Survey: 78% of SMMEs do not have sufficient cash flow to survive lockdown

Source: NEASA

The National Employers Association of South Africa (NEASA) recently conducted a survey aimed at assessing the impact of the current lockdown on small, medium and micro enterprises.

Hundreds of employers in the NEASA network participated in the survey. The analysed response to the questions posed in the survey is dealt with below:

Are SMMEs able to cope during the initial lockdown, including the two week extension?
78% of responding enterprises indicated that they do not have sufficient cash flow to see them through the lockdown period; and
despite this, 69% percent of responders are of the view that they would survive the setback presented by Covid-19 lockdown measures.

In the case of an extended lockdown (beyond April 2020):

  • 92% of enterprises indicated that they will not have sufficient cash flow; and
  • only 29,5% of enterprises were confident that they would survive the lockdown

The following expressed confidence in enduring beyond 30 April 2020:

  • 74% of enterprises in the wholesale and retail sector;
  • 70% in the services sector; and
  • 47% percent in the manufacturing sector

In the case of an extended lockdown (beyond April 2020), the following believed they would survive:

  • 30% of enterprises in wholesale and retail;
  • 29% in manufacturing; and
  • 25% in services

How have workers of SMMEs been affected?
According to the scientific methodology applied, the lockdown could result in 813 000 job losses.
The aforementioned negative impact on jobs will be somewhat mitigated over time, as businesses recover following the initial lockdown.

How many businesses have accessed financial aid measures?
56% of responders have applied to the various funds set up to assist with the alleviation of business hardships as a result of the lockdown. However, as at 13 April 2020, only 4% had received approval.

Post Covid-19 recovery measures

  • 34% of responders supported a once-off “Covid-19 recovery levy” on turnover; and
  • 44% supported the concept of a once-off “Solidarity Tax” of between 1 and 2% on personal incomes above a R240 000 per annum threshold.

Other measures

  • 32% supported increased Government spending to alleviate hardships on business and the vulnerable in society, even though it would lead to greater fiscal deficits with probable tax increases as a result;
  • 64% supported closing down the radically loss-making State Owned Enterprises (SOEs), even though it would result in job losses;
  • 3% supported increasing taxes for the foreseeable future;
  • 53% supported the launching of major public-private partnership projects, supported by Government guarantees; and
  • 48% supported Government to request IMF and/or World Bank loans, understanding that it would require significant policy reforms.

To view the full report, click here.

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