Business in times of Covid-19

27 Mar, 2020 - 00:03 0 Views

eBusiness Weekly

Joseline Sithole

Iam afraid I have become a bit infamous in my tribe for forcing relatives, friends and siblings alike to wash hands with soap and to strictly follow the Ministry of Health and Childcare directives with regards to prevention of Covid-19 virus.  I also flatly refuse to shake hands at funerals and do hugs. I don’t care what all those relatives will say but I am simply not having it. I have also not ventured out and am staying at home unless it is absolutely necessary.  I am glad that the small business sector is slowly awakening from its slumber and has begun to put in preventative measures to fight Covid-19.

However, a snap survey by SODECO, revealed some disturbing trends among our SME sector with regards to preventing this disease. In some outlets it’s still business as usual, with absolutely no social distances observed at all. It is quite disturbing that bus owners still do not have passenger lists for tracking purposes in the event that a passenger might be infected. Vendors are still selling their wares proximal to each other with goods exposed to “potential sneezes” and dirty hands. Rarely when someone chooses a vegetable bundle do they pick the first one. Here I am hoping that with increased awareness campaigns people will exercise more precautions.

To say that the business fraternity has taken a “knock” in revenues since the outbreak of Covid-19 will be an understatement. In fact, a recent BBC report predicted that a recession is now most likely.

According to the UNCTAD, the United Nations Trade body, the Covid-19 pandemic will cost the global economy about US$1 trillion in 2020. In addition, world financial markets have tumbled and major supply chains especially those originating from China have been affected. The organisation also notes that emerging economies dependent on commodities will see particular decreases in Gross Domestic Product . SMEs are particularly vulnerable during this time as they are dominant world economies.

What current measures are countries taking to mitigate against the effects to SMEs?

(a) China: China has already put into place an array of measures to mitigate against the Covid-19 virus. Jennifer Bouyey, in her report entitled “Assessment of Covid-19’s Impact on Small and Medium Sized Enterprises” outlines a number of these measures.

The report notes that Chinese SMEs compose more than 30 million entities constituting 99,6 percent of companies and contributing to 80 percent of national employment. In addition, 70 percent of the country patents are owned by SMEs.

However, the Covid-19 pandemic has seen a drop in income of 30 percent of SMEs in this country. In addition, only 50 percent of the SMEs predicted that they will still be open within the next coming months. At most, SMEs were worried about paying salaries. To this end, China Central Bank has disbursed into the economy US$174 billion to cushion SMEs against the negative effects of Covid-19. 

Furthermore, large State-owned banks have been advised to increase lending to SMEs by at least 30 percent. China’s three government run policy banks were also told to lend US$49.7 billion to affected SMEs.

(b) The United Kingdom: The United Kingdom government has announced a Statutory Sick pay relief package for SMEs and a Small Business grant funding of Pound Sterling 100 million for all businesses. The government has also announced the coronavirus Business Interruption Loan Scheme, offering Loans of up to £5 million through the British Business Bank. The government has also announced deference of VAT and Income Tax Payment.

(c) Australia: In Australia the government has announced a new coronavirus SME guarantee scheme, which will support lending to small and medium-sized business with an AUS 40 billion dollar facility.

(d) South Africa: President Cyril Ramaphosa, announced a series of interventions to assist SMEs to survive the Covid-19 pandemic. Among some measures, tax compliant businesses with a turnover of less than R50 million will be allowed to delay 20 percent of their Pay as you Earn (PAYE) Liabilities over the four months. This will assist over 75 000 small and medium enterprises.

The Department of Small Business Development has made over R500 million available immediately to assist small and medium enterprises that are in distress through a simplified application process.

There is no doubt that Zimbabwean SMEs are going to experience negative consequences in the wake of the Covid-19 and there is need to take precautionary measures and active measures to moderate against its aftershocks.

How then can SMEs mitigate against COVID-19?

Monitoring cash flow: The biggest risk that SMEs can face is shortage of working capital. Though most SMEs in Zimbabwe are not labour intensive they might need to be careful with regards to spending. Notably consumers are now extra careful with money, as they buy the most necessary goods to survive possibly extended quarantine periods.

Working from home policy

Face-to-face contact should be minimised at all costs, and businesses should consider making employees work from home. In the same breadth there is a need to invest in the right equipment to enable employees to work from home. Such equipment might include laptops and enabling network systems for ease of communication.

Supplier management

Zimbabwean SMEs import a variety of supplies from China and the region. Due to Covid-19 there has been major disruptions. It is important to communicate with suppliers on delivery times and if resources permit businesses should order in bulk.

Using remote services

SMEs can do well to minimise contact in financial institutions especially banks and use internet and mobile banking services.

Which businesses are mostly likely to be affected?

As expected businesses in the services sector have been mostly affected as they thrive on large volumes of human traffic. These businesses include the food sector, hotel industry, transport sector, vendors, retail, beauty and entertainment to name just a few. For example, South African Airways has grounded its regional flights. CNN reported that the airline industry would lose about US$113 billion while the International Air Traffic Association (IATA) put the figure at US$30 billion. The restaurant industry was expected to lose 5-7 million jobs.

A research by Coresight showed that 49,1 percent of consumers in the United States are currently avoiding public transport altogether, 35,3 percent are avoiding restaurants, 32 percent are avoiding sports events and 21 percent are avoiding entertainment areas. This trend of consumers avoiding public meeting places is most likely spill into Zimbabwe as well.

Suggestions for start-ups

during this period

IT Sector: If employees start working from home IT related SMEs will need to install systems that enable workers to work real time from home. I hear from my nephew who lives in Denmark that their company has put in a system that you log on and the boss can monitor your work. The only difference is that work is not being done in the office.

E Commerce: Digital marketers might take the opportunity to train SMES to maximise their social media footprint as consumers have switched to conducting most of their shopping online.

Entertainment and arts industry

Those in the photography industry will do well to document how the coronavirus has affected the lives of Zimbabweans. Instead of a physical exhibition an online exhibition can garner positive responses.

Musicians can live stream their performances while people in the arts and crafts industry can push more volumes while in quarantine. (I think I will start writing my book).

The detergent industry

There is no doubt that SMEs in the cleaning industry are making a “killing” from Covid-19. Hygiene products such as soaps, sanitisers towels and other hygiene-related paraphernalia will be in great demand way long after the Covid-19 pandemic is gone.

However, the Standards Association of Zimbabwe need to be vigilant in ensuring that SMEs do not use harmful products to make these products.

Home delivery services

Currently home delivery services are mainly provided by for fast food companies such as Nandos. As people will stay at home these services will be crucial for survival.

Cab industry

It is possible that the general public will most likely use private cabs to avoid congested public transport. Private taxi cabs should therefore put into place attractive packages to cater for this growing consumer demographic. In conclusion, I urge all Zimbabweans to follow the simple hygiene rules that have been provided by the Government. Together we can fight this virus.

Joseline Sithole is an SME Consultant and founder of Southern Africa Development Consultants (SODECO). For comments write to her on [email protected] or whatsapp +263773634062.

Share This:

Sponsored Links

Survey


We value your opinion! Take a moment to complete our survey

This will close in 20 seconds