While the lockdown has had dire financial consequences for many, it has also stimulated the growth of new business registrations as entrepreneurs changed their strategies and business plans to survive, says FNB.
Lauren Deva, head of Sales for Transactional Product House at FNB Business, says the bank has seen an increase in the number of businesses starting to use BizPortal, a government initiative where entrepreneurs use the BizPortal.gov.za website to register their new businesses at the CIPC (Companies and Intellectual Property Commission).
Once registered, they are prompted to open a business bank account, followed by a listing of the different banks.
FNB data shows that Gauteng led with 44% of applications followed by KwaZulu-Natal at 13%, Mpumalanga at 10% and the Western Cape at 9%.
“We are seeing a strong uptake through this portal as well as an increase in applications through our normal CIPC interactions, where clients can register a company on FNB’s website,” she said.
This indicates that more entrepreneurs want to formalise their businesses in order take advantage of new opportunities presented as a result of Covid-19 and further benefit from financial support provided by both private and public sector, said Deva.
“When the BizPortal started, we initially had an average of 700 registrations a month. However, this significantly increased to 14,000 registrations during the lockdown period, between April and end of August. On average 2,800 businesses were registered per month via the portal,” she said.
Deva said that many businesses have used the lockdown period to either open their own personal services business, or to formalise their existing business for relief funding and operating permits.
South African Revenue Service (SARS) commissioner Edward Kieswetter said in a July interview that as many as 30,000 companies have been forced to apply for tax directives, in the face of business rescue and liquidation.
He pointed out that during lockdown, the economy, already under strain, came to a ‘stop’. And as a result, he said that some businesses “may never come back, and that is a loss of economic capacity”.
“Some of the jobs that we have lost will not come back immediately. Our longer-term concern notwithstanding this year’s revenue decline is that for the foreseeable future, we have a contracting revenue base,” Kieswetter said.
Data published by Statistics South Africa in its Quarterly labour force survey (QLFS) shows that total employment decreased by 648,000 or -6,4% quarter-on-quarter, from 10,196,000 in March 2020 to 9,548,000 in June 2020.
This was largely due to decreases in the following industries:
- Trade (-192,000 or -8,4%);
- Business services (-147,000 or -6,3%);
- Community services (-103,000 or -3,7%);
- Manufacturing (-85,000 or -7,1%);
- Construction (-74,000 or -13,2%);
- Transport (-38,000 or -7,6%);
- Mining (-6,000 or -1,3%);
- Electricity (-3,000 or -4,9%).
The Quarterly labour force survey (QLFS) is a survey of households which collects information from approximately 30,000 dwelling units and collects data on the labour market activities of individuals; whereas Quarterly employment statistics (QES) is an enterprise based survey that collects information from non-agricultural businesses and organisations from approximately 20,000 units.
The QLFS for the second quarter of the year showed that 2.2 million people lost their jobs over the quarter.