With economic data for April beginning to show the devastating impact of the first full month, Business for SA (B4SA) has urged the government to move quickly to level 2.
The business group – made up of the Black Business Council and Business Unity South Africa – was formed to support the government’s efforts to deal with the effects of COVID-19.
Modelling by B4SA shows that if level 4 continues for a month, with a gradual move to lower levels, the economy will contract 14.5% in 2020.
The Sunday Times reported that B4SA is calling for a swift move to level 2, which would reduce the contraction to 10% and cut the number of formal sector jobs at risk from 2 million to less than half that.
At level 2, about 97% of the workforce is allowed to work.
The situation is so dire that South Africa’s National Treasury predicts more than 7 million jobs will be shed as a result of the virus and lockdown.
The domestic economy was already taking strain before Covid-19 hit SA shores.
About 65% of South African businesses believe that the COVID-19 pandemic will impact their business worse than the 2008/09 global financial crisis, a survey by Statistics South Africa (Stats SA) said on Tuesday.
Stats SA released a survey about the effects of COVID-19 on the formal businesses’ turnover from March 30 to April 13.
Businesses responded to the impact on their trading, workforce, imports and exports, purchases, prices and business survival.
“Most businesses (65%) anticipate that the COVID-19 pandemic will impact their business substantially worse than the 2008/09 global financial crisis. Only 4.3% of respondents indicated that the impact would be the same,” said Stats SA media relations officer Felicia Sithole.
She said half of the businesses surveyed had temporarily closed their doors. The highest percentages of temporary closure trading activity were construction, manufacturing, trade and mining.
Sithole said, “The report further shows that 42.2% of respondents indicated that they are not confident that they have the financial resources to continue operating through the COVID-19 outbreak. When asked how long businesses can continue without a turnover, about 54% of respondents indicated that they could survive without turnover between 1 to 3 months.”
The survey showed that five in six businesses experienced a decline in turnover during the period.
It further showed that 85.4% of businesses surveyed reported turnover below the normal range. Those most affected are those in the construction, real estate and other business services and transport industries.