February 5, 2021

Will small businesses survive another year like 2020?

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Sibonginkosi Mlalazi

The year 2021 has so far been more or less a continuation of 2020. One cannot help but wonder if small businesses will survive another year like 2020. Last year we saw numerous small businesses either shutting their doors or downsizing their staff because of how hard their balance sheets had been hit by the various lockdowns that were imposed across the globe.

With the near future still looking bleak, there are expectations that more small businesses will close down because of failure to bring in enough income to self-sustain.

According to Deloitte, Africa’s projected GDP growth for 2020 was 3.2%, however because of the Covid-19 pandemic, it is expected to be around -0.8%. The outbreak has led to disruption in the various sectors, most notably the financial industry and the tourism and hospitality sectors.

With the new South African Covid-19 strain currently wreaking havoc across different African countries, African small businesses continue to be at a big disadvantage as small businesses are the backbone of many African economies. Zimbabwe is one such country. Tourism brings in a lot of revenue for the country, but because of the different lockdown regulations that have been introduced since March 2020, in a bid to curb the spread of Covid, the sector has suffered major losses.

In the town of Victoria Falls, the majority of tour operators, lodges and restaurants are run by individuals and this has seen a number of these small businesses having to close their doors with the hope of opening only after the pandemic is supposedly over. Jobs have been lost in this industry as travel restrictions are still more or less in effect across the globe.

The income from domestic tourism has done little for the sector, as the locals do not really have a culture of travelling, and the international tourists are not coming in their droves as per normal.

In South Africa, many small businesses have fallen to the same plight. Because South Africa has an alcohol problem, the lockdown restrictions have on many occasions included a ban on the sale of alcohol, which has affected small brewers who play a key role in the production of artisanal beer.

One such brewer is Apiwe Nxusani-Mawela, founder of Brewsters Craft. She is one of small business owners who are struggling to keep things together because of disruptions in revenue. The liquor sector is only but one industry affected by the pandemic. Jobs have been shed in the sector, as
alcohol sales are not as per normal, and also because they are losing millions in revenue because their brewed stock has to be discarded when it reaches its sell-by date.

Small businesses have been stretched to the maximum, with some having to go into debt just to save their businesses from going under. Some of these businesses cannot afford to keep paying high mall rentals and paying staff whilst their sales are compromised. When walking in the different malls, one cannot help but notice the number of empty shops, as tenants are cancelling their leases every other month.

Imports from China account for a large part of the small business sector in Africa, and because of the different lockdown restrictions, a lot of African countries were unable to purchase their business stock from China. Many informal traders in Africa rely on importing merchandise from China and reselling it in their countries. Kenya for instance, imports about 21% of its goods from China and the pandemic at one point slowed the logistics around the delivering of goods, thus impacting on the livelihoods of many Kenyans who rely on importing merchandise to sell to the local market.

However, 2021 presents some light at the end of the tunnel, with many countries having started to roll out Covid-19 vaccinations. There is hope that some sort of normalcy will be restored as the masses get vaccinated.

Sibonginkosi Mlalazi is a Zimbabwean born Communications Expert based in South Africa. She is the Founder of Ingenious HD, a communications company based in Cape Town.

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