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NC small businesses suffer 37% drop in turnover

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Load shedding and recent amendments to Level 3 lockdown have hit SMEs hard in the past two weeks

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THE RECENT bout of load shedding saw small businesses in the Northern Cape experiencing their biggest drop in turnover since the initial Level 5 lockdown.

The Yoco Small Business Recovery Monitor showed that from July 8 to July 22 the turnover of small and medium-sized businesses (SMEs) in the country dropped from 72 percent to 60 percent versus pre-Covid levels.

The biggest decrease occurred in the Northern Cape, where turnover dropped by 37 percent. 

Yoco, distributor of point-of-sale devices to more than 80 000 merchants who operate mainly small businesses, compiles the Yoco Small Business Recovery Monitor which, as far as is known, is the only live, publicly available, small business transaction data resource. The monitor tracks the recovery of small businesses in South Africa through the lockdown.

Yoco said on Friday that 29 percent of the SMEs in its database had yet to trade since the outbreak of the pandemic, compared with the same base and trading time frame in 2019. This pointed to a potential business closure rate of almost 30 percent.

The latest data showed that, despite a positive start to the month, the recent amendments to advanced Level 3 and load shedding had hit SMEs hard in the past two weeks.

The food and drink industry (F&D) was the most fragile sector – its turnover levels had dropped back below the halfway point to recovery, losing seven percent over the past two weeks.

F&D was now at 46 percent of pre-Covid levels. This was attributed to the reinstatement of the alcohol ban and the imposition of the curfew.

The declines were also driven by a significant decrease in the health, beauty and fitness industry (-19 percent), where the initial large spikes in turnover after months of lockdown had caused a run on beauty salons and hairdressers, which had now abated. This industry was back to 59 percent of its pre-Covid level.

Consumer confidence in this sector could also be affecting turnover, as people were reluctant to book services outside of “essentials”, such as a hair cut.

The declines were consistent across every province, with the biggest decreases occurring in the Northern Cape (-37 percent), North West (-31 percent) and Limpopo (-30 percent). KwaZulu-Natal (-16 percent), the Eastern Cape (-19 percent) and Gauteng (-12 percent) were also hard hit.

The Western Cape, where the pandemic curve was showing signs of flattening, was the least impacted (-5 percent), but remained the province with the lowest turnover recovery rate.

This was likely due to the volume of businesses that were impacted by the movement restrictions, as well as the number of businesses in the province that relied on tourism for business traffic.

“The combined impact of load shedding, reintroduction of the alcohol ban and curfew as well as the surge in coronavirus cases has overwhelmed many of the businesses who were beginning to stabilise,” Yoco said.

As of July 8, weekly SME turnover had had a 2.49  improvement, with the total index at an average of 72 percent versus pre-Covid levels. This improvement had been attributed to increased trading over the weekend.