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The impact of Covid-19 on small and micro businesses in SA

The impact of Covid-19 on small and micro businesses in SA

In almost all the messages, strategies and press conferences we have seen in these tough times of a global pandemic, one thing is clear in the world of SMMEs – some animals are more equal than others. 


Business owners listened with excitement as there was going to be a relief fund for SMMEs. 

Industry players breathed a sigh of relief in potentially averting disaster. However, sentiments also turned to fear of being left out for the underprivileged and usually, but not always, black-owned small and micro-businesses. 

In April 2020, the Minister of Small Business, Khumbudzo Ntshavheni, announced the implications of the Disaster Management Act, 2002 (Act No. 57 of 2002) for SMMEs and it has been a rollercoaster experience for most SMMEs and more so for the Small and Micro businesses (DSBD, 2020). 

Although guidelines have been provided, there has been confusion around essential goods, and the loopholes in the definition of what constitutes these essential goods. 

Tenderpreneurs have found themselves chasing PPE supply to no end, out of desperation. 

On the one hand, the informal sector has been left with no consumer, and on the other hand, the small business has woken up to what was meant by business compliance which they had, historically, not complied to. The creative industry businesses which operate as micro businesses have been left in limbo and vacillating between the Department of Small Business Development and the Ministry of Sports, Arts and Culture for directives. 

By and large, there has been misinformation in most spaces, and the Department of Small Business Development (DSBD) has been silent in communicating and translating their message to some of the small and the microbusiness practitioners. According to the above Act, as of 7 April 2020, all SMMEs who are in the business of providing essential goods (which are inclusive of groceries), can acquire a permit to trade. 

In the micro-business space this includes the informal traders who are mostly selling on the pavements and the spaza shops. The 7 April was in response to the cries from the micro industries who found themselves unable to make ends meet as their businesses were ‘closed down’ on the 26 March when the lockdown period began. Big established, essential goods businesses, however, were not as affected as they could continue to trade. 

During this time, most citizens who are working received their salaries and the grant system paid out as per usual. By the time government woke up to the need to include the micro traders, the first wave of spending had passed. This meant that some informal businesses would not rise again. 

The Informal Traders 

Not every informal trader sells essential goods. There are mechanics, electricians, restaurants, muthi (traditional medicines and spiritual consultations), shebeens, food stalls, etc. the list is endless. All of them have been working and had a market. Suddenly they are no longer allowed to work, there is no income, and their families are going hungry. There has been a rise in illegal trade. 

The Small Businesses 

Not all small businesses are performing as they were expected to even before Covid-19 hit. There is too much red tape, they cannot keep up. They do not have enough infrastructure and market to warrant the hiring of personnel and in some instances, they lack the maturity required to be formidable businesses. 

The stresses of being responsible for the full supply chain hits them and they usually do not know how to react and act when problems hit. In most instances, they do not have the skill and knowledge to deal with the position they find themselves in. It is only after years of trying, failing and giving up that one sees them morph into more mature medium business form. Unfortunately, many get left in the vortex of not reaching this level due to lack of compliance, innovation, networks, skills and knowledge. 

Solutions for the future of SMMEs 

One thing Covid-19 has done is to expedite change in the SMME sector as a whole. It has made the gaps clearly visible and it has allowed the powers that be to change research and strategies towards the construction of an SMME industry that is robust, and sustainable. 

Below are some suggestions which could help businesses and government in carving out the SMME path post- Covid-19. 

• Innovation 

It cannot be denied that SMMEs who constantly are innovative will survive post-Covid-19. Innovation should no longer be a subheading that simply exists in business plan documents and never practised. This means for a business to truly exist and be sustainable it has to adapt to the ethos of entrepreneurship which embraces change and the need for innovation to forge forward. 

• Virtual Teams 

During the Covid-19 pandemic, many businesses continue working without employees going into the office. Physical infrastructure and resources are becoming a thing of the past for some. Where there is no need to have a physical office there should be no physical office. 

Training and Development 

This should go beyond ‘how to write a business plan’; training needs to be changed completely. Outcomes of the training programmes that are offered should translate into actual plans and strategies, with business compliance completion forming part of the training programmes.

Not all businesses will come out on the other side of Covid-19. Only those businesses willing to accept change and make the necessary adjustments will prevail. The existence of Small and Micro Enterprises boosts the economy immensely and the country cannot afford to lose them 

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