South Africa’s economy has been severely affected by the COVID-19 pandemic, and the future looks increasingly uncertain for the majority of the country’s businesses. This came on top of an economic recession prior to lockdown. Economic growth has been poor, the ratings agencies have downgraded SA’s standing and unemployment has skyrocketed.
The chief executive of Pan-African Investment and Research Services, Iraj Abedian, has noted that COVID-19 dealt a crushing blow to a struggling economy, after a decade of politically orchestrated looting and plunder, that could barely stand a mild wind, let alone a hurricane.
The Covid pandemic has exposed the weaknesses in our society. Our educational and health systems are not up to the challenge, the limited social net cannot cope, and struggling businesses have meant that less tax has been collected. Vulnerable communities in particular face a dire future. The various fiscal and monetary stabilisation measures such as direct cash transfers to households and businesses have been blighted by corruption.
Children and students have had to study from home. This has highlighted two problems. Many educational institutions were not able to pivot their operational models to online learning. This has widened the gap between the rich and the poor and has affected the opportunities for disadvantaged learners to participate in the national economy.
But the spirit of free enterprise remains vibrant, as witnessed by the escalating trade in bootleg alcohol and tobacco products, which have been banned under the lockdown. It will be a pity to let this entrepreneurial flair go to waste.
What can South Africa do to recover from this crisis? One important action is to revise this is to scrap unnecessary regulations that get in the way of profitable small business. Another is to cut back on bloated government expenditure. The remuneration of civil servants service accounts for 45% of government revenue. These two actions will have a powerful combined effect – the numerator will increase with more tax revenue, and the denominator will decrease with a less costly state apparatus.
We need competent ethical business people and we need an ethical, efficient state. The situation is serious -we cannot dilly dally with mediocre, half-hearted measures.
Dawie Roodt of the Efficient Group and a frequent panellist at Regenesys events, has described the pandemic as a “multifaceted, nonlinear, shock to the world economy and that its repercussions will be felt in a number of ways.”
He foresees the following implications:
Roodt says that there will also be more pressure on fiscal policy to spend more on health and on transfers to the poor, as well as support marginal companies.
He foresees that “…. the introduction of minimum assistance, or a basic income grant, is likely to become a permanent fixture of fiscal policy in future. Inevitably that means that the role of the state in future will be further expanded as the state becomes more aware of the (income) needs of its citizen.
Further insights into basic income grants can be found here
A further consequence of the lockdown is that companies are forced to reconsider their office arrangements and their staffing models. Employees which are not contributing will face an uncertain future, adding to the mushrooming ranks of the unemployed. Work from home has become an operational reality, and this brings a decreased requirement for expensive office space. Flexible working hours will become widely accepted, with a less directive, more participative approach required for performance management.
There will always be a future for employees who can adapt and innovate under testing conditions. A tolerance of ambiguity and a commitment to providing deliverables as opposed to performing activities will be sought after employee characteristics.
Dawie Roodt expresses it frankly and with a trace of humour: “Once workers experience the benefits of working from home, and realise that your colleagues and your boss can be a distraction in an office environment, the home of the future will be designed around the home-office worker.”
Annatjie van Rooyen, CEO of MyWealthInvestments takes this view of the situation:
“The SA economy is currently in crisis due to the Covid-19 pandemic but do not allow this bleak picture to destroy your dreams. This crisis too shall pass. The financial crisis in 2008 truly felt like Armageddon while traders witnessed history being made but in hindsight, the crisis presented golden opportunities for investors and entrepreneurs. Many supply chains have been broken under current lockdown restrictions but this has forced entrepreneurs to focus on new opportunities and revenue streams. Invest in yourself and your potential by educating yourself because your dreams are in reach. Online brokers have reported record inflows during the lockdown, proving that astute investors have learned a valuable lesson from previous meltdowns and subsequent recoveries in global markets.”
J. Brooks Spector, a former US diplomat, makes the point that “….there is a growing understanding and acceptance that economies and nations cannot continue to have large pools of un- or under-employed individuals with few resources while others take advantage of the benefits of the new 4IR economies. Such a situation can only lead to greater instability politically and socially.”
Annabel Bishop, Chief Economist at Investec Bank and a regular panellist at Regenesys events has this to say about our rating situation: “…..SA has been falling through the credit ratings increasingly quickly and is at BB from Fitch (for both its foreign and local currency ratings), while from Standard and Poor’s SA’s local currency rating is BB but its foreign currency (country) rating is BB-. The next step after BB- is single B, followed by the C grade ratings and then D, for default.”
So, the outlook is not good.
Heather Rolfe, Director of Research at Demos, the international research and survey organisation says:
“The coming months and years are going to be among the most challenging in our lifetime for our economy, our society, and many of us individually. Problems of unemployment, low productivity, declining competitiveness and low innovation will be hard to resolve; harm will be inflicted on people’s working and personal lives. The post-coronavirus labour market is going to be very different to the one we left behind in March.”
She continues: “As we come out of the crisis, we need a recovery strategy focused on getting people back to work, into jobs that are skilled and sustainable, in sectors we want to grow. This needs to include changes to the benefits system, to local economic planning. It also needs changes to our immigration policy which looks set to hinder recovery. It needs coordinated policies and action at national and local levels. And most of all, it needs to focus on people and skills.”
The ILO reports that worldwide, more than 436 million enterprises face high risks of serious disruption. These enterprises are operating in the hardest-hit economic sectors, including some 232 million in wholesale and retail, 111 million in manufacturing, 51 million in accommodation and food services, and 42 million in real estate and other business activities.
ILO Director-General Guy Ryder makes the point:. “For millions of workers, no income means no food, no security and no future. Millions of businesses around the world are barely breathing. They have no savings or access to credit. These are the real faces of the world of work. If we don’t help them now, these enterprises will simply perish.”
The Southern Africa Labour and Development Research Unit at the University of Cape Town conducted a survey on the effect of the Covid lockdown on young South Africans. This is what they found:
More than 11 500 young people aged 18 to 35 participated. The findings emphasise the abrupt loss of income and the severely increased levels of uncertainty as a result of the pandemic, indicating how Covid-19 exacerbates existing fault lines in young people’s lives.
Of those respondents who were employed before the lockdown, almost half were in precarious jobs. A whopping 69% indicated they were either no longer receiving their wages during the lockdown or paid only partly. At least 42% of those employed didn’t know if they would still have a job after the lockdown, while 24% said they would not.
In addition to the threat to their own employment, 57% indicated that they were living in a household where only one adult was earning an income during the lockdown. Lack of adult earners in households places a huge burden on the employed young people who reported that they supported at least five people on an average wage of about R5 016 per month before the lockdown.
SALDRU argues that current interventions are not engaging sufficiently with the complexities and linkages in young people’s realities and how these affect their life chances. They argue for a multi-faceted and integrated strategy is needed to support their educational and employment transitions, recognising the interconnectedness of deprivation and seeking to support young people’s agency and resilience within that context.
Importantly, the biopsychosocial model appreciates that young people need a wide range of support services to deal with many challenges or deprivations. Furthermore, a survey showed that 37% of respondents indicated that they would need free data after the lockdown, but also learning support (36%), online work or training information (33%), jobseeker support (29%) and access to a counsellor (19%).
McKinsey, the global management consultants, phrase the challenge like this:
“Because of their critical role in job creation and growth, protecting and enabling SMEs during this period of economic turbulence is important not least because their survival and recovery is likely to be a bellwether for the economy as a whole”.
“SMEs are the lifeblood of South Africa’s economy—and also the most at risk”.
“SMEs across South Africa represent more than 98 percent of businesses, employ between 50 and 60 percent of the country’s workforce across all sectors, and are responsible for a quarter of job growth in the private sector. And while the GDP contributions from South Africa’s SMEs lag other regions—39 percent compared to 57 percent in the EU—there is no doubt that this sector is a critical engine of the economy.”
Smaller business face a number of problems which they will have to overcome:
- a restrictive owner mindset – owners are overwhelmed and stick to what worked in the past rather than taking bold steps.
- small enterprises often lack sufficient performance management systems – owners and managers will have to take on a strategic role
- Inefficiencies in daily business activities [inventory, deliveries, staff rotation] – smaller business have to put together clear day-to-day survival operating models.
Many new and low maturity SME businesses do not have the financial, operational, and strategic structures that are common in larger businesses. This hinders them from making the best use of available capital to scale their operations. Often this can be traced to limited cash flow and consequently, they are highly dependent on customers paying invoices on time or because they have little knowledge and insight into how to effectively set up and run the business, and the associated key metrics to be tracked.
McKinsey argues that the Government should “continue to ensure that entrepreneurs are supported with the skills and capabilities they need to rebuild and grow their business after the crisis. Most would benefit from additional training, for example, in business scenario planning or managing scarce financial resources. This would be particularly relevant where relief funding is provided. The government could also work with industries and sectors that are most under threat from COVID-19 to develop resilience strategies and to help them reimagine their business models going forward.”
It is Professor Sipho Seepe, deputy vice-chancellor of Institutional Support at the University of Zululand who perhaps more crisply than anyone else spells out the disconnect between the creation of vibrant smaller businesses and the institutions which should be providing these services. Professor Sipho Seepe puts it like this:
“Universities seem to be caught in a daze of deathly parade and competition on how well they are doing as opposed to their counterparts. …. The higher education sector has not risen to the challenge. We have seen little visionary leadership, idea formation or innovative solutions.”
So a rather gloomy picture has emerged in our conversation above. In a nutshell, in order for South African business to survive we need:
- Strong leaders with a strong ethical mindset
- Support in nurturing a business through the lockdown and beyond
- Access to quality business education in formats that suit the student, rather than the provider
- Student loans for those who seek to deepen their business knowledge and understanding.
- Support to bright qualifying students who are desperate to study business, but who lack any sort of funding.
- Business managers and leaders who understand the Fourth and Fifth Industrial Revolutions.
Regenesys cannot address all these challenges alone, but true to their values, we have stepped up to play our part in addressing these crippling problems.
Twenty-one years and counting, over two hundred thousand students trained and currently placed in more than a thousand of the world’s most reputable organisations; Regenesys has proven to be one of the fastest-growing and leading institutions providing management and leadership development skills in the world.
At Regenesys, we assist individuals and organisations in achieving their goals by enhancing their management and leadership potential.
Our ultimate goal is to awaken the potential lying dormant or untapped in individuals and corporate organisations.
As global thought leaders with campuses in the heart of Sandton, Lagos, and Mumbai, we do not just instruct and train, we develop astute business leaders with a passion and sense of responsibility to holistically manage people, profit, and the planet in a creative and sustainable manner. It is this can-do mindset the Regenesys is offering to the world.
Here are some of the many ways in which Regenesys is contributing to make our world a better place.
1.1 Accessible study opportunities
The Regenesys Foundation has made a R100 million pledge to the Regenesys Business School to launch a great lockdown education initiative to provide access to higher education to individuals and organisations affected by the global pandemic crisis. This now allows us to offer a 60% reduction in course fees between May and August 2020.
This offer applies to online MBA, Bachelor’s, Diploma, and Certificate programmes. Click here for more.
1.2 Strong leaders with a strong ethical mindset
Regenesys approaches education holistically – intellectually, emotionally and spiritually delivering learning programmes that are designed to inspire and transform not only the minds but the hearts and souls of our students. Our programmes enhance cognitive and analytical thinking, but we also go further with focused attention to team and interpersonal dynamics, ethical standards and developing a deep inner sense of purpose to make a difference in the world. We uniquely combine intellect, emotional intelligence and purpose in all our offerings. Building a strong, defensible ethical framework in all our students is part of what we do.
1.3 Managing your personal and business finances
MyWealthInvestments, a financial services provider company in the Regenesys stable, offers a comprehensive range of financial products and management consulting services
They range from exciting discretionary investments to short term insurance that is best suited for your personal budget and long term insurance solutions.
MyWealthInvestments also offers a number of online financial training programmes to help you protect your hard-earned money in the time of lockdown. Click here for more.
1.4 Quality business education in formats that suit the student, rather than the provider
Whether in the classroom or during other engagements, our watchword is excellence: always reaching for the highest standards of quality and service delivery that every student, staff and all other stakeholders deserve. We have interactive 5th generation online learning. options as well as full time and part-time offerings.
1.5 Student Loans
MyWealthInvestments offers affordable and personalised payment solutions for students who study at Regenesys Business School. Once you have decided on your course of study, and you are requiring financial assistance, click here to make an appointment. Click here to find out more.
1.6 The Ed4All Initiative
The Regenesys Foundation’s Ed4All programme disrupts traditional models of education, using technology to deliver top quality online life-changing programmes from as little as R500 per month. At the Regenesys Foundation, we believe that education is the greatest equaliser in addressing the disparity we face in South Africa and the African continent. We wish to serve our society uplifting people out of the impending poverty, empower them to live successful lives with purpose through education. Click here to apply.
1.7 Digital Business Education
Regenesys offers digital business education programmes designed for leaders and managers who need to deepen their understanding, and successfully execute the organisation’s AI strategy. These programmes are offered online and make use of top-level faculty from around the world. The growing number of courses include artificial intelligence, digital marketing, robotics, coding, data science, machine learning, blockchain and Cybersecurity. Click here to view courses.
1.8 Business advisory and support
MyWealthInvestments specialises in the start-up, development and growth of companies operating in the SA Financial Services market. The mission of the company is to ensure that clients remain compliant with the Regulatory requirements in SA.
MyWealthInvestments also offers a variety of management consulting services – essential as businesses struggle to cope with lockdown – such as feasibility studies, strategy and business planning, organisation development and design and organisational and individual performance management systems. Click here to book a consultation.
These are the many ways in which Regenesys can support you and your business.
Click here and begin your business, learning and financial future with us.