Large corporations have been requested to pay their creditors early this month in an effort to bolster small and medium businesses.
This request was issued by The CEO Initiative, whose members include 200 company bosses. It has called on businesses to settle their bills with suppliers at least by the 20th of April. There are 525,000 formal small and medium businesses (SMEs) in South Africa, which employ 6.6 million people.
“These are extraordinary times that require extraordinary commitment from CEOs and large corporates. The government has asked South Africans to stay home under a 35-day lockdown. This is tough for every individual, and every business, but most especially difficult for SMEs,” says Standard Bank CEO and CEO Initiative member Sim Tshabalala.
“They are under enormous strain and we are already seeing many businesses having to close their doors, which has a significant impact on their ability to sustain their employees. Even outside of the lockdown, many of these businesses often do not have the cash flow needed in order to maintain sustainability. We believe early payment is the right thing to do and will have a significant impact on their ability to survive and keep paying their employees,” he adds.
“There are approximately 525 000 formal SMEs in South Africa, employing 6.6-million people. Given the lockdown, the vast majority are unable to pay their rent, utilities, and importantly, their employees. Initial surveys indicate that 60% of SMEs are either considering retrenching employees, or already have.
“This is a significant threat to the SA economy, with many millions of jobs at risk. We need to act boldly now and pay all outstanding SME creditors by Monday,” says Discovery CEO Adrian Gore.
In his national address on April 9, President Cyril Ramaphosa called on all businesses to continue to pay their suppliers, and the organisation indicated that business must do all it can to ensure that the underlying economy continues to function and to focus support on those small businesses that really need it.