SMMEs remain vulnerable to external shocks – report

WHILE South African small, medium and micro enterprises (SMMEs) have proven to be resilient through the Covid-19 crisis, with many remaining optimistic about their financial future, however, they remained extremely vulnerable to external shocks, such as lockdown restrictions and civil unrest.

This translated to them requiring significant support, if they were to survive and play a role in the country’s economic recovery and job creation.

This was revealed in “From Survival to Opportunity through Covid-19 and Beyond: SA Future Trust Baseline SMME Report”, released last week by the South African Future Trust. The SA Future Trust provided financial assistance to SMMEs hit by the Covid-19 lockdown, last year, in the form of interest-free loans to facilitate direct payments to their employees for a 15-week relief period.

A survey of the SMMEs which took up the SA Future Trust loans, was conducted between October last year and March this year to assess the impact of this funding and what support these businesses required to help them survive and thrive longer term. Of 9 656 businesses surveyed, 2 849 responses (26 percent of the total) were received.

One encouraging finding in the report was that most of the businesses that participated in the survey had remained operational – 2 772 were still operational at the time of the survey, representing 97 percent of respondents. Furthermore, across all sectors and skill sets, more jobs were preserved than lost.

Data collected from the survey indicates that the various lockdowns depleted the small reserves respondents had on hand, with 69 percent indicating that they had less than one month of savings accessible.

Oppenheimer Generations Philanthropies Social Investment Associate Ashleigh Fynn-Munda said, in assessing the SA Future Trust’s role in supporting these SMMEs through the Covid-19 crisis for at least 50 percent of respondents the SA Future Trust loan was the only relief they reported to have taken up.

The SA Future Trust was established in March 2020 and has extended loans worth R985 630 500 to 9 656 SMMEs.

“Another interesting finding is that, while the SA Future Trust loan was available to qualifying SMMEs with an annual turnover of less than R25 million, micro businesses with fewer than ten employees and a probable turnover of between R5-R20 million made up 71.84 percent of the loan holder respondents,” said FynnMunda.