SMEs most Affected in South Africa Chaos
South Africa….. Africa’s third largest economy now faces the most deadly eras in performance. With a population of about 60,078,202, the southernmost country in Africa boasts of an increased 11.0 percent GDP at an annual rate in 2021, a number that can be broken to $566.3 billion, in the first quarter to a level of $22.06 trillion.
With a representation of more than 98 percent of businesses, SMEs employ between 50 and 60 percent of the country’s workforce across all sectors, and are responsible for a quarter of job growth in the private sector.
With the widespread looting and social unrest that’s followed the imprisonment of former President Jacob Zuma is damaging business confidence. Key trade routes, seen businesses from banks and supermarkets to SME traders are shutting their doors.
On July 10, trucks were torched in KwaZulu-Natal, leading to the closure of the N3, the highway linking sub-Saharan Africa’s biggest port in Durban to the economic hub of Johannesburg. It’s also the start of trucking routes used to transport of goods as far north as the Democratic Republic of Congo.
More than 200 shopping malls had been looted by mid-Monday afternoon and retailers had lost an estimated 2 billion rand according to reports by Al- Jazeera.
As of 12th July 2021, the rand had weakened as much as 2% to 14.5058 the dollar, the most since Feb. 25.
The riots have been fueled by years of poor government service provision, an unemployment rate that’s climbed to a record 32.6% and severe inequality that’s been seized upon by populist politicians.
To bolster investor confidence and protect the economy, President Ramaphosa needs to demonstrate a robust response as evidenced by his deployment of the army. But a crackdown could further fuel unrest, especially among those sympathetic to Zuma and his allies.
With the riots spreading to different states in the country, the country faces a huge risk of economic sabotage. SMEs have gained fear and the state is worse on the ground even as portrayed by the media. We hope for peace to help the South African economy.
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