Here are some of the topics discussed in the Practice Management Conference this week. Click here to sign up (it’s free).
Economist Mike Schussler from Economists.co.za forecasts a 28-40% drop in GDP in the second quarter, when the real pain of the Covid-19 lockdown starts to bite. This will be followed by a recovery in the third and fourth quarters, with GDP ending the year 7-8% down for the year.
Professional service providers such as accountants are not yet particularly affected, though they will likely suffer a drop in income until the economy recovers. “Accountants are going to be very busy, helping their clients apply for help in accessing funds,” says Schussler.
Data from specific sectors shows only 5% of employees in the tourism sector will be paid in May, and just 10% in aviation.
The real problems for government is how to trim its budget, which it will surely have to do while approaching international financing bodies such as the African Development Bank and International Monetary Fund (IMF) for emergency assistance. While labour unions are against going cap in hand to the IMF because of the conditionalities they will impose on the country, Schussler believes this is not necessarily a bad thing – if only because we will be able to access funds at very low interest rates.
There’s good news and bad news in all this. The bad news is that the economy will only recover to pre-Covid levels in 2022/3, while the good news is that new business opportunities will open up for professional services providers in the weeks and months ahead.
Gerhard Papenfus, chief executive of the National Employers Association of SA (Neasa), gave an on-the-ground perspective of what life is like for many of the 10,000-plus SMEs his organisation represents. Just 29% of those applying for Unemployment Insurance Fund (UIF) assistance had been paid as of the end of April. Interestingly, the majority of Neasa members are planning to reopen their businesses on Monday 4 May, 2020. The extended lockdown is has had a devastating effect on small businesses, and it seems many will reopen with or without government approval – as a sheer desperation.
Mark Silberman, founder and CEO of accounting software firm Accfin, says many firms that were already battling in a tough economy may not open their doors at all when the lockdown is lifted. He offers some sound advice on how companies can use technology to get back on their feet again.
Xolile Ntuli. Chief financial officer at the National Lotter Commission, explained how the National Lottery is supporting government’s efforts to support the small business sector, both through direct grants to the Solidarity Fund, and through various other direct interventions.
All these podcasts and many more can be accessed at Saiba Academy, where you can sign up for free. Go to https://saiba.academy/).