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SMEs remain resilient despite long term impact of July unrest in KZN and Gauteng
While previous data by Skynamo’s Industry Thermometer revealed that political turmoil in South Africa in July 2021 did not have as big an impact on sales as expected, the organisation’s August data is showing that the unrest is having a long term effect on small and medium enterprises (SMEs).
SMEs are essential to the economy’s health and predicted to lead an economic recovery post-COVID. However, many of these businesses are fighting to keep their doors open since the onset of the pandemic, with 89% impacted by the recent rioting and looting in KwaZulu-Natal and Gauteng, according to research by BeyondCovid.
Zane van Rooyen, product marketing manager at Skynamo, South Africa’s leading field sales app, says that data from the Industry Thermometer, which benchmarks industry sales activity and sector health, showed decreased sales in previous months, but not as much as had been anticipated. “It does indicate though that there might be a bigger longer-term impact on the recovery that SMEs are working so hard to achieve post the pandemic.”
Zane van Rooyen product marketing manager at Skynamo
“When comparing July with June orders, we see technology, accessories, sporting goods and pharmaceuticals taking the biggest knocks, with these sectors showing lower combined ordering values,” adds van Rooyen. “However, the ordering demands of our services customers increased by more than 500%.” He believes this could be linked to the urgent need to restock after supply disruptions in July.
“Encouragingly, our usual steady growth frontrunners like food and beverages, electronics, building materials and hardware, waste management, health and safety and others have maintained the steady month-on-month growth we’ve seen throughout the year so far,” he says.
FIRST SIGNS OF SLOWDOWN
Van Rooyen says that unfortunately the company’s Industry Thermometer data for August has shown the first slowdown of the growth pattern this year. “Optimistically, only eight out of the 26 industry groups monitored have shown negative growth when compared with the previous month. This negative, or stalling, is small compared to the big drop experienced in 2020 as a result of the pandemic.”
“Apparel, such as clothing and shoes, as well as packaging were amongst the industries that struggled in August,” he adds.
“However, looking at the combined total of all the industries monitored together, the graph still shows an ever so slight outcome in the right direction. Order volumes were lower than the previous months this year, but August managed to still hold its own, if only just.”
IMPACT WILL BE FELT FOR SOME TIME
These results mirror the sentiment of Finance Minister Enoch Godongwana, who recently said that the economic impact of the recent unrest would not be quickly resolved and would persist beyond 2021. He said that while early estimates of the economic impact were about R50 billion, the impact would be felt for some time.
“However, the 1.2% economic growth recorded in the second quarter this year, as mentioned by the National Treasurer, has been encouraging to witness in our data,” says van Rooyen.
Only time will tell what the tight rope of the next few months will look like, he says. “I am cautiously optimistic that the South African resilience will shoulder this wave and that local business will emerge wiser and stronger at the other end.”
SOUTH AFRICANS MUST SUPPORT SMES
However, in light of the country’s delayed vaccination rollout and reports of possible renewed volatility, there is much to be done to ensure SMEs do not face long-term difficulties in the months ahead.
Although government assistance in terms of funding and support is essential, van Rooyen believes it is vital for all South Africans to support local SMEs to ensure they are able to weather the storm. “In addition, small businesses should form a community and assist each other whenever possible,” he asserts. “For those that can, it’s time to reach out by mentoring other entrepreneurs, sponsoring local non-profits with your time and skills, and supporting small businesses and startups. Consider running free training workshops and be generous with your network.”
This is exactly what Skynamo’s community of SMEs did to assist each other during July. “We reached out to businesses affected by the unrest and proposed that if any of our customers’ products could somehow help other Skynamo customers to repair their damages, we would connect them – and offer a once-off 10% discount on a onemonth subscription,” says van Rooyen.
The company has had a great response so far, with customers offering special discounts on paint and related goods, personal protective equipment (PPE), cleaning materials, paper products, industrial supplies, hand sanitizer, disposable masks, IR thermometers, flooring, brooms and office-related products.
Skynamo www.skynamo.com
