[Opinion] Business closures herald a looming disaster

Tawanda Makombo | 10 Sep, 2020
Company liquidations and employee retrenchments are a stark reminder of the extensive and continuing impact on economic activity of the Covid-19 pandemic and the resultant lockdown.

Statistics South Africa (Stats SA) data shows that from January to June 2020, a total of 763 companies and close corporations have been liquidated either voluntarily or by an order of the court. In June 2020 alone, a total of 134 companies and close corporations were liquidated.

South Africa faces one the biggest economic contractions in recent memory owing to Covid-19 and the lockdown. The country desperately needs, above all, rapidly expanding investment both domestic and foreign.

The Coronavirus Rapid Mobile Survey from the National Income Dynamics Study shows that an estimated 17 million people were employed in February 2020, but only 14 million were employed in April 2020 which is a 3 million or 18% decline.

Tawanda Makombo, analyst at the Centre For Risk Analysis (CRA) notes: “In the midst of this crisis, the government should prioritise policies that will attract rather than discourage investment, in order to create the much needed jobs. Ongoing business closures and retrenchments, coupled with restrictive government policies are thwarting any prospects of economic recovery. As a result, job losses will continue to drive more people into poverty.”

by Tawanda Makombo

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