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Recovery after the riots: how small businesses can bounce back from adversities/external shocks

03 August 2021 | Story Prof Brownhilder Neneh | Photo Supplied

Prof Neneh_web read more — Prof Brownhilder Neneh is an Associate Professor and Academic Head (HOD) of the Department of Business Management, University of the Free State.

Opinion article by Prof Brownhilder Neneh, Associate Professor and Academic Head (HOD) of the Department of Business Management, University of the Free State.

South Africa was recently rocked by the worst violence, riots, and chaos that has devastated the business community. An estimated 40 000 businesses were affected, costing the country about R50 billion in lost output and endangering around 150 000 jobs. It is important to stress that the situation regarding riots and looting in South Africa is not a once-off phenomenon, because in the past few years, South Africa has witnessed rioting and looting as one of the reoccurring events happening in the country, which often left big and small businesses to bear the burden as they pay the price for the actions of angry citizens. The aftermath of the Zuma imprisonment has once again put immense pressure on small and big businesses that were already disproportionately struggling with decreasing revenue and dismal forecasts of earnings due to the continuing COVID-19 pandemic and lockdowns. The losses have had a devastating effect on particularly small businesses, which are typically not insured against damage during protests, and do not have much cash reserves at their disposal. Some small business owners’ years of hard work and entire life savings were completely wiped out overnight, putting the reopening plans of some on hold and completely shutting down others.

Given that riots and protests are not unusual in South Africa, some people on social media have argued that South Africa is a volatile country when it comes to riots and protests, and that small businesses should have anticipated such risks and should have made an effort to obtain business insurance. A critical question to ask is whether all small businesses can afford insurance? In most cases we expect the answer to be ‘no’. This is because small businesses operate under various difficult circumstances, such as liabilities of newness, smallness, poorness, and lack of access to external financing. Nonetheless, it is important to educate small businesses about the importance of getting insurance, especially any form of insurance that covers their core assets. But more importantly, what needs more insight within the South African context, is a critical discussion on how small businesses can minimise losses incurred during riots and bounce back from external shocks.

Many uninsured small businesses might not reopen unless government helps them

Depending on the extent of the damage across the different businesses affected during the recent protests, it could take up to 18 months to reconstruct the malls and for businesses to become fully operational again. This means that many of the small businesses might have to temporarily change their business location or relocate completely. The major problem with this strategy is the risk of paying double rent, both to the damaged mall as well as at the new location. The law does not provide for these SMEs to stop paying rent to the damaged mall, regardless of whether they want to relocate. In addition, most of the assets that these businesses had, such as furniture, equipment, inventory, and debtors, were destroyed. This is a double negative, which implies that they have lost almost all of the assets they could use as collateral to obtain loans from financial institutions, as well as having to replace these assets.

Many of these small businesses that were not insured and have very little or no cash reserves may not be able to reopen their businesses, unless they receive assistance from the government. The South Africa government and the entire civil society have come out to condemn these barbaric actions, and have put in place some measures to redress the situation and bring stability to the country. As part of the recovery strategies, the government funds allocated to small businesses through its different departments, such as provincial development corporations, the IDC, and national youth funds, should be used to provide interest-free loans to those small businesses that were profitable before the looting crisis. Government should also consider paying business rentals to the damaged malls until these malls reopen. Tax incentives for some of these businesses for a certain period of time is another option to be explored. Likewise, unemployment funds should be made available to pay their employees until they are fully operational again.

Within the context of entrepreneurship, resilience – which is viewed as the capacity of the business to recover, survive, or grow quickly following a crisis – is one of the capabilities that small businesses can deploy. While small businesses are often regarded as less resilient because of their limited resources, this liability makes them more flexible and adaptable in the face of adversity. Small businesses can become more resilient and less vulnerable to crises by developing an anticipated and containment mindset. An anticipated mindset entails continuous identification of all possible problems and emergencies, while a containment mindset is about embracing flexibility and adapting when responding to crises (conceptual slack), developing capabilities to deal with losses, and making a commitment to resilience. Small businesses can achieve these mindsets by undertaking training in metacognitive awareness, which entails developing coping strategies to respond to uncertain events, developing adaptive thinking to identify and recognise opportunities in an uncertain and dynamic context, and changing responses and strategies according to changes in the environment. Small businesses can also develop resilience by investing in and building resources. These resources can range from social resources (e.g., support from networks of family and friends, business partners); economic resources (e.g., personal savings, stokvels, and financial institutions); and personal resources (e.g., self-determination, inner strength, adopting a problem-solving mentality, emotion regulation, and self-confidence). As a short- to medium-term strategy, the South African government – through its Ministry of Small Business Development – should partner with higher education institutions and private organisations to create nationwide workshops and seminars on how to develop resilience and overcome liabilities of newness, smallness, and poorness.

Small businesses are the panacea for addressing poverty, unemployment, and inequality

Small businesses should also foster cooperative relationships, as these have proven to help entrepreneurs overcome the lack of resources by sharing business resources (equipment, business space, and funds). This ultimately transforms competitive differences into potential growth opportunities for businesses. This is one of the most important business practices adopted by many immigrant businesses for survival. Those who need to start from scratch are encouraged to develop their businesses, using what they can create with the set of resources (computer, land, skills, money, car) at their disposal, no matter how small. Given that the future is unpredictable, instead of defining a specific plan to reach a goal/objective, such entrepreneurs should focus on what means are available to them now. Most successful entrepreneurs around the world – and particularly in Africa, where entrepreneurs are usually constrained by limited resources and support structures – will tell you that they started their businesses with very limited or only one resource that they had at their disposal. It might be quite difficult and painful to undergo the cycle again, so entrepreneurs should tap into their inner grit and remember that although they are starting from scratch, this time around they are wiser and more experienced, which will ultimately translate to higher achievements.

In conclusion, small businesses are the panacea for unleashing and addressing the triple problem of poverty, unemployment, and inequality that South Africa is currently facing. So, if the government is intentional about enhancing the creation, survival, and sustainability of small businesses, it becomes critical that they create an enabling environment that significantly minimises external shocks. The South Africa government should also put in place clear short- and long-term goals to address the causes and issues that give rise to riots and provide practical solutions to transform the country. The South Africa government should also partner with civil society and the media to spread awareness about the negative impact of destructions during riots and protests.

News Archive

Inaugural lecture: Prof Robert Bragg, Dept. of Microbial, Biochemical and Food Biotechnology

2006-05-17

Attending the inaugural lecture were in front from the left Prof Robert Bragg (lecturer at the Department of Microbial, Biochemical and Food Biotechnology) and Frederick Fourie (Rector and Vice-Chancellor). At the back from the left were Prof James du Preez (Departmental Chairperson: Department of Microbial, Biochemical and Food Biotechnology) and Prof Herman van Schalkwyk (Dean: Faculty of Natural and Agricultural Sciences). Photo: Stephen Collett

A summary of an inaugural lecture delivered by Prof Robert Bragg at the University of the Free State:

CONTROL OF INFECTIOUS AVIAN DISEASES – LESSONS FOR MAN?

Prof Robert R Bragg
Department of Microbial, Biochemical and Food Biotechnology
University of the Free State

“Many of the lessons learnt in disease control in poultry will have application on human medicine,” said Prof Robert Bragg, lecturer at the University of the Free State’s (UFS) Department of Microbial, Biochemical and Food Biotechnology during his inaugural lecture.

Prof Bragg said the development of vaccines remains the main stay of disease control in humans as well as in avian species. Disease control can not rely on vaccination alone and other disease-control options must be examined.

“With the increasing problems of antibiotic resistance, the use of disinfection and bio security are becoming more important,” he said.

“Avian influenza (AI) is an example of a disease which can spread from birds to humans. Hopefully this virus will not develop human to human transmission,” said Prof Bragg.

According to Prof Bragg, South Africa is not on the migration route of water birds, which are the main transmitters of AI. “This makes South Africa one of the countries less likely to get the disease,” he said.

If the AI virus does develop human to human transmission, it could make the 1918 flu pandemic pale into insignificance. During the 1918 flu pandemic, the virus had a mortality rate of only 3%, yet more than 50 million people died.

Although the AI virus has not developed human-to-human transmission, all human cases have been related to direct contact with infected birds. The mortality rate in humans who have contracted this virus is 67%.

“Apart from the obvious fears for the human population, this virus is a very serious poultry pathogen and can cause 100% mortality in poultry populations. Poultry meat and egg production is the staple protein source in most countries around the world. The virus is currently devastating the poultry industry world-wide,” said Prof Bragg.

Prof Bragg’s research activities on avian diseases started off with the investigation of diseases in poultry. “The average life cycle of a broiler chicken is 42 days. After this short time, they are slaughtered. As a result of the short generation time in poultry, one can observe changes in microbial populations as a result of the use of vaccines, antibiotics and disinfectants,” said Prof Bragg.

“Much of my research effort has been directed towards the control of infectious coryza in layers, which is caused by the bacterium Avibacterium paragallinarum. This disease is a type of sinusitis in the layer chickens and can cause a drop in egg product of up to 40%,” said Prof Bragg.

The vaccines used around the world in an attempt to control this disease are all inactivated vaccines. One of the most important points is the selection of the correct strains of the bacterium to use in the vaccine.

Prof Bragg established that in South Africa, there are four different serovars of the bacterium and one of these, the serovar C-3 strain, was believed to be unique to Southern Africa. He also recently discovered this serovar for the first time in Israel, thus indicating that this serovar might have a wider distribution than originally believed.

Vaccines used in this country did not contain this serovar. Prof Bragg established that the long term use of vaccines not containing the local South African strain resulted in a shift in the population distribution of the pathogen.

Prof Bragg’s research activities also include disease control in parrots and pigeons. “One of the main research projects in my group is on the disease in parrots caused by the circovirus Beak and Feather Disease virus. This virus causes serious problems in the parrot breeding industry in this country. This virus is also threatening the highly endangered and endemic Cape Parrot,” said Prof Bragg.

Prof Bragg’s research group is currently working on the development of a DNA vaccine which will assist in the control of the disease, not only in the parrot breeding industry, but also to help the highly endangered Cape Parrot in its battle for survival.

“Not all of our research efforts are directed towards infectious coryza or the Beak and Feather Disease virus. One of my Masters students is currently investigating the cell receptors involved in the binding of Newcastle Disease virus to cancerous cells and normal cells of humans. This work will also eventually lead to a possible treatment of cancer in humans and will assist with the development of a recombinant vaccine for Newcastle disease virus,” said Prof Bragg.

We are also currently investigating an “unknown” virus which causes disease problems in poultry in the Western Cape,” said Prof Bragg.

“Although disinfection has been extensively used in the poultry industry, it has only been done at the pre-placement stage. In other words, disinfectants are used before the birds are placed into the house. Once the birds are placed, all use of disinfectants stops,” said Prof Bragg.

“Disinfection and bio security can be seen as the ‘Cinderella’ of disease control in poultry. This is also true for human medicine. One just has to look at the high numbers of people who die from hospital-acquired infections to realise that disinfection is not a concept which is really clear in human health care,” said Prof Bragg.

Much research has been done in the control of diseases through vaccination and through the use of antibiotics. “These pillars of disease control are, however, starting to crumble and more effort is needed on disinfection and bio security,” said Prof Bragg.

Prof Bragg has been working in close co-operation with a chemical manufacturing company in Stellenbosch to develop a unique disinfectant which his highly effective yet not toxic to the birds.

As a result of this unique product, he has developed the continual disinfection program for use in poultry. In this program the disinfectant is used throughout the production cycle of the birds. It is also used to ensure that there is excellent pre-placement disinfection.

“The program is extensively used for the control of infectious diseases in the parrot-breeding industry in South Africa and the product has been registered in 15 countries around the world with registration in the USA in the final process,” said Prof Bragg.

“Although the problem of plasmid mediated resistance to disinfectants is starting to rear its ugly head, this has allowed for the opening of a new research field which my group will hopefully exploit in the near future,” he said.

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