Media Release: Western Cape Business Survey Report – Garden Route Business Impact

For Immediate Release
7 May 2020

To assist the Western Cape Government to better understand the impact of COVID-19 on the business sector and to determine how government can best support businesses for planned recovery, the Department of Economic Development and Tourism within a week from the pronouncement of the Disaster Management Act and the first lockdown period activated, conducted a survey with businesses across the province to establish the extent of the impact of COVID-19 across all regions.

The survey was intended to reach out to businesses of all sizes across the metro and all five districts, in order to gather real-time economic insight. Provincial government, municipal forums and agencies, social media platforms, sector bodies and organised business partners were amongst the range of networks accessed as widely as possible to gain essential information. Within 10 days the study exceeded 2000 responses from across the Province and the survey closed on 14 April 2020 with 2150 respondents having participated.

In general terms, the survey asked businesses to reflect how they are affected, how they believe they will be affected, what business recovery support they need and what assistance they believe they require in building business continuity.  In each category of questions, responses were verified as complete and valid.  The survey covered not only SMMEs but a number of bigger businesses as well.

The focus areas / questions of the survey were as follow:

• Single Site Business Response Distribution
• Standardised Sector Distributions
• Business Size by Employment
• Number of Permanent Employees
• Indicated turnover of respondents
• Does your business export?
• Have you identified new business opportunities as a result of the pandemic?
• Have you had to source from different suppliers?
• Has your business had to cancel any business contracts due the COVID-19 pandemic?
• Are you able to pay your most important business expenses?
• FIRST biggest monthly expense – 2078 Respondents
• Do you think you will be able to meet your FIRST biggest expense during the next 6 months
• Perception on SECOND biggest expense during the next 6 months
• Do you think you will be able to meet your SECOND biggest expense during the next 6 months
• What business strategies are Businesses considering?
• Have you informed your bank, shareholders and other important stakeholders regarding the impact of the pandemic on your business?
• Have you communicated to your staff, to ensure adherence to the national protocols for the virus?
• Have you informed your staff of the potential impact on them should the situation not return to normality soon?
• How well informed do you feel you are regarding?
• COVID-19 business-related information?
• What have been your three primary sources of COVID-19 business-related information?
• Have you implemented a Work-from-Home (WFH) arrangement at your business/enterprise?
• Do you have a business continuity plan, and have you implemented it?
• Are you aware of the www.supportbusiness.co.za website?
• Are you interested in receiving tips and assistance with taking your business digital?

It was found that many of the businesses surveyed are dependent on domestic demand and only 10.6% of them export. The South African economy is expected to contract sharply. The Reserve Bank estimates that a contraction of 6.1% is likely, the IMF -5.8% and Moody’s -2.5%. Business for South Africa projects the economy could contract by a whopping 10%. Regardless of what the exact size of the contraction will be, it points to the fact that demand will be constrained, and many businesses are destined to experience challenges to remain operational.

Even though businesses face the same storm, it was evident from the survey that they are not all in the same boat.  It appeared that nearly 99% of firms are keeping their staff informed about the virus and are trying to make sure that they adhere to national protocols.  The three primary sources of COVID-19 business related information that businesses used to inform and enhance their thinking and decisions, have been; (1) News websites, such as News 24, Daily Maverick etc. (73%), (2) Television and radio (55%) and (3) Official Government Websites (41%).

The insights gained from analysing the business survey reveal several recommendations that could help mitigate the impact of COVID-19 on business.

The recommendations are the following:

Both businesses and employees need support, urgently.

• Many of the businesses surveyed are dependent on domestic demand. Although demand is, and probably will be constrained in the near future, support to stimulate demand is needed as businesses are challenged to remain operational. Particularly, businesses in the retail and trade, construction and general services sectors predict that they will generate no revenue over the lockdown period. A gradual lifting of lockdown restriction is needed;
• With no revenue coming in, business needs assistance with wage and rental bills that are accruing;
• Business needs assistance with operational cost buffers to address overheads and cashflow challenges;
• Business requires government to consider municipal utilities and tax relief or reprieves (like interim concession on carbon tax, PAYE, etc.);
• Business needs assistance to understand the implications and gain access to, support containment strategies around bridging finance and business continuity planning;
• Similarly, business needs to understand the implications of selecting containment strategies like downscaling, wage reductions, retrenchments and business closure;
• Businesses need to be encouraged to reach out to banks, shareholders and important stakeholders to learn what support may be available; businesses need to be informed about any opportunities that may exist in their sector;
• Institutions like banks, insurance companies, business chambers, etc. need to give serious consideration to where they direct appropriate support and ‘put skin in the game’;
• It is particularly important that businesses engage with their banks given that financial containment strategies have been identified. Support is required around issues like debt restructuring or reduce the cost of borrowing, reduction in bank fees, etc.;
• Insurance companies to consider reducing excess amounts on insurance claims; Insurance companies have been less visible in announcing support to business than the banks have. There should be an exploration to see what can be offered; greater awareness (like that required for the banks), is needed;
• Organised business formations like business chambers and sector forums to establish working groups on innovative ways where some sectors could increase their work-from-home segment of their operations, consider online processing and/or sales; and
• Existing consumer behaviour (and delivery constraints) limit expanding online sales; however, there is an opportunity for consumer education by retailers for various LSM levels. Now is the time to educate South African customers to shift shopping

Workers need support with the ability to return to work and earn.

• Easing and opening of sectors require lockdown restrictions to lift, i.e. essential needs to be redefined in an evolving manner.;
• The provision of protective wear for all workers needs to be mandatory where any new sectors or industries can operate;
• Workers need safe and sanitized public transport options; and
• Workers need government support to consider minimizing short-time and retrenchments.

Government needs to protect jobs and drive recovery of the economy.

• Government needs to consider financial and non-financial support interventions and measures to assist business and employees in the above areas highlighted;
• Government needs to accelerate availability and applicability of support strategies, schemes, funding models and most importantly, access for business and workers (like secured access to UIF funding support); and
• With more than 80% of respondents to the survey being SMMEs, dedicated support from government, for small business, is imperative. The survey shows that these SMMEs do not have financial buffers for an extended period of inactivity.

Greater awareness and access to information needs to increase.

• Feedback to businesses via as many networks as possible on this ‘snapshot’ of the two-week real time window’ of the local economy;
• Communication Initiatives are still not optimally reaching businesses and increased awareness of websites hosting business information and support available, needs to occur; and
• Businesses need to be fed tips and be given assistance on how they could take their business digital.

From Western Cape Business Survey it became apparent that there is a significant role for everyone to play.  The intent is that Western Cape Government and its partners – municipalities, agencies, sector bodies, organised business and most importantly businesses that shared their experiences – utilises the real time information, to better understand the impact of this pandemic on our regional economy, but more importantly on business. The survey offers the opportunity to economic stakeholders to gain insight into enterprise, sectoral and municipal impact areas.

In the Garden Route district a decision was taken at the Garden Route District Business Economy and Tourism Cluster to promote local economic development by procuring products and services locally, as far as possible. Municipal LED units are also actively assisting small businesses with information and applications for available government assistance and funding.

We realize that Businesses and workers need to play its role to ensure business continuity and economic resilience of their entities.

Government and all its partners need to protect workers and stimulate a more resilient economy to emerge. To do this, government at all three spheres, should position and align its initiatives to ensure effective recovery support in the short, medium and long-term is activated.

Even though we have been thrust into a pandemic without too much time to prepare, it is encouraging to know that many businesses have been able to implement working-from-home arrangements.  We believe that recovery is possible, but only if we remain resilient and work together.

ENDS

Acknowledgements:

Western Cape Government

Issued by the Garden Route District Economic, Business and Tourism Cluster