Businesses fear extension of SA’s two-week lockdown

TPN Credit Bureau Chief Executive Officer, Michelle Dickens

by MTHULISI SIBANDA 
JOHANNESBURG, (CAJ News) THE extension of the level 4 restrictions beyond two weeks could deal a final blow to the embattled South African liquor, restaurant, leisure and tourism industries.

About 1 million jobs in the restaurant industry are at risk.

The above-mentioned sectors are still struggling to recover from the hard lockdown implemented at the onset of the coronavirus outbreak last year.

As the number of infections spike ahead of the lapse of the two-week period this coming weekend, there is speculation the government would extend the restrictions.

Michelle Dickens, Chief Executive Officer of the TPN Credit Bureau, noted many business owners in the above sectors had not yet managed to catch up on arrears rental payments and would be falling further into deficits.

There have been four alcohol bans in total since the lockdown was imposed at the end of March 2020.

“These latest restrictions – which some analysts predict may be extended beyond the initial two weeks announced by President (Ramaphosa) – are not being accompanied by any plans from government to provide financial support for businesses impacted by the restrictions,” she said.

According to Dickens, the Property Industry Group provided R3 billion rental relief to small, micro and medium enterprises (SMME) retail tenants during the first hard lock down.

TPN analysis of the data indicates that even this substantial value of relief did not stem the flood of delinquencies, as tenants three months or more in arrears increased from 7 percent prior to lockdown, to 10 percent in April 2020 in the initial months of rental relief.

This peaked at 19,12 percent, or one-in-five tenants more than three months in arrears in September 2020.

As the economy re-opened in the last quarter of 2020 and first quarter of 2021, severe commercial tenant delinquencies improved to 15,42 percent by March 2021.

It is feared new level 4 restrictions will reverse some of these gains as business owners in affected sectors are struggling for their very survival.

Although restaurants can do takeaways, a significant proportion of their profits come from alcohol sales.

Steve Maresch, co-owner of the Local Grill in Parktown North, is quoted as saying their rent is in arrears.

He said they had been in this space for 18 years and although the local community and their landlord had been supportive and loyal in the past year, there was no denying this had been a difficult period.

“This is our last stand. We have depleted all our resources. If we have to close our door during these latest restrictions, we won’t be re-opening,” Maresch lamented.

Some 26 staff as well as three managers and two co-owners would be left jobless.

A majority are primary breadwinners.

Mark Johnston, co-owner of the Turn ‘n Tender in Cresta Shopping Centre, is apparently facing a similar dilemma.

The business has been operating for three years and is still trying to pay off new business debt.

“The alcohol bans have all put huge pressure on the business, significantly reducing turnover. And although we were slowly recovering from 2020, we had yet to reach pre-COVID turnover levels,” Johnston is quoted.

According to Lenard Mitchley, owner of liquor store Gordon Road Cellars, said if this latest ban continued for more than two weeks, he would fall into rental payment arrears, as his savings have now been depleted.

Wendy Alberts, CEO of the Restaurant Association of South Africa, told media that close to a million jobs in the sector would be at risk in the next few weeks.

Sun International has temporarily closed all restaurants and casino properties and some hotels.

“The new regulations require our casinos and restaurants to close, but given the new restrictions on leisure travel into and out of Gauteng, alcohol and the curfew, our Hotels and Resorts will struggle to operate, so we have taken a decision to temporarily close them too,” Graham Wood, the Group Chief Operations Officer: Hospitality, said.

– CAJ News

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