SMME closure rate should serve as a warning against the devastating impact of hard lockdowns

9 December 2020

The Democratic Alliance (DA) has taken note of a new Covid-19 impact report on small businesses by FinFind which has reported a closure rate amongst small businesses of 42.7%.

The SMME sector also experienced a job bloodbath during the first 5 months of lockdown, with 60% of full-time jobs lost, 76.8% of part-time jobs lost, 54.4% of casual jobs lost, and 41.4% of consultant jobs lost.

Even more shocking is that, of the 42.6% of the now-closed SMMEs that applied for Covid-19 relief funding, 99.9% of these applications were rejected by credit providers. Out of all the applications that were rejected, 32.3% simply did not receive a response, whilst poor credit history was cited as the main reason for rejecting applications (35.3%).

These shocking figures should serve as a warning against the devastating impact that hard lockdowns have on the small business community.

Small business owners and their employees are the backbone of a strong and prosperous economy, and are a crucial part of any attempt made at economic recovery.

This is perfectly illustrated by the fact that 76.7% of remaining SMMEs are still optimistic about their odds of surviving into 2021 whilst 69.9% of them are intending to develop new or different streams of income, with only 11.2% of remaining SMMEs planning on reducing staff going into the new year.

Nevertheless, the jobs and livelihoods already lost should not be overshadowed by the sense of optimism amongst the bulwark entrepreneurs and employees in our economy. If anything, their optimism must be harnessed by society to rebuild the economy.

It is therefore imperative that government avoids another hard lockdown at all costs. The livelihoods and well-being of members of the small business community should not and need not be sacrificed in the fight against Covid-19.

Issued by Jan de Villiers,DA Shadow Minister for Small Business Development, 9 December 2020