30% of SA businesses cannot survive a one-month lockdown

Posted 24 April 2020 Written by Ciaran Ryan
Category Economy

We now have a better sense of the impact the lockdown is having on the economy, and it’s not pretty.

survey by StatsSA shows 85% of companies experiencing a drop in turnover, but what is more alarming is that 54% of businesses surveyed say they cannot survive a lockdown lasting 1-3 months, with a further 30% saying they cannot survive a single month without turnover.

The announcement that government plans to partially relax the lockdown from 1 May 2020 will therefore be crucial to the survival of many businesses – even if they recommence operations at reduced turnover.

Key results
 The majority of responding businesses (85,4%) reported turnover below the normal range.
 46,4% indicated temporary closure or paused trading activity.
 50,4% expected their workforce size to stay the same in the two weeks after the survey, while 36,8% reported that their workforce size is expected to decrease.
 28,3% indicated that their workforce has decreased working hours and 19,6% reported laying off of staff in the short term.
 19,1% indicated that prices of materials, goods or services purchased increased more than normal.
 Access to financial resources: 23,8% indicated a decrease while 52,6% indicated access to financial resources remained the same.
 38,2% of businesses applying for financial assistance reported that they would use government relief schemes.
 30,6% indicated they can survive less than a month without any turnover, while 54,0% can survive between 1 and 3 months.
 46,3% of the workforce were able to meet business demands, and 43,0% of the workforce were not able to meet business demands (the rest reported ‘unsure’).

There are various estimates of the number of South Africans that have lost their jobs since the start of the lockdown, and they vary from 260,000 to 1 million. The StatsSA survey indicates show that 36% of businesses are expecting to reduce the number of employees as a result of the lockdown.

Some 28% of companies have reduced working hours, and roughly 20% have let workers go in the short term. What’s also worrying is that 37% of businesses are unable to get the materials, goods and services they need to operate, and only 7% said they had improved access to financial resources, notwithstanding the government’s range of financial relief packages.

Not mentioned in the survey is the domino effect caused by business failure on other businesses in the supply chain. This will become clearer in the months ahead. Two-thirds of businesses believed the current crisis was worse than the 20089 financial crisis.

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