Businesses feel the impact of Covid-19

Covid-19 has played havoc with our economy and businesses are struggling to get back on their feet.
The lockdown and recent protests and looting have not helped the matter.

The Springs Advertiser spoke to Eastern Gauteng Chamber of Commerce and Industry (EGCCI) president Mike du Toit to get his take on where we are now and what lies ahead for businesses.

How would you describe the impact of Covid-19 on business?

Firstly there has been the impact of people being off sick and also of people dying. This naturally puts a strain on any business, but particularly small family businesses. Secondly, there is the impact of lockdowns and regulations to comply with.

It is very difficult to manage under the circumstances that lockdowns thrust on you.

These things naturally have an impact on productivity. Investment and growth come to a standstill. Survival becomes the name of the game.

Which sectors have been the most affected?

There can be no doubt that the sectors that have been worst hit are hospitality and in particular restaurants and pubs that have sometimes had to close completely for weeks on end.

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This has a major knock-on effect on their suppliers, particularly the liquor industry. We still cannot be sure how many of these enterprises are going to survive.

The membership figures of the Eastern Gauteng Chamber give some idea of the stress that business is under.

During 2020, the chamber lost 18% of our members, mostly due to financial stress. So far this year we had 6% of members resigning, claiming cost-cutting due to financial stress, and a further 10% are in arrears with subscriptions.

Most of the businesses are small but there are also a few medium-sized firms among them.
This is quite a good indicator of the state of business reality in the country. We have naturally had to put our staff on short-time.

How long will recovery take?

Once we are out of lockdown and restrictive Covid-19 regulations, getting back to the pre-Covid-19 ‘normal’ should only take a few months.

The real problem is that normal was simply not good enough as we were on a path to disaster before Covid-19 arrived.

If your economy is growing at a slower rate than the number of people coming into the job market every year, you are actually going backwards.

We need high growth, and that comes from investment. We need a fundamental change in policy and attitude towards business at both the national and the local levels. If we want to avert disaster, we need that change in a hurry.

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What do you think Springs needs to get it back to the industrial powerhouse it was once?

We need an environment that gives confidence to investors and people in general. These things are the same for a country as a town, a reliable supply of electricity, law and order and a low crime rate, good schools, a quality water supply, a clean and pleasant living environment (sanitary, litter-free with regular garbage collection), good medical services, reliable and safe transport facilities, pleasant suburbs for the affluent as well as affordable housing for the poor.

When you have all these things right and do not strangle business with regulations and controls then you will attract investment and create jobs.

Do businesses feel confident about their ability to do business in Springs?

For the most part business in Springs faces the same problems they would almost anywhere else in South Africa, namely crime decay and decline.

There are many places where service delivery is a lot worse than it is in Springs, and the same thing can be said for crime.

However, in the past few years, service delivery from the metro has declined markedly as the infrastructure has deteriorated.

Naturally, when business people feel a sense of decline around them they start losing confidence and become nervous about investing.

How supportive has the City of Ekurhuleni been in terms of making Springs the place in which to do business?

Not very. We try to maintain close communication with the municipal authorities regarding all the serious problems businesses encounter.

Some departments are responsive and many seem to try their best but either does not have the resources or the ability to solve problems due to the policy restrictions placed on them.

Too much power is gathered at the centre of the City (that happens to be in Germiston on the westernmost boundary of the City) and not enough delegated to the outlying towns.

I have been closely involved with many of the problems we face and I am sorry to say that more often than not, tendering and personnel issues crop up as the root cause of the problems.

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Are there any challenges unique to Springs that businesses are facing?

Yes. On top of all the problems thrown at the industry because of the mismanagement of Eskom and declining general levels of service delivery, we have a situation where a key substation that feeds a hugely important part of our industrial base in the New Era and Fulcrum burned down last year, twice.

About 50 industrial businesses employing thousands of people have lost, in some cases, around 70 production days from power outages in the last 17 months.

This is totally exclusive of time and efficiencies lost due to lockdowns. After 17 months, we are still awaiting the completion of the re-build of this substation. The supply of energy at the moment is coming through a temporary set-up that leaves the industry at risk of a total collapse at any time.

The lack of urgency shown by the political heads of Ekurhuleni to this problem, which is an existential problem to Springs, does not give business confidence in Ekurhuleni as an investment destination.

The root cause of this crisis and many others is due to poor resource allocation by the council through not allocating sufficient funding to the energy department for manning maintenance and capital expansion over the last 15 to 20 years.

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