Small businesses hit hard by national lockdown

The speed with which government enacted lockdown regulations to curb the spread of the Covid-19 coronavirus pandemic meant that many small businesses did not have time to prepare adequately to safeguard their livelihoods.

Small businesses include hawkers, street traders and all businesses in the informal trading sector. These are run by the most vulnerable groups in society most of whom cannot access bank loans or state funding.

And even with the Solidarity Response Fund that has amassed more than R2 billion in mainly private sector donations to assist small, medium and micro enterprises (SMMEs), many will find it impossible to access financial assistance.

The fund requirements include an onerous criteria such as racial profiling of owners and that an SMME must have at least R2.5 million turnover a year.

Do informal traders match such a definition? How many SMMEs will be blocked from this opportunity merely because government doesn’t like the owner’s skin colour? Hasn’t occurred to the authorities that most of the white, Indian, coloured and foreign-owned SMMEs employ mainly black people?

For politicians, I guess all this is not important.

Most of our lawmakers have never run businesses and have never created jobs. I’ve been self-employed and running my business from home for 11 years. I work with many small businesses, mainly in the informal sector. I have learnt that when politicians introduce policies, they never go back to business owners to see how these changes are working.

At events we held for SMMEs, we discovered that these business owners weren’t even aware of the proposed bills in Parliament that affect them. And yet, these policies have a detrimental impact on their operations. There have been no grassroots consultations with the people who will be affected.

The owners of SMMEs already waste too much time and money complying with government requirements and bureaucracy – which means time away from running their businesses.

If I could have a day to speak to lawmakers, I would plead with them to first do proper impact assessments before implementing any new laws that will affect small businesses. I would appeal to them to repeal laws that are stifling their operations.

This is important.

The SMMEs stand a better chance of employing both new entrants into the labour market and those who have been desperately seeking employment for years. Freeing these small businesses from the government red tape would be beneficial to our economy. More successful SMMEs will help reduce the high unemployment levels.

I am passionate about business because as an entrepreneur myself, I know how difficult running a one can be but it is also immensely rewarding. If schools taught entrepreneurship from Grade 1, we would be a better country for it.

We need to encourage this as much as we can. Gone are the days when you go to school, then college or university, only to come out after 15 years as a job seeker. All courses at university or college should include entrepreneurship training.

We need more students who have an innovative “job creator” mindset. The fourth industrial revolution requires that we rethink what the world of work looks like today.

How are we preparing children who are starting Grade R now for this technological revolution?

A large part of it includes teaching entrepreneurial skills. We need more creators or inventors. Empowering people, rather than regulating them, is the way to go.

Under lockdown, many of us are trying to run businesses online from home. But how many of us are well prepared, with the right skills for this challenge?

Of course, some businesses require a physical store, but not all of them do. We need to rethink how we incorporate the digital into the physical.

For a street trader, obviously this would be a challenge. But there is nothing to stop this kind of business from using WhatsApp, for instance, to find clients and arrange deliveries at people’s homes.

Businesses that will survive under these harsh economic times are those that continue to innovate and think outside the box. The current conditions demand that things be done differently.

Even after the lockdown, the survivors will be those who continuously seek ways to outsmart their competitors.

South Africa’s credit rating has already been downgraded to junk status. This is all the more reason for us to innovate and find new ways to make our businesses successful. And government’s role is to create an environment that is conducive for small – and all – businesses to operate in.

It is possible. A great threat is that the rules and regulations, instituted prior and during the lockdown, become so draconian that when things return to normal, their impact will be worse than the Covid-19 pandemic was. We must all guard against that.

Unathi Kwaza, an entrepreneur, freedom lover and social commentator, is a board member of the Free Market Foundation.

This article was first published on City Press on 09 April 2020
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