The Hope-full Impact of Level 1 on South African SMMEs

President Ramaphosa’s recent announcement has breathed even more fresh air into the economy. South Africa’s move to “alert level 1” based on the Covid-19 Risk Adjusted Strategy, will be a lifeline to the smaller SMMEs in our economy, who were unable to operate under previous lockdown levels. The significantly lower infection rates also provide more hope for businesses to call employees back into workplaces – if they can still afford to reinstate their jobs.

It has been expressed across the board that the GDP’s reported contraction of over 50% compels the president to move to level one and that any other move would be no less than irresponsible and detrimental to the already battered economy. Tourism and aviation, major contributors to the economy, suffered the most during the prior levels due to travel restrictions and the ability to move between provinces, already restored hope to these industries. Increasing activity in these, could be a strong contributor to the restoration of the economy, subject of course, to people’s fears relating to social distancing related risks. Tourism alone reported over R100bn contribution in 2019.

The easing of restrictions cannot go alone but needs to be coupled with a review of the surviving and most promising industries. This will require research studies, across the board, of the period March to August 2020, to understand the journey of SMME’s to date, so as to appropriately inform business support decisions, market, and infrastructure development as well as financial support.

It will be necessary now more than ever to make evidence-based decisions about where to direct the available resources to make the highest impact on the SMME sector in South Africa. Our SMME’s are still the key foundation to our country’s economic future and the two key areas of support that are important to SMMEs are access to markets and access to finance. These are of the most crucial forms of support that keep our SMMEs alive. However, SMMEs have expressed great difficulty in both areas and have been calling the private and finance players to pay attention.

Two key areas of support that are important to SMMEs are access to markets and access to finance. These are of the most crucial forms of support that keep our SMMEs alive. However, SMMEs have expressed great difficulty in both areas and have been calling the private and finance players to pay attention.

In October 2020, C4G will be engaging with African funders and SMME’s to review the COVID-19 journey and its impact on SMME access to finance and the approach to funding going forward. If you are an interested party you are invited to secure your seat at the webinar.

Nomsa Langa
C4G

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