NOTE: PRELIMINARY RESULTS AS AT 2 APRIL 2020
The news we share below is not good news, but it is better to face reality squarely than to underestimate the challenge.
Sakeliga’s research team is currently polling our members and our network on the impact of the Covid-19 regulations. The picture that emerges is one of great upheaval and worry. It also confirms the trend we see in the inquiries and requests for assistance that reach our service lines daily. There are some silver linings in between, but they are overshadowed by the upheaval.
What should companies do now? Of course, there are no easy answers, but we believe that the answers to the crisis primarily have to come from the business sector itself. Our primary concern is to keep open the doors of as many businesses as possible and restore a free economy as soon as possible. We are doing this in several ways, as indicated on our Covid-19 page.
So far, the indications are that assistance from the government will be limited. The reality is that, as we previously mentioned, now is the time for extraordinary business, which means not only innovative adaptation to individual business operations, but also a considerable expansion of beneficial business communities to work together to create value, to protect jobs and to keep the market economy’s chain of serviceability in place.
Piet le Roux, CEO: Sakeliga
ON THE SURVEY
Sakeliga recently distributed a questionnaire among its members to gain impressions about the impact of the Covid-19 outbreak and assess the regulatory response to it. This questionnaire is part of an ongoing survey that will be done on a regular basis during the Covid-19 crisis. The next survey will be launched in the week of 13 April 2020. The first survey was aimed at gaining insight into the future outlook of business people in the light of Covid-19 and the current emergency measures.
Clearly, the survey’s results are already grave cause for concern. Not only do the Covid-19 outbreak and the regulatory response to it greatly impact short-term business conditions, but companies’ perceptions suggest that it may take a considerable period of time for business people’s future prospects to recover. The results and comments strongly indicate an acute crisis for many businesses. Many businesses believe that it will be difficult to ultimately counter the effect of the Covid-19 crisis.
Conclusion and summary
So far, we have come to the following conclusion from the data:
- The Covid-19 outbreak, but especially the regulatory response to it, has clearly had a serious impact on the local business environment.
- This deterioration is of course not surprising, but a very large number of businesses in our survey indicated a considerable worsening of their short-term business conditions.
- Furthermore, a poor outlook, even after the next twelve months, was indicated. Great uncertainty was indicated about future prospects.
- Few companies felt that they will ultimately be able to counter the damage from Covid-19 and the reactions to it.
- In the open comments, respondents showed understanding about the disaster management measures, although there was great concern about the impact on businesses.
In these difficult circumstances, we think it is imperative that the business community itself acts innovatively and out of the ordinary to counter the crisis. Outside of government aid, private initiatives that focus on small and medium businesses are extremely necessary. It is there that Sakeliga wants to play a role.
We are keeping an eye on these developments and will keep you informed.
Gerhard van Onselen, senior analyst: Sakeliga
RESULTS IN A NUTSHELL
- Sakeliga’s recent members’ survey showed that for 86% of companies that took part in the survey, current conditions significantly deteriorated due to the Covid-19 crisis. 70% indicated that conditions have deteriorated considerably and for 16% they deteriorated to some extent. What stands out is that businesses are being acutely impacted. Only a minority of respondents expected better prospects in 30 days, 90 days and even after 12 months.
- The respondents were mostly from Gauteng and the Western Cape, and most of the respondents’ businesses, about 92%, employ fewer than 50 people.
- Nearly 80% of respondents indicated that their 30-day prospects are now much worse (58%) or worse (20%) than before.
- About 60% of respondents indicated that their 90-day prospects are also worse (17%) or much worse (43%) than before. Significant uncertainty about the future is indicated and uncertainty increases the farther people look into the future. 31% of respondents were unsure of their 90-day prospects (14% were undecided on the question of the 30-day period).
- Respondents were also asked about their prospects after 12 months. Uncertainty after 12 months has increased further, with 37% who indicated uncertainty. Still, 41% indicated much worse (23%) or worse (18%) prospects after 12 months. Those who indicated better prospects made up only 17% of respondents.
- About 47% of respondents felt that their companies can do little to ultimately considerably counteract the harmful effects of Covid-19. 27% thought that the harmful effects can be offset to a limited extent. Only 8% thought it would be possible to eventually counter the damage.
- In open comments, respondents showed understanding about the need for measures to combat Covid-19, although there was concern about the impact on businesses, frustration about the uncertainty of the requirements and questions about the assistance available.
Description of the survey sample
From a total of 231 respondents who have so far participated, Gauteng (38%) and Western Cape (24%) are most strongly represented. 31% of respondents indicated that they form part of an existing business chamber. About 92% of respondents indicated that their company has fewer than 50 employees. Enterprises with 10 or fewer employees accounted for about 65% of the total respondents. The survey therefore relates mainly to businesses with fewer than 50 employees. The survey was taken from March 26 to 2 April 2020.
Conditions in the short term (preceding 7 days)
As might be expected, a large majority of respondents indicated that over a preceding seven days, conditions for their businesses became much worse (70%) or somewhat worse (16%) due to Covid-19. Only about 15% of the respondents indicated that conditions remained the same (10%) or improved somewhat (2%) or improved greatly (3%). It confirmed that a large number of respondents experienced a significant worsening of conditions in the short term due Covid-19 and the responses to it.
Short and medium-term prospects
30-day forecast: Most of the respondents, about 78%, expect worse (20%) or much worse (58%) prospects over the next 30 days. Only 2% indicated better prospects (about 6% indicated the same) and 14% were undecided.
90-day outlook: 60% of respondents indicated worse (17%) or much worse (43%) prospects for the next 90 days. 10% of respondents indicated the same (5%) or better (4%) or much better (1%) prospects, while 31% were undecided on their 90-day outlook.
The respondents’ outlook on both the 30-day and 90-day periods was mainly negative. Respondents’ uncertainty increased as the future period of the outlook was extended.
Prospects after 12 months: The respondents were also asked about their companies’ prospects after the next 12 months compared to the present. Here, the proportion of respondents who indicated uncertainty was 37%, while 41% still indicated worse (18%) or much worse (23%) prospects. The group that expected better (10%) or much better (7%) prospects, accounted for about 17% of the respondents, and 5% indicated the same prospects.
Therefore, it seems that uncertainty about prospects and concern about weaker prospects make up a strong part of the respondents’ perception of the crisis at the time of the survey.
Over 30 days, 90 days and even after 12 months, relatively few respondents indicated an expectation of better prospects.
Extent to which damage can be limited: Respondents were also asked to what extent their businesses would be able to ultimately counter the damage of Covid-19. A significant number of respondents, 47%, indicated that little can be done to limit the harmful effects on their business. 27% felt that the harmful effects can only be countered to a limited extent. Only about 8% of the respondents expect the damage will ultimately largely be countered, and 15% were undecided on this (3% gave other feedback).
Open comments: The respondents were also given the opportunity to leave open comments. Although many of the respondents showed understanding about the need for emergency measures to combat Covid-19, there was considerable concern about the impact on businesses. Furthermore, there was considerable uncertainty about the current application of the regulations, with additional uncertainty about the help that is available to businesses. Some also questioned the feasibility of the lockdown regulations.