The coronavirus (COVID-19) global pandemic has brought additional strain to an already struggling South African economy. The Reserve Bank’s announcement of an interest rate decrease of one percent indicates that it expects the South African economy to contract by 0.2% in 2020, primarily as a result of the impact of the Covid-19 outbreak on households and businesses.
Jason Goldberg, Director at Edge Growth, estimates that 70% of small businesses will likely lose 30% or more in revenues due to the COVID-19 impact; of which one third is likely to experience more than 60% loss in revenues. This will likely result in a cash flow crisis, which might see approximately 30% of businesses going into liquidation within the next three months.
This will not only result in higher unemployment and lower household earnings, but will also have a negative impact on the prospects for economic growth and corporate and personal income tax collection.
It becomes increasingly important therefore that businesses reach out to qualified turnaround specialists early to give themselves the best chance to restructure their operations, access the extra financing required, and get the breathing space they need from creditors to get their companies back on track.
COBRA War Room launches this week
IQbusiness, Schindlers Attorneys, Engaged Business Turnaround, Sirdar Group and Envision have formed a consortium to bring their extensive legal, accounting, technology and business turnaround expertise to help businesses in financial distress.
Together, these businesses have launched a crisis management centre called the COBRA (COvid Business Rescue Assistance) War Room. The initiative aims to assist and sustain South African businesses through the COVID-19 crisis with free services to help them receive coordinated bank, government and stakeholder support. If required, a structured business rescue process can be initiated, with the objective of rehabilitating affected companies.
IQbusiness has built and will be operating the crisis management centre. The COBRA War Room has an agile response capability covering data assimilation, trend tracking, triage, decision support, communications, resource management, learning and development and change management disciplines.
“At the moment, we’re coordinating our efforts in the set-up process across all the partners using Microsoft Teams, as we believe that this is the ideal platform for communications, resource management, IP gathering and sharing,” says Adam Craker, CEO at IQbusiness.
“IQbusiness is proud to be part of this initiative to help South African businesses in their hour of greatest need.”
Related Tag: Local Business Support