Johannesburg – It is no secret that South Africa faces major social, political, and economic ills. We have not yet emerged from the shadow of Apartheid; we have some of the starkest examples of inequality on the globe; ordinary citizens are feeling the effects of a deteriorating state apparatus that is incapable of dealing with the complex issues we face as a nation.
Over the last weeks, these complex issues clustered at the tip of a particularly heinous spear, which has had a devastating effect on small and micro-enterprises, despite some of the country’s largest businesses receiving most of the media attention.
The aim here is to cast some light on the burden faced by some of our smaller but critical economic players.
Doing business in South Africa as a small (formal or informal) entity is no easy matter.
At the individual level, being a small business owner in South Africa requires a certain resilience, a plucky demeanour, and frequently, no shortage of innovation and agility to overcome uncertainty.
However, neither personal aptitude nor mental fortitude could surmount what many have woken up to in recent times. In so many cases, small entrepreneurial businesses were looted, burnt to the ground, damaged, or a combination of these.
For some, many years of toil to build up stock, cash flow, premises, equipment, and employing youth has come crashing down with little hope of recovery.
Very few of the smaller enterprises are insured, but even those who are will be losing critical time before supply chains re-open, insurance claims are paid out, clients feel safe enough to return, and normal trade can resume.
Cognisant of the obvious urgency of the matters at hand, we decided to run a flash survey of our SMME alumni over the last two days, in particular those located in and around Chatsworth and Umlazi in KwaZulu-Natal (however, some responses were yielded from Gauteng). We found that almost three-quarters (72%) reported being personally affected by the recent unrest, with the same figure reporting family members being affected.
No fewer than 93% reported a direct and immediate negative effect on their businesses. These deleterious effects ranged from supply chain issues and not trading due to concerns for personal safety, to experiences of violence and the total decimation of business properties and stock.
The experiences relayed by small business owners were understandably emotional and included a combination of fear, hopelessness, and a generalised sense that anomie had become entrenched.
Indeed, many are prioritising food security and physical security over rebuilding business activities at present. This is a major setback to families of the business owners, their employees and the economy; and it will require not only fortitude on the part of entrepreneurs to rebuild, but the investment of resources from players in the entrepreneurial ecosystem to help rebuild this sector, which is widely acknowledged as the major driver of employment in South Africa.
Given the magnitude of the challenges being faced by small and micro-enterprises in certain areas and the mammoth task of rebuilding that lies ahead in those areas, time is of the essence.
There is likely to be little fallback for the majority of small enterprises which, in turn, will deepen levels of poverty, inequality, and joblessness as a result of many never trading again. There has possibly never been a more important time for educators, enterprise and supplier development practitioners, incubators, financiers, business coaches, NGOs, NPOs, and all other business development service providers to act swiftly and reduce the fallout from recent events.
Riots and looting that broke out in the United States last year provide a timely reminder of the effects of these activities. Bearing in mind, of course, that the context was very different. While the United States suffers from irrefutable inequality in certain regions, it is largely a wealthy and developed nation with enough resources dedicated to law enforcement, infrastructure, and recovery. In South Africa, we have witnessed the ill-preparedness of the government to quell the uprisings and our generalised resource constraints in the aftermath.
But even in the United States, estimates of the damage caused during protest action from May and June last year tallied as much as $2 billion.
The major difference is encapsulated in one example of the City of New York offering relief packages to small businesses affected by looting, violence, destruction or a mix of these.
Indeed, it was announced that relief funds of up to $10 000 would be made available to small businesses – almost R150 000 at today’s exchange.
While this figure would not theoretically be sufficient to assist all rebuilding efforts, it would be a welcomed from the perspective of many of our SMMEs.
However, no such relief has been discussed, nor is it truly expected to be tabled in any significant way.
For the most part, small businesses are on their own and will be left to pick up the pieces where they can and if they can.
Over almost a decade, the GIBS Entrepreneurship Development Academy has seen first-hand how difficult regulatory frameworks, uncertainty, market fluctuations, and the lack of education, amongst other factors, can thwart entrepreneurial activity locally.
Nonetheless, we have also witnessed exceptional achievements and commendable business successes from many small business owners with whom we have worked.
We call on the private and public sectors to partner with us in forging expeditious solutions to save our all-important SMME’s in affected areas. So many of these small and medium enterprises provide employment and a means of living to an unknown number of fellow South Africans and we would like to be catalysts in preventing as much loss of livelihoods as possible.
For those willing or able to pledge assistance, please reach out to us at academy@gibs.co.za.
By the GIBS Entrepreneurship Development Academy.
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