SA SMEs show confidence in GNU

Small and medium enterprises (SMEs) in South Africa have shown confidence in the government of national unity’s (GNU) ability to improve the country’s business landscape.

This is according to the 2024 second-quarter SME Confidence Index by Business Partners Limited.

Executive general manager for impact investing at Business Partners Limited, David Morobe says 60.96% of SMEs surveyed believe the GNU will make the country a more attractive place for investors, which will result in business growth.

51.78% of respondents said the current business landscape after the country’s general elections offers an opportunity for improvement, while 15.84% viewed the landscape positively and 5.87% perceived it as unstable.

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Business will grow

81% of the respondents are confident that business will grow in the next 12 months. Morobe says this is a decrease of 2% from the previous quarter.

However, the year-on-year comparison shows a 15% increase, which shows that SMEs are more hopeful about their growth prospects over the coming year than they were during the same period last year.

“When it comes to access to finance, SMEs’ confidence has decreased with businesses displaying confidence levels of only 62% that it will improve over the next year,” he says. This represents a 5% decline from the previous quarter, although it remains 1% higher compared to Q2 2023.

Is government doing enough?

He adds that 46% of respondents said the government is doing enough to support SME development, which is a 13% decrease year-on-year and a 4% decrease from the previous quarter.

When it comes to the private sector, 54% of the SMEs said they get enough support from the sector. However, this is also a decrease of 6% from the previous quarter.

“Finding skilled staff remains top of mind for SMEs.” Confidence in this area sits at 72%, a decrease of 4% from the previous quarter. But it remains 8% higher compared to Q2 2023.

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Load shedding on SMEs

Morobe says the Index shows over 45% of SMEs still feel the impact of load shedding despite its suspension. The respondents said load shedding led to decreased operational expenses and improvements to their bottom line.

“However, 33.63% indicated that while expenses have dropped, their businesses’ financial performance has not significantly improved. A further 20.75% of SMEs reported that their businesses remain financially constrained due to previous investments in alternative energy solutions during severe load shedding periods.”

Top challenges

Cash flow, economic conditions and funding are identified as the top challenges that SMEs are facing. Previously, the biggest challenge was crime. He adds that the changes in challenges can show that businesses are focusing on financial stability and owners are seeing results from crime-fighting efforts.

Another challenge that businesses have faced is weather events. “Nearly 20% of respondents reported business loss or disruption due to severe weather, while an additional 14.97% indicated that their business partners or suppliers were affected.”

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