Date:26 February 2021

Measuring the pulse of firms in South Africa: results from the COVID-19 Business Pulse Survey

Measuring the pulse of firms in South Africa: results from the COVID-19 Business Pulse Survey

A report by the Department of Small Business Development and the World Bank

A: Survey sample

2,226 firms were surveyed, sampled from client lists of the DSBD (mostly micro, small and medium-sized firms). Interviews were conducted over email (1788) and phone (438), between 15 May 2020 and 1 June 2020. South Africa found itself in Level 4 of the lockdown, meaning that most non-essential businesses remained closed.

B: Broad, key findings

  • Only half of all firms were partially open, or open at the time the survey was conducted
  • Accommodation, food services and other services saw the most closures
  • Informal firms and services firms were more likely to be affected
  • Firms were affected by multiple channels at the same time
  • More than 90% of firms saw a decline in sales
  • Firms responded by cutting wages and working hours and firing employees
  • Firing employees was more common in formal businesses

C: In more detail

Impact on female-owned businesses

  • Female-owned businesses reported more closures than male owned businesses (even when controlling for other factors).
  • But of the businesses that are open, the differences between male-owned and female-owned businesses are small.

Impact on youth-owned businesses

  • Youth-owned businesses reported higher rates of firing workers and granting unpaid leave of absences compared to other businesses.
  • 76% of youth-owned businesses started or increased their usage of digital solutions during the pandemic, compared to 57% of other businesses

Impact on business with majority black employees

  • Firms with majority black workers reported firing workers at substantially higher rates.
  • Firms with majority black employees were less likely to use digital solutions.

Impact on businesses with disabled workers

  • Firms with disabled workers reported slightly higher rates of firing workers than other firms.
  • Firms with disabled workers reported higher rates of starting or increasing usage of digital solutions (73%) compared to other firms (59%).

D: On the adoption of digital platforms and solutions

Digital platforms and digital solutions are used in response to the crisis

  • Formal businesses were more likely to utilize digital and/or repackaging solutions.
  • The manufacturing sector had the highest digital utilization.
  • Firms of all sizes have been utilizing adjustment mechanisms.

Almost two-thirds of firms started or increased their use of digital solutions

  • 60% of all firms (with 5 or more employees) either started or increased their usage of digital solutions during the pandemic.
  • Informal firms were less likely to start or increase use of digital solutions during the lockdown period.

E: Recommendations

In the short-run: improve and optimize support schemes. The survey indicates that many needs remain unmet. Only 16 percent of firms have surveyed received support and half of firms report that they applied but have not received support yet. Firms in vulnerable groups are less likely to receive support.

  • Optimize the delivery of current emergency support measures. Clarity on eligibility criteria, processes and timeline is crucial. It is unclear whether the current gaps are a result of limited financial resources or capacity to disburse funds.
  • Target vulnerable groups. Micro, informal, female-owned, youth-owned firms and firms with disabled workers or majority black workers are less likely to be supported under current schemes, but face pre-existing vulnerabilities.

In the long-run: set foundations for longer term productivity growth. As the crisis continues, the emphasis on policy should be on how to regain much-needed productivity growth

  • Support re-establishment of demand, supply and financial channels.
  • Help firms adjusting to the new “normal” to boost productivity. Promote investments for worker training, management training, BDS, technology adoption.