How COVID-19 (Corona) will affect South African business in 2020

The COVID-19 virus has been declared a worldwide pandemic. Businesses are faced with unprecedented circumstances as to how to move forward, while economies around the globe threaten to grind to a screeching halt.


The work environment seems to be changing instantaneously with many companies being forced to employ mandatory work-from-home policies as a result of self-isolation directives to delay the spread of the virus. Self-isolation has been proven to be one of the most effective ways in reducing the spread of coronavirus, which will hopefully mean less pressure will be exerted on the healthcare systems around the world.

What does this mean for business, though?

With staff working from home, the role of the online realm has come to the forefront in a big way. Meetings can now be held on online platforms such as Skype, Zoom, or Google Hangouts.

China’s lack of initial control on the situation led to health systems being overwhelmed. The lack of flexibility in the system and the disproportionate impact on healthcare workers have made it especially difficult to get the virus under control.


While many escalation mechanisms may be understood in theory, the practical execution of them becomes a lot more difficult. For example, temperature checking mechanisms may prove ineffective, especially because many carriers of coronavirus are asymptomatic.

Asking employees to stay home is the most likely way of reducing transmission. However even policies of keeping people home need to be tailored to each location employee segment.


Being optimistic about the rebound after coronavirus may be a dangerous move for businesses. This is worsened by the fact that businesses who are suffering at the hands of the epidemic the worst, are the most likely to believe in a quicker recovery.

Facing up to the possibility that a deeper and longer downturn in business is the most realistic option may be more agreeable than the options that will be available later.


South Africa seems to be taking quite drastic measures to contain the virus as much as possible. This will see far greater shifts in people’s daily behaviors, such as staying home from work for the majority of working-age people, children being removed from schools, and a general economic slowdown.

The resulting demand shock of such behaviors, according to McKinsey, is a global GDP growth figure that will be half of what it would have been without the coronavirus pandemic. This would effectively pull the economy into a definite slowdown, but not a full-blown recession.

This type of global slowdown is set to affect medium and small companies more acutely than larger firms. Less developed economies such as South Africa’s are more likely to feel the pinch. Service sectors such as aviation, travel and tourism as well as events are likely to be the hardest hit.


A few key actions have been identified by McKinsey as the most likely to help businesses of all kinds and are detailed below;

  1. Protect your employees. Business as usual is unfortunately no longer an option given the current crisis. Stay-at-home policies seem to be the most popular amongst businesses and keeping effective communication open with employees for them to express whether they feel unsafe for any reason is very important.
  2. Ensure you have some cash reserves. Companies need to conduct proper scenario analyses and identify what triggers will impair liquidity.
  3. Stay close to your customers. Companies that are able to navigate the disruption better are usually investing their core customer segments. For example, in China, while customer demand is down, it has not completely disappeared. There has been a dramatic shift to online shopping for all types of goods. Companies should consider investing in online platforms as part of their omnichannel distribution. It is reasonable to expect that customer’s preferences for which channel they shop through will not go back post outbreak.

Whilst the outbreak has caused a lot of panic worldwide, businesses would do well to implement efficient procedures to help mitigate any negative effects that will arise as a result of the COVID-19 outbreak.

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