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Riots and looting add to the woes of black SMEs

It’s a double-whammy for these businesses just when they hoped to emerge from the impact of the Covid-19 pandemic.
Former Orlando Pirates footballer Lucky Lekgwathi saved up for 20 years so he could have his own business, finally opening his Grootman restaurant in Soweto in April. Image: Supplied

Note: The aim of this article was not to suggest that only black SMEs were affected by the looting and unrest this week. It merely attempts to highlight the reaction of the Black Business Council and black SMEs who were affected in this regard. Moneyweb is covering the comments of numerous authoritative organisations and people who are reacting to the events.

Many small black-owned businesses may not survive the aftermath of the riots and looting that has hit parts of South Africa over the last week, the Black Business Council (BBC) warns.

It says the unrest and destruction of property comes as a crippling double blow for these businesses, which have also had to face tougher economic conditions as a result of the Covid-19 pandemic.

BBC president Sandile Zungu notes that many of the affected black-owned small and medium-sized enterprises (SMEs) are not likely to have the relevant insurance cover – not even through the state-run South African Special Risk Insurance Association (Sasria). This could lead to the permanent closure of such SMEs.

“The impact has been severe. Most of the SMEs were hit hard by Covid-19 even before the looting spree,” says Zungu.

Insurance

“Many SMEs are not insured with Sasria cover.… Those that sell fresh produce cannot operate [right now] because the places where they used to work have been trashed. All their inventory is no more, and they can’t claim from the insurance.”

Read: Insurance claims from SA unrest seen between R7bn and R10bn – govt insurer

“This is an absolute disaster. The looting has resulted in a lot of hardships for these small businesses,” he adds.

“As much as one talks about the resilience of entrepreneurs and the hopes that they will bounce back … the reality is that some of them will not be able to,” says Zungu.

One of many businesses that were hit

Lucky Lekgwathi’s Kliptown-based eatery Grootman, which was only opened in April this year, was not spared by the looting and destruction in Soweto this week. But he is hopeful that it will reopen.

The former Orlando Pirates footballer says the damage and losses to his business amount to around R400 000, mainly related to equipment and machinery that was stolen or vandalised.

“It took me 20 years to save money and open up the business. I played professional football for 20 years, saving money so that I can have a business [because] I wanted to teach and motivate current players ‘to have their own’ while they are still playing because after they retire it’s going to be tough,” he adds.

Lekgwathi says his restaurant was doing well, with more than 100 customers a day.

Despite the setback, he is confident it will reopen as he has been receiving ‘unbelievable’ support from South Africans.

He says there has been monetary support from South Africans and others have offered their assistance to clean and fix the plumbing and the electricity to help get it back up and running.

Read: SA looting dies down in places as more troops expected

“I took all my savings to open a business with the hope of it doing well. I didn’t expect something like this to happen,” says Lekgwathi.

“But now we are depending on people who have come to the party in helping us rebuild the restaurant. People have offered to contribute and so far, that’s going well. The funds are not enough right now, but we hope that as time goes on, the money raised will be enough.”

Nafcoc reacts

Reacting to the riots and looting, Gauteng spokesperson for the National African Federated Chamber of Commerce and Industry (Nafcoc) Refilwe Monageng says the organisation is saddened to see the destruction of businesses, property and threats to the safety of citizens.

“Black-owned businesses in particular cannot afford this turmoil,” she says.

“Black entrepreneurs throughout South Africa have already been in crisis mode for well over a year following various forms of lockdown restrictions since March 2020.”

Read: Alexandra was already ‘a ticking time-bomb’ – SAHRC report

Nafcoc has appealed to government to expedite efforts to provide comprehensive relief to workers, employers and communities affected by the unrest and looting.

‘Many options’ for government

“There are many options available to the government, including further support through the Unemployment Insurance Fund [UIF], tax relief and debt amnesty provisions,” says Monageng.

“The livelihoods of potentially millions of South Africans [are] at stake.

“We also call on the government to implement urgent interventions that will safeguard our business communities from being further impacted by the devastating protests and ongoing looting that has plagued the country over the last few days.”

Harsh reality

In a radio interview with Moneyweb’s Fifi Peters on Wednesday, founder of the Township Entrepreneurs Alliance Bubelani Balabala pointed out that in the organisation’s most recent report (Lockdown Township Economic Impact Survey) only 2% of entrepreneurs were able to meet the criteria of the UIF Covid-19 Temporary Employer-Employee Relief Scheme.

He also noted that around 80% of the pool of 6 000-plus township and rural entrepreneurs that were engaged through the survey said they didn’t have business insurance.

Listen to Fifi Peters’s interview with Township Entrepreneurs Alliance founder Bubelani Balabala (or read the transcript here): 

COMMENTS   16

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The black racial ringfencing and timing of your artice is insensitive, demeaning and isulting to all the other racial groups in the country who have suffered grieviously at the hands of savage anacrcist mobs.
All South African are suffering hardships because of the inability of the ANC regime to provide safety to all its citizens.

Veritas56
I agree totally with you, this continued polarisation by various special interest groups and organisations just adds to the already tense situation in our country.
Instead of beating their own drums they should be coming together to pressure the cANCer in our country as the only way we are going to move forward is by working together for the greater good.
Bring back apprentiships where the youth can earn whilst training for a skill that they can use to better their lives and gain useful employment and also gives them the opportunity to start meaningful businesses in the future.
The employment rules need to be changed to make hiring and firing less onerous which will result in an immediate increase in the employment rate (most companies could employ more staff immediately but are scared to do so). This pandering to the masses cannot continue as the only solution to get out of poverty is work work and more work.

There is no shortcut to the solution however we have to start somewhere

I disagree. It is but one article and it is important to get the perspective on different economic sectors impacted by the carnage.

But the interviewees should have been asked whether they voted for the political party that caused all this.

I see your point …can one also perhaps see the reasoning by this article; that its not to just reflect empathy for black south African businesses

Small growing black businesses are essential for all race groups else “umbrage“ will propagate to violence against race groups relying on black spend

Its wise to support black independents when appropriate

My regular plumber is a middle aged black, whom requested a chance with “no fee if no satisfaction”. He is patient and respectful and when a date and time is agreed, never has an excuse “on otherwise“

The events of the past week have just shown how week the Government’s security cluster actually is. This government can so easily be toppled by a Coup d’Etat it ain’t even funny. By the time it hit them, it will all be over. One can just hope and pray that any plotters have the wisdom which Generals Constand Viljoen and Kat Liebenberg had when they said: “We can take over this country in one day, but the problem is what happens tomorrow? Will that solve the problems or create even bigger ones?”

So other races have not been affected by Covid or the riots?

seems like it? I also get the impression that people,other than black are the biggest treat to these lot!

..and these suffering SMME’s assuming will vote for the Zuma-camp, when he’s back in power?

I request that Moneyweb immediately remove this article. It is one-sided and racist!

Business is business. We all pay our taxes,rent and utillities,UIF..etx. The moment you feel sorry for and single out one you are biased.

I have to wonder to what extent people will now continue voting along racial lines now that the ANC has been exposed an incompetent, criminal and corrupt gang of looters for the world to see.

Only the stupid can possibly continue voting for these idiots.

@ The Spark
Don’t ever underestimate the quantity of voters blinded with a T shirt or some KFC in South Africa. Check out average IQ . Explains all.

Clearly the purpose of this article is to drum up sympathy and support for only black SME owners. But shouldn’t you then also apportion the blame in the same way, by identifying the racial group who mostly did the looting, pilfering and destruction? Shouldn’t they then also carry most of the consequences (and cost) of it? Ah, but this is SA after all, where race is a tool used to advance only one group. It’s almost as if we’ve never been there, done that and found that it didn’t work, yet here we are again.

@Moneyweb – Spreading the MSM narrative/ obsession with race. Definitely a lefty in action here. poor journalism on your part.

Hope to see a follow up on the impact on “minorities” in the country since we are hoping on the Mainstream bandwagon namely “white”, “Asian”, “mixed Race” and finally “Indian” articles to follow please. after all we are a rainbow nation about “equality” right!?

No Sasria, business cover, UIF contributions – yet supposed Business owners.

Not too dissimilar to drivers without vehicle insurance.

I am sorry, but there is a price to doing business in South Africa and if you do not have the necessary cover in place you are setting yourself up for this kind of eventuality.

I like your comment. Would have liked it even more if you tossed in non-Tax compliant.

End of comments.

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