Survey: More than 90 percent of iLembe businesses have suffered financially from lockdown

The North Coast region has suffered a deep economic slump with indications that many businesses will not survive in the current climate.

A survey by the iLembe Chamber of Commerce as a member of the KwaZulu-Natal Business Chambers Council (KBCC) last month looked into the impact the pandemic and resulting lockdown has had on local business, especially in some of the sectors that dominate the iLembe economy.

The survey was conducted during the national Covid-19 lockdown as it transitioned from level 4 (May 15 to 31) to level 3 (June 1 to 15).

The results, presented to the CV19 District Council meeting last Thursday, indicate that the devastating effects on businesses were expected to worsen and many will not survive under the current rules.

The lockdown, in place since March 26, led to a sudden halt in demand and a near-total lack of revenue for many firms even while many continued to pay rents, wages and interest.

While South Africa’s lockdown, one of the strictest globally, may have saved lives it has also hurt an already fragile economy.

The survey findings paint a gloomy picture of low expectations with respondents predicting a lengthy and painful recovery.

Most of the businesses polled had either substantially reduced trading or stopped trading altogether during lockdown. Some 57% of businesses were not confident they would survive the lockdown.

Small and mid-sized businesses had been the hardest hit, suffering vast economic challenges with 38% of respondents indicating they risk shutting down permanently within three months.

Only a quarter (26%) thought they would survive longer than six months.

More than half of those polled said they had no income at all during the crisis. Some 25% of companies said turnover had fallen by 50%, with another 8.5% having scaled down operations by half.

Just 5.5% of businesses said their turnover had not been affected.

The survey shows small businesses, who are the biggest employers, are bearing the brunt of the lockdown with nearly half of all businesses experiencing severe impact on staffing levels, salary cuts and temporary layoffs.

About a third said the crisis had had a negative impact on their mental health.

While government extended some financial help for many of the poorest and relaxed some financial regulations to help the country’s larger firms and banks, small and medium-sized businesses seem to have fallen through the safety net.

Ilembe Chamber of Commerce CEO Cobus Oelofse said the survey confirmed the dire impact of lockdown.

“This is an ominous warning about the contraction of our regional economic activity, and resulting consequences, specifically consumer spend and disposable income, unemployment levels and commercial property values.

“These are unprecedented economic times with significant business uncertainty, exacerbated by the pandemic – with the tough message to all economic development stakeholders that a mediocre response to these challenges, or even worse no response at all, will have grim consequences for the region’s investment appeal and economic competitiveness,” said Oelofse.

“A targeted response will have to focus on measures that will yield results, and ignore the high level talking about nice to haves. Business continuity and economic recovery measures cannot include the things that we have always done, or should be doing anyway – all the social partners in the district, including the iLembe Chamber on behalf of business, will have to put their heads together and decide what we need to do differently, and with a sense of urgency.”

“Simply reopening factories and businesses alone, will not be enough to fix the economy’s woes. We will also need to think about stimulating demand for these products, which will currently be very low given that many people have lost livelihoods and wages,” he said.

The survey was done in collaboration with the KZN Department of Economic Development, Tourism and Environmental Affairs (EDTEA) and the UKZN Graduate School of Business and Leadership (UKZN).

The data analysis for iLembe was done by Shannon Moffat from the iLembe Vuthela LED project, an initiative sponsored by the Swiss government and the KZN EDTEA.

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