South African Chief Executives Help Businesses Prepare for an Economic Tsunami
As South Africa enters a 21-day lockdown that started at midnight on 26 March, a new consortium of YPO and non-YPO business leaders have launched an initiative to try to lessen the impact of an already strained economy.
The founders of Covid Business Rescue Assistance (COBRA) have positioned it as South Africa’s largest pro-bono initiative, providing distressed businesses access to qualified turnaround specialists who can help restructure their operations and provide access to financing required to get them back on track.
“While the pandemic has just started to take hold in South Africa, the real concern is if it leaps like a forest fire across the road into the underprivileged, informal economy, where there is very little in the form of health provisions and where in some instances there are several millions living in close proximity,” says Adam Craker, COBRA co-founder and CEO of IQbusiness.
“We also have high HIV and tuberculosis rates, so a large section of the population is living with immune deficiency issues. To exacerbate the situation, in a country of 56 million, we only have 7,000 intensive care beds, and the bulk is targeted in the private health system. The health system will be overwhelmed within days.”
The economic fallout
On 21 March, before the lockdown was announced, Craker connected with two of his colleagues from Schindlers Attorneys and Engaged Business Turnaround to discuss the looming health care crisis as well as the ensuing economic crisis, which they recognized as carrying equally serious implications for lives in South Africa.
“We felt there was little being done on the economic side. South Africa is currently in recession,” says Craker. “The country entered a technical recession as of fourth quarter 2019. This is the second technical recession in the last 18 months. In reality, the country has been in a recessionary cycle for last nine years.”
He continues, “We predicted that the economic fallout of the epidemic will be catastrophic for many of small, medium and micro enterprises, as well as for the bigger businesses. There was an urgent need for a form of ecosystem to enable businesses to sustain themselves through the economic crisis, which is like an approaching tsunami. We can see it building on the horizon, while we try to get everyone ready and on high ground.”
A model based on collaboration and agility
The COBRA model involves three groups of stakeholders. The first group is the consortium of business partners consisting of professional service providers who support the second stakeholder group — businesses that are in distress. The third group is the broader base of interested parties such as banks and various other organizations and associations.
“Our role as consortium partners is to engage with businesses in distress and help them coordinate bank, government and stakeholder support through a structured business rescue process,” says Craker.
Within a week from that initial call, a website for the initiative was built and social media engagement was launched to create awareness. In addition, the team has started a free one-hour webinar every morning to get local business leaders up to speed on the latest market developments and available incentives to support them. The webinars also provide resources and networks local businesses can access for financial support. More than 20 businesses in need have already joined the webinars, with more expected as the lockdown begins to take effect.
A growing consortium
In a matter of days, the message has also spread among the wider South African service-providing business community. Among the business leaders who joined as consortium partners are YPO members Carl Bates, Chief Executive of Sirdar Global Group and Justin van Lienden, Managing Director of Adept Advisory.
Within the YPO global community, other members from around the world reached out to Craker, offering to help and sending information to regional leadership teams. “What we found was that even in this short period of time, we have started to get offers to provide guidance and mentorship from across the YPO community, as well as referrals to other non-YPO companies who can benefit from the initiative.”
While the focus of COBRA remains on South Africa, Craker expects the idea will catch on in other countries with similar lack of government support or bailout plans. “This initiative is focused on helping South African businesses in their hour of greatest need. But we are facing a global crisis, and we can leverage our YPO network and shared knowledge to help different economies in need,” says Craker.
As Craker prepares for the tough times ahead, he is keen that other business leaders get engaged as well. “The impact of the COVID-19 pandemic on economies is affecting global businesses of all size and scale. We need more YPO members and business leaders to step forward and get engaged, not step back. Step into the problem because it would be catastrophic for all businesses if we see economies, like that of South Africa, fail.”
For more stories like these check out the COVID-19: Leading Through Crisis page on YPO.org.
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