The coronavirus continues to cause untold human suffering across the globe, and Africa is no different. There is no doubt that the pandemic will leave an indelible impact on our continent’s businesses.
For countries like South Africa already grappling with a contracting economy, more shocks from the pandemic are putting further pressure on the small and medium enterprises. Lockdown measures have caused revenues in many businesses to drastically fall, forcing businesses to cut back on business spending.
With the new normal here to stay - the Covid-19, climate change – it is imperative that entrepreneurs are aware of the impending challenges and learn how to navigate business amid these difficult times.
Lucky for you, in this article, I've compiled for you a list of 3 the biggest challenges facing businesses and how they can be solved.
3 Challenges Facing Business in South Africa
1. Drop-in Consumer Demand
As of March 2020, a consumer survey found that over 80% of respondents were looking to cut back their spending on all retail activities, with 70% cutting on transport and travel costs.
The worst-hit sectors include retail, hospitality, tourism, among other service industries. Business disruptions are signaling a strong decline in profits and revenues.
2. Limited Access to low-and-medium-cost funding
Only 6% of SMEs surveyed received a government fund a while further 9% sourced funding from private sources. Besides the majority of funding, 90% from private equity focused on mature businesses or those above 5 years. This is a clear indication that a lack of funding is hurting business growth.
3. Low-level awareness of opportunities and lack of financial knowledge
Business people are not aware of the available government loans or making use of payment reliefs such as PAYE and UIF. While some of these businesses don't qualify for the loans, others are not aware of the opportunities or where to access the valuable information.
2 Key Areas Where Businesses can Take Action To Mitigate Challenges Amid The Crisis
First, as a business continues to search for solutions, one thing becomes evident.
It's time for businesses to be future-proof by adopting new innovations –with the most appropriate time to act being now. For many years, the question of whether businesses are ready for the 4th industrial revolution has been answered by the coronavirus pandemic.
By leveraging on technology, SME's can enhance their efficiency and lower costs. Businesses should focus on key areas of competitiveness in their value chain, products they offer, and operations, and determine the best technology that can enhance their competitiveness.
Businesses should be evaluating strategies to streamline their operational efficiencies to drive competition while increasing sales and managing cash being the top priorities.
Secondly, businesses should be looking to develop team skills and capabilities while at the same time, nurturing empowering leadership.
Embracing the 4th Industrial Revolution is likely to bring a dramatic shift in society. The best way to these challenges is training employees on how to use digital platforms to access relevant legal information virtually.
Besides this, the business should be in a position to develop and innovate its products using the latest technology, meet customers' expectations, and keep business records updated using virtual platforms. Thus, the critical opportunities posed by embracing technology include the availability of online information, faster processing of business permits, and filing of taxes.
However, business will not reap these benefits if the employees are not trained as well as leaving the with a small pool of talent.
If you are looking to invest in Africa—and particularly in South Africa, these are the key challenges you can expect to solve.
Dr. Alex Granger is Co-Founder and Chief Purpose Officer of Twice Blue