The impact of the looting and unrest in KZN and Gauteng on small business

The past week or so has seen extensive damage wrought to many shopping malls and some private properties, including delivery trucks. Most small businesses were looted to the ground and vandalised.

Some might never open up again, as most do not seem to have insurance. It is estimated that the impact could cost the KwaZulu-Natal economy somewhere in the region of R20 billion and 150 000 jobs lost. The impact in Gauteng will be just as big.

As most logistics companies could look for alternative routes into Africa and bypass South African ports, the impact on small businesses and job creation could be very severe, as most stand to lose existing contracts.

As productivity was disrupted for several days, the subsequent loss has impacted earnings. Most premises and warehouses were subsequently burnt, meaning some key customers could not operate as a result. Small businesses will struggle to survive, as they might not get paid on time due to cash-flow issues.

Those companies with operations in both KwaZulu-Natal and Gauteng have been doubly affected, again meaning there will be no work for small businesses that depend on the lifeline provided by these companies.

It is estimated that some companies could take up to two months before they could possibly resume normal operations. This means most small businesses could lose significant income during that time. In addition, they would still incur expenses that need to be paid. The ripple effect is that these obligations may not be honoured.

While Shumani itself so far remains unaffected, some of our large customers have been directly impacted in that their businesses have been vandalised and looted. Obviously, it is still early days to determine the full extent of the consequences to which we ourselves might be exposed as a result.

We anticipate an immediate knock-on effect on payments, as some customers are currently unable to operate on various sites. The implication for our bottom line is that we cannot invoice while this situation persists, which translates into under-invoicing for some months ahead.

Web: www.shumani-industrial.co.za