[X]

Determining COVID-19’s economic blow to small businesses

Publication Date: 
Wednesday, July 1, 2020

Scenarios created by the CSIR, and the Universities of Pretoria and Stellenbosch show the impact of the COVID-19 pandemic, and subsequent government decisions, on small, medium and macro enterprises (SMMEs) across South Africa. A team of researchers from the three institutions gathered data from SMMEs and experts across various industries to create a picture of the economic condition of these businesses in the midst of lockdown.

Contact Person

Charl Harding

charding@csir.co.za

Scenarios created by the CSIR, and the Universities of Pretoria and Stellenbosch show the impact of the COVID-19 pandemic, and subsequent government decisions, on small, medium and macro enterprises (SMMEs) across South Africa. A team of researchers from the three institutions gathered data from SMMEs and experts across various industries to create a picture of the economic condition of these businesses in the midst of lockdown. The scenarios provide indications of the impact on each sector as various restrictions are eased, with the main aim of informing government of the most appropriate support tools and packages for each sector.

Project leader Charl Harding, a business development manager at the CSIR, says, “We followed a two-part approach in creating these scenarios – qualitative, which is an approach derived from narratives and which included surveys and a workshop with 35 experts in different fields. The data derived from the aforementioned process was put through a quantitative process using a computable general equilibrium model in which we mathematically modelled the impact on the economy in each scenario.”

The scenario analysis helped to create a better understanding of future South African economic impact change and identified the support required for the sustainability, development and growth of SMMEs during the COVID-19 pandemic. The research looks at a range of plausible futures that might result from COVID-19 in South Africa in an integrated manner, by considering input from various stakeholders, including manufacturers of products and services, supply chain experts and policy makers.

Working through the data

In order to develop the research parameters as well as the SMME survey, numerous workshops were conducted, after which a survey was sent to 20 000 SMMEs. Policy makers and experts developed key assumptions based on the results from the survey, as well as factors such as global and local trends in similar industries. The research team then proceeded to run the scenarios using a computable general equilibrium model to provide clear, evidence-based guidance to government.

“We used a scientific approach that is sector and geographic specific – a tailored approach to rescuing small businesses – to assist government in formulating new ways of helping small businesses,” says Harding.

Lessons derived from the study will assist government to improve their response to SMMEs in future crises.