soweto were among those looted and vandalised amid the violence that has since claimed more than 220 lives, without an official explanation of how these people died.

As Nkuna, the chair and founder of Masingita Group, was travelling back from the match in Morocco, I could only reach one of his twin sons —Esley. Like his father, the young Nkuna was devastated but surprisingly upbeat in the face of the tragedy visited on the family ’s business empire, which includes the Jabulani and Protea shopping malls. He told me they would bounce back soon.

Apart from forcing business owners to lay off thousands of workers at more than 200 malls and scores of factories, the unrest has disrupted supply chains, placed more than 150,000 jobs at risk and set back economic recovery.

The bank-financed shopping malls accommodate three sets of vulnerable breadwinners: the major anchor tenants; the thousands of so-called independents or small business owners (stores not owned by head offices and liquor retailers); and the informal sector traders who eke out a living outside these malls.

Typically, the latter two categories are uninsured, especially for public disorder, and depend largely on mall security for protection.

Over the past few days, many figures have been bandied about on the exact cost of the mayhem. Of course, one major cost is the effect on business confidence among small tenants arising from the uncertainty over when this might happen again.

However, looking only at recent events offers a blurred view of the plight of small and medium enterprises (SMEs). The mayhem is only the latest blow to this important segment of the economy, coming on top of the bruises inflicted by the level 4 lockdown.

These new blows are exacerbating pre – existing factors, including late payments, rolling power outages, crippling red tape and recessionary conditions. Late last year, one survey on the impact of Covid on SMEs estimated that as many
as 55,000 might not make it beyond the pandemic.

Liquidation numbers corroborate this sad story of a fragile segment that is supposed to generate 90% of all jobs by 2030 (according to the National Development Plan).

Sad as it is — especially because this crisis was foreseen and could probably have been avoided by a professional, capable state — it has presented us with an opportunity to reset. I have been pleasantly surprised at the many offers from big business to assist SMEs get back on their feet.

In this regard, the courageous efforts by communities to protect the businesses that serve them have to be commended. Similarly, the instruction from the South African Special Risk Insurance Association, the specialist state-owned insurer, to short-term insurers and brokers to speedily settle claims for less than R1m shows that
some key players are not tone deaf.

Masingita is well poised to quickly rebound. But that doesn’t apply to the thousands of SMEs — future job and growth creators — affected by the mayhem. We need a short-term plan to avert the looming crisis fuelled by unemployment (especially among black African youths), poverty, hunger and inequality, and an urgent intervention
to get distressed SMEs back on their feet.

A key component of this intervention has to be a commitment to use local labour, suppliers and small construction companies to help in the rebuild programme.

✼ Dludlu is CEO of the Small Business Institute

by Sunday Times –

John Dludlu