Despite the easing of lockdown restrictions, the South African Chamber of Commerce (SA Chamber) has continued its call for large companies to support small, medium and micro enterprises (SMMEs) facing sales, revenue and cash flow challenges.

At the onset of the pandemic, the respected business network called upon UK companies with South African connections and South African business and individuals to support South African SMMEs. Sharon Constançon, SA Chamber Chairman, urged larger corporates to be mindful of struggling small businesses: “Those that might be customers, those within their supply chains and those that support their local communities – all need to survive to continue to add value in the economy and to feed themselves and their dependents.”

Going in to the global health crisis, SMMES already faced an uncertain outlook with the release of The Unseen Sector joint report by the World Bank and IFC highlighted the stagnation of this part of the economy for over a decade. The 2018 report, which estimated the country to have 5.78 million SMMEs (14% being formalised), highlighted the problems small businesses faced in terms of access to finance and markets while recognising that enterprise ownership reflected the underlying socio-economic inequalities of the country.

The onset of the global pandemic and the effects of lockdown measures added further pressures to many SMMEs. This was reflected in the results of the COVID-19 National Small Business Survey based responses from thousands of small businesses just before Lockdown Level 5 (over the period of 20 March – 26 March 2020) and at the commencement of Level 4 (over the period of 4 – 6 May 2020). The survey by the National Small Business Chamber (NSBC) revealed that pre-lockdown 81% of responding enterprises were experiencing ‘cash flow problems’ and 61% faced a ‘financial crisis’ due to the effects of the pandemic. Some 53% had applied for relief funding at the start of Level 4 but only 6% had secured assistance.

A ban on the sale of beer, wine and spirits in late March had a catastrophic impact upon bars and glass businesses which rely heavily on customers in the alcohol industry. (Credit: Timothy Barlin)

“Pay suppliers in full, on time, as quickly as possible to help their cash flow,” urges Sharon Constançon, “Commit to future work now, pay in advance and pay more regularly.” SACC’s call for responsible business conduct aligns with the call from Mike Anderson, NSBC’s CEO, whose organisation is campaigning for public and private sector organisations to promptly pay MSMEs. “Late payments are now at an all-time high,” he stated during an interview on 7 May, “This is exacerbating the casualty rate which is already extremely high.”

On the ‘supplier’ side, the SA Chamber is also encouraging companies to increase capacity to order more and retain communications with SMMEs. This can significantly help enterprises who are reporting significant cancellations in meetings and orders since the start of the pandemic.

The SA Chamber is also urging flexibility in relation to ‘customer’ relations. “Show forbearance and extending longer credit where possible,” suggests Sharon Constançon who also companies might also allow for different order sizes and smaller orders which hopefully will be more frequent to assist smaller enterprises.

Data from the Small business Recovery Monitor, launched by the small business financial platform Yolo, indicates that SMME trading is gradually returning to pre-lockdown levels. Cautious optimism was expressed in a statement by Katlego Maphai, Yoco’s CEO, on 21 May: “What we are witnessing now is hopefully the start of a story of recovery and resurgence.”

The pandemic has had a huge impact upon the cultural and creative industries which contributed R74.4bn to GDP between 2016 and 2018 according to the South African Cultural Observatory. (Credit: The Digital Marketing Collaboration)

The short-term outlook for SMMEs, however, varies according to industry while many enterprises are trying to gain clarity in relation to regulatory changes as lockdown levels change. There are also risks to business from the threat of a ‘second wave’ of the virus and the longer-term effects of societies working to contain the threat. The SA Chamber highlights the importance of larger companies supporting SMMEs as they restructure their business plans and devise innovative strategies to recover lost business. “We know SMMEs can be resilient and creative,” observes Sharon Constançon, “Many are now proactively re-strategise, especially where they can scale up their e-commerce capability.”

More widely, the SA Chamber has encouraged companies to explore how they can provide day to day support for SMMEs, such as sourcing stock for them or helping with deliveries. Firms can also work with the SMME community to help them access government support or bank funding.

“The SA Chamber encourages members and businesses in the UK and SA to continue supporting SMMEs as one of the most effective and rapid ways of helping make a difference to South Africans in this time of crisis.” says Sharon Constançon, “They remain one of the country’s biggest development opportunities.” And while the SA Chamber remains committed to supporting South African SMMEs they are also working to promote and support UK-based small businesses. Entrepreneurs have already been invited to participate in a series of Lightning Talks to offer micro-presentations about their lives and careers. A range of online events has also been launched to offer SACC members practical advice and support across a range of business and professional topics.

The SA Chamber would like to hear about how your company is supporting SMMEs or the wider community. SMMEs in the Chamber who are adopting creative ways to sustain their businesses are also welcome to get in touch.

Article by Antony Shaw.

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