Prof. Dulipkumar Garach CFP® , CEO Garach Corporation.
Covid 19 has been an unprecedented event. It is a pandemic that has had dire consequences both financial and otherwise for the whole world. Economies globally have virtually collapsed, governments have been scrambling to borrow money, most businesses both large and small have become unsustainable, bankruptcies are inevitable and unemployment has risen globally.
In South Africa the president of the country has taken charge to ride us through the pandemic. At the commencement of the pandemic in South Africa, the Minister of Health predicted that more than half of the 57 million people in the country would be infected by the Covid virus. At the time the Minister predicted that if five percent of those infected needed intensive care facilities in hospitals the country would need about two million beds. South Africa does not have the health infrastructure to cope with the pandemic. So the government realised that it was matter of serious concern.
The other concern is that if people’s movement both socially and at work was not restricted, the virus is contagious and would therefore spread rapidly. In order to contain the virus the government adopted a risk adjusted strategy for economic activity. This action led to a total lockdown of economic activity for a period of approximately 5 weeks and gradually opening of the economy over a period of time. This was tight rope which the President chose to walk and it was a tough balancing act between protecting the lives of people against preserving their livelihood. Seven months since the strategy was adopted, South Africa seems to have contained the infection rate compared to many countries globally. So the government strategy has proven to be successful but it has adversely affected the economy.
Businesses in general have experienced many setbacks. Many businesses both large and small got back to basics and adopted lesson 101 in business management. They reviewed their business strategy using a management technique known as SWOTS – “Strength, Weaknesses, Opportunities and Threats. This approach allowed such undertakings to “think out of the box”. It was about being agile, adapting, re-shaping and re-modelling their business. Businesses realised they were trading in difficult circumstances which was dictated by volatility, uncertainty and complexity.
It was clear to all businesses their revenue streams were substantially reduced and they were forced to introduce cost cutting measures. It was business unusual and new measures adopted included, inter-alia, the following: innovative techniques in communicating with staff, clients, community – being empathetic, showing compassion and understanding the plight of others, moving to digital communication and marketing, creation of a flexible work environment, developing and fostering the skills of staff to perform in difficult circumstances. During difficult times staff had to show enthusiasm in driving new initiatives to boost both revenue and efficiency. So it has been a whole new ethos both for business and labour.
Turning to government and the handling of its finances during Covid. South Africa was already in a recessionary cycle before the commencement of Covid. Covid exasperated South Africas financial position and showed that it had run out of money and it would have to borrow more money merely to make ends meet. Covid has exposed the government’s ability to manage its own finances. Despite being in such a precarious position it continues to fund mismanaged state owned enterprises (SOEs). South Africa needs to follow models for managing SOEs in countries like Singapore.
Governments in such countries involve the private sector in acquiring equity, be involved in the management of the SOEs and government as a stakeholder merely gets a dividend from these enterprises rather than give bailouts to such SOEs. South Africa must increase revenue by growing its economy. South Africa is rich in resources and it can grow the economy by encouraging foreign direct investments into South Africa. In order to encourage foreign business into South Africa it needs to review its economic policies, labour laws, reflect on its ability to fight crime and corruption. Covid 19 and its impact has been a wake up call for government
Covid 19 and the consequences thereof has taught us that change is inevitable, we must learn to embrace it. A business needs to adapt to the changes, build on leadership skills and direct the business to success even in the most difficult times.
It is often said: “When the goings get tough, the tough get going!!”