Up to 100,000 businesses to be shut down due to COVID-19 in S. Africa, says economist

Source: Xinhua| 2020-06-27 19:39:27|Editor: huaxia

Photo taken on April 10, 2020 shows an empty street in Johannesburg, South Africa. (Xinhua/Yeshiel)

As the pandemic continues wrecking havoc on South Africa's economy, a senior economist predicted that about 100,000 businesses, mainly small, medium and micro enterprises, would become bankrupt.

JOHANNESBURG, June 27 (Xinhua) -- As the pandemic continues wrecking havoc on South Africa's economy, a senior economist predicted that at least 100,000 businesses, mainly small, medium and micro enterprises, would become bankrupt.

"We are talking about a significant number that would shut down due to COVID-19. My estimation, this includes big companies as well, is that up to 100,000 businesses in South Africa will go under," Dawie Roodt, chief economist at the Efficient Group told Xinhua on Friday.

Roodt said the loss of companies might lead to at least 2 million jobs being shed.

He said tax incentives that the government availed and relief funds won't be adequate to save thousands of businesses.

"The economy was in trouble before the virus, this virus is just a crisis on top of another crisis," said Roodt, adding that while some companies "might be saved", others in need of capital would simply permanently collapse.

The Department of Small Business Development also said that the pandemic would devastate all the sectors of the economy.

"There is no doubt that COVID-19 will have an aftermath impact, particularly on small and medium size businesses. Entrepreneurship has been negatively affected, with 92 percent of small business operations struggling to continue in business," according to the department.

The department's research revealed that a total of 71 percent companies do not have cash to keep their business operational.

"Retrenchment is inevitable for many small businesses," the department said.

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