Unpacking the Economic Impact of COVID 19 on SMBs in South Africa

One in two small and medium-sized businesses (SMBs) in South Africa has yet to see revenues recover to pre-pandemic levels, according to the latest edition of Facebook’s Global State of Small Business Report.

50% of operational South African SMBs on Facebook reported that their sales in February were lower than the equivalent month last year. Some 74% reported that they were operational or engaging in any revenue-generating activities, while 8% of operational SMBs on Facebook expected challenges related to cash flow and 20% expected challenges related to demand or a lack of customers in the next few months.

Continuing trends observed throughout the pandemic:

  • Women-owned South African businesses have been hit especially hard.
  • Some 71% of women-led SMBs (vs. 77% of men-led SMBs) on Facebook reported that they were operational.
  • In addition, six in 10 operational, women-led SMB reported that sales in the past month were lower than February 2020, prior to the pandemic, compared to four in 10 of operational, men-led SMBs.

“South African small businesses continue to struggle since the start of the pandemic, more than a year ago” says Nunu Ntshingila, Facebook Africa’s Regional Director. “Our latest Global State of Small Business Report is a timely reminder that many are still vulnerable and need support. It’s also a reminder that whenever a crisis hits, it’s always the most vulnerable who are hit the hardest.”

Less than half (45%) of operational South African SMBs on Facebook said they were confident in their ability to continue operating for at least 6 months, if current circumstances persist, while 36% of operational SMBs on Facebook reported they had reduced the number of employees/workers as a result of the pandemic. This highlights the urgent need for customers, government, and other stakeholders to continue supporting small businesses that continue to navigate the challenges of COVID-19.

If there is a silver lining, it’s that many businesses are finding success online. Globally, 87% of business leaders at operational SMBs indicated they used at least one of the Facebook family of applications such as Facebook, Facebook Messenger, WhatsApp, WhatsApp Business, and Instagram. Advertising and selling goods or services online were other predominant uses of digital tools and integral to connecting SMBs to customers.

Ntshingila adds, “Facebook is in the business of small businesses. Whatever challenges and opportunities South African businesses face in 2021 and beyond, we will continue to do all we can to help them with their economic recovery and, hopefully, thrive online.”

Edited by Jenna Delport
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