Recession takes its toll on small KwaZulu companies

The number of companies and close corporations in KwaZulu-Natal had skyrocketed from 8654 in 2002 to 39364 in 2008, but 8000, or 20%, of these had closed down last year due to the economic downturn, said Clive Coetzee, an independent economist in Pietermaritzburg.

The figures were provided by the Companies and Intellectual Property Registration Office, which does not gather information on the sectors.

Coetzee said the entities included private companies headquartered in KwaZulu-Natal.

The figure excluded national companies with regional branches in KwaZulu-Natal, and sole proprietorships and partnerships.

He said job losses were 10 times worse than the number of closures indicated, with 222000 jobs lost in the province last year.

Coetzee said 60000 of the jobs lost last year were held by domestic workers and 58000 were in the agricultural sector.

Close corporations in the trade sector accounted for another 70000 retrenchments.

He speculated that a lot of employers had taken advantage of the recession to retrench excess labour or had acted out of panic.

“It will be very difficult for businesses that closed down to get started again so we are not going to create jobs in that way,” he said.
“Instead, we have to create new businesses. However, the problem is that SA has a limited number of entrepreneurs. Our SMME s (small, medium and micro enterprises) rely on big business to generate opportunities, and the consumer market in KwaZulu-Natal is limited because the average disposable income levels are fairly low.”

Bheko Madlala, spokesman for economic development and tourism MEC Mike Mabuyakhulu, said that since investors were naturally risk- averse, it was part of the government’s strategy to market the province.

“One of our key marketing pillars is to target companies that have operations in the province,” he said.

“We are also approaching neighbouring provinces to use the cargo terminal attached to the new King Shaka Airport.”

The tourism market has also been segmented into upper and lower markets and the government is targeting nontraditional markets such as the Middle and Far East.

Source:, 20100222

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