It was recently reported by ratings agency S&P Global that the coronavirus outbreak has plunged the world into a recession. On the home front, a sudden surge in COVID-19 cases in the country resulted in the President of South Africa imposing a 21-day country-wide lockdown, starting from Thursday, 26 March 2020. Combine this with the fact that the country also recently announced to be in its third recession since 1994 it’s safe to say that many businesses are beginning to feel the effects of the pandemic.
The impact of the coronavirus on small businesses is likely to be substantial, especially for local businesses who are already feeling the pinch, as financial and market uncertainty can easily translate into an emotional crisis that can overwhelm our systems. However, help is on the way as the Department of Small Business Development announced that a Debt Relief Fund has been set up to assist small, medium and micro enterprises impacted by COVID-19.
While this relief is welcomed, it is still vital for leaders to step up. The world has been through crises before, but during these significantly difficult times, the economic impact may be as severe or possibly worse. As such, those in leadership positions must use past crises as examples and apply what was learnt to keep the country on course and minimise the impact of the pandemic.
Karl Westvig, CEO at Retail Capital, has pinpointed the visible areas that are affected and outlined a few pointers to help small business owners weather the storm.
The first victim of panic is liquidity – banks, asset managers and funders stop lending. When they cannot calculate the potential risk, they will not lend. Therefore, it is critical to shore up cash by drawing down on available facilities and suspending any unnecessary investments. Reduce expenses and manage cash flow daily.
Get Your Best Team on It
When a business is growing, we tend to shift our best people into roles linked to growth and new initiatives. In a crisis, these people need to move into the highest priority roles. These roles would include collecting from customers, raising facilities or engaging key clients.
Morale and Communication
People need leadership. This would include authentic and regular communication about the situation, what the business requires and how this will be achieved. You can’t control the circumstances, but you can control the response and actions. This will create more certainty.
Events evolve quickly and every day is critical. Leaders must be hands-on. They have to be in touch with customers, suppliers, funders and staff. They have to collect data on everything – the mood, the financial metrics, even customer stories. Some of the best information is anecdotal, not just big data.
It’s tough to lead when you don’t understand all the underlying levers. These can change in a crisis. What worked in a stable environment can go out of the window in an instant. The best approach is to start again, listen to customers and then adapt your policies within your framework.
“This is not a manual on how to handle the current crisis, but hopefully, the points mentioned above can add to what you are already doing. In simple terms, it is easy to be overwhelmed, so tackle a few things very quickly and with commitment. This will create certainty and lead to action. The alternative is paralysis,” concludes Westvig.
Op-Ed: How To Be A Major Player In Global Food Markets
Last year, Bill Gates named his 10 breakthrough technologies for the year. Among the technological developments he outlined were robot dexterity, new-wave nuclear power, customized cancer vaccines and the cow-free burger. It was the first time that the list, usually compiled by MIT Technology Review, was created by a guest editor. It is no wonder that Gates rightly predicted that home computers and the internet would infiltrate much of our lives. Yet, when I went through this list, it was not necessarily universal. Many of these breakthrough technologies made sense through Western lenses. We have to ask, which of these breakthrough technologies will have the most significant impact on the African continent?
Perhaps the most pressing issue for Africa now is agriculture. Climate change has had a devastating impact on the agriculture sector, which is particularly concerning when you consider that most African economies still heavily depend on it. A study by McKinsey & Company found that more than 60% of the population of sub-Saharan Africa is smallholder farmers, and about 23% of sub-Saharan Africa’s gross domestic product (GDP) comes from agriculture. Yet, increases in temperatures, changes in precipitation patterns and extreme weather events not only disrupt entire industries but reduce food availability and impacts food quality. This, of course, is coupled with the fastest-rising population, which places more strain on resources.
We have already observed in the last few years how devastating a drought can be. South Africa has become a significant food importer, while Kenya and Zimbabwe are on the verge of starvation. This has seen the regional and national economic growth take a severe knock. Yet, as the United Nations put it, “the continent has enormous potential, not only to feed itself and eliminate hunger and food insecurity but also be a major player in global food markets.” So how do we go about this? I would argue that tapping into the technologies of the fourth industrial revolution (4IR) does not just serve as a way of revitalizing the agricultural sector but also realizing its potential. As the American financier Bernard Baruch once put it: “Agriculture is the greatest and fundamentally the most important of our industries. The cities are but the branches of the tree of national life, the roots of which go deep into the land. We all flourish or decline with the farmer.”
I have just bought a farm and have been looking at ways in which artificial intelligence (AI) can make farming more efficient. Farmers can tap into AI to combat disease and pests, which have been made worse by climate change and pesticide use. Drones and other robots equipped with computer vision can collect data points from the farms’ existing crops. If you were to ask me to spell out some breakthrough technologies, many of them would be inextricably linked with the agricultural sector.
For instance, it is estimated that humans would need to plant over 1.2 trillion trees to combat climate change. Here, we could use AI to automate this process.
Airlitix is a South African AI software that is currently being used in drones to automate greenhouse management processes. We could take this a step further. Airlitix can collect temperature, humidity, and carbon dioxide data as well as analyse soil and crop health.
Elsewhere, similar technology has been adopted. The Third Eye project in Kenya uses near-infrared cameras mounted on drones to survey and diagnose the plants for pests and diseases, water stress and nutrient deficiencies. This requires a combination of historical data and the use of AI. Last year, IBM developed an AI-powered app to test the quality of their soil and water on location, in real-time. The AgroPad is a technology that can rapidly perform chemical analysis of water and soil samples. In California, Ceres Imaging has mapped fields using images of farms, which are analysed using AI to ascertain whether crops are getting enough water. This technology helps farmers decide when to plant, water, spray and harvest their crops.
This conversation crops up as we scrutinize what it means to have a green economy. The 4IR does not merely provide tools for efficiency, but it presents a unique opportunity to interrogate how we can transform the industry as our natural environment deteriorates.
To a large extent, we underestimate the importance of the agricultural sector. Yet, without it, we would not have food security, we would see our economies crumble and there would be untold job losses.
Moody’s Downgrades South Africa To Junk
Credit ratings agency Moody’s has downgraded South Africa to junk status on day 2 of the country’s nationwide lockdown.
President Cyril Ramaphosa’s economic reform plans have been slowed by the coronavirus pandemic. The downgrade adds salt to injury for South Africa as it currently struggles with a recession it slipped into in early March.
“The unprecedented deterioration in the global economic outlook caused by the rapid spread of the coronavirus outbreak will further exacerbate South Africa’s challenges” said Moody’s.
What You Need To Know About AfDB’s $3 billion “Fight COVID-19” Social Bond
Landmark transaction, largest Social bond transaction to date in capital markets
Abidjan, Côte d’Ivoire, 27 March 2020 – The African Development Bank (AAA) has raised an exceptional $3 billion in a three-year bond to help alleviate the economic and social impact the Covid-19 pandemic will have on livelihoods and Africa’s economies.
The Fight Covid-19 Social bond, with a three-year maturity, garnered interest from central banks and official institutions, bank treasuries, and asset managers including Socially Responsible Investors, with bids exceeding $4.6 billion. This is the largest Social Bond ever launched in international capital markets to date, and the largest US Dollar benchmark ever issued by the Bank. It will pay an interest rate of 0.75%.
The African Development Bank Group is moving to provide flexible responses aimed at lessening the severe economic and social impact of this pandemic on its regional member countries and Africa’s private sector.
“These are critical times for Africa as it addresses the challenges resulting from the Coronavirus. The African Development Bank is taking bold measures to support African countries. This $3 billion Covid-19 bond issuance is the first part of our comprehensive response that will soon be announced. This is indeed the largest social bond transaction to date in capital markets. We are here for Africa, and we will provide significant rapid support for countries,” said Dr. Akinwumi Adesina, President of the African Development Bank Group.
The order book for this record-breaking bond highlights the scale of investor support, which the African Development Bank enjoys, said the arrangers.
“As the Covid-19 outbreak is dangerously threatening Africa, the African Development Bank lives up to its huge responsibilities and deploys funds to assist and prepare the African population, through the financing of access to health and to all other essential goods, services and infrastructure,” said Tanguy Claquin, Head of Sustainable Banking, Crédit Agricole CIB.
Coronavirus cases were slow to arrive in Africa, but the virus is spreading quickly and has infected nearly 3,000 people across 45 countries, placing strain on already fragile health systems.
It is estimated that the continent will require many billions of dollars to cushion the impact of the disease as many countries scrambled contingency measures, including commercial lockdowns in desperate efforts to contain it. Globally, factories have been closed and workers sent home, disrupting supply chains, trade, travel, and driving many economies toward recession.
Commenting on the landmark transaction, George Sager, Executive Director, SSA Syndicate, Goldman Sachs said: “In a time of unprecedented market volatility, the African Development Bank has been able to brave the capital markets in order to secure invaluable funding to help the efforts of the African
continent’s fight against Covid-19. Not only that, but in the process, delivering their largest ever USD benchmark. A truly remarkable outcome both in terms of its purpose but also in terms of a USD financing”.
The Bank established its Social Bond framework in 2017 and raised the equivalent of $2 billion through issuances denominated in Euro and Norwegian krone. In 2018 the Bank was designated by financial markets, ‘Second most impressive social or sustainability bond issuer” at the Global Capital SRI Awards.
“We are thankful for the exceptional level of interest the Fight Covid-19 Social Bond has raised across the world, as the African Development Bank moves towards lessening the social and economic impact of the pandemic on a continent already severely constrained. Our Social bond program enables us to highlight our strong development mandate to the investor community, allowing them to play a part in improving the lives of the people of Africa. This was an exceptional outcome for an exceptional cause,” said Hassatou Diop N’Sele, Treasurer, African Development Bank.
Fight Covid-19 was allocated to central banks and official institutions (53%), bank treasuries (27%) and asset managers (20%). Final bond distribution statistics were as follows: Europe (37%), Americas (36%), Asia (17%) Africa (8%,) and Middle-East (1%).
Press Release by the African Development Bank
Download issues of Forbes Africa
- Single Digital Issue: Forbes Africa April 2020 - 30 Under 30 R50.00
- Single Digital Issue: Forbes Africa March 2020 R50.00
- Single Digital Issue: Forbes Africa February 2020 R50.00
- Single Digital Issue: Forbes Africa December 2019/ January 2020 R50.00
- Single Digital Issue: Forbes Africa November 2019 R50.00
Subscribe to Forbes Africa
The Sale Of Alcohol Will Be Allowed In South Africa As Country Moves To Level 3 Of Lockdown On 1st June, Cigarettes Still Prohibited
[IN NUMBERS] Coronavirus Update: COVID-19 In Africa
Inside America’s Food Supply Chain Under Covid-19 | Forbes
A Day In The Life Of A Taxi Driver In Lockdown
Florida Defied Covid-19 Predictions. Is It A Model For Reopening? – Steve Forbes | Forbes
- Health2 days ago
[IN NUMBERS] Coronavirus Update: COVID-19 In Africa
- Billionaires4 weeks ago
Kanye West Is Now Officially A Billionaire—And He Really Wants The World To Know
- Billionaires4 weeks ago
Jack Dorsey, Bill Gates And At Least 75 Other Billionaires Donating To Pandemic Relief
- Brand Voice4 weeks ago
Premium Cigars Made The Moroccan Way
- Current Affairs2 weeks ago
WITHOUT UNIVERSAL HEALTH COVERAGE WE ARE SITTING DUCKS WHEN THE NEXT PANDEMIC STRIKES
- Billionaires4 weeks ago
Elon Musk May Bank The Biggest Payday Of His Life During Global Pandemic
- Heroes & Survivors3 weeks ago
‘Confused At First, Then Proud To Be In This Country’
- Arts3 weeks ago
‘Our Home Became The Film Set, Blankets Became Props, Windows Became Locations’