Small business confidence has maintained a steady upward trajectory as SMEs move on towards positive post-election horizons.
This was one of the insights that emerged from the Q1 2024 SME Confidence Index, a survey conducted by Business Partners Limited.
David Morobe, Executive General Manager for Impact Investing, Business Partners Limited said: “Only 33% of small business respondents indicated experiencing heightened levels of anxiety around the elections and its potential impact on their operations.”
A further 19.5% felt optimistic about the outcome of the elections that saw the ANC lose their majority but still holing on to the most amount of seats in the National Assembly, 159.
The DA won 87 seats while the MK Party received 58 seats. The EFF and IFP followed with 39 and 17 seats respectively.
South Africa is expected to form a national government of unity.
Morobe said: “Now, post-election, we look forward to the shifts that will undoubtedly take place as we recalibrate ourselves politically, socially and economically.”
“On the whole, the SME ecosystem remains confident and optimistic about the country’s future. It remains for the government and political leaders to work together to create an environment that will enable SMEs to thrive.”
However, the past few years have been incredibly tough for many businesses as they look to re-attain pre-Covid-19 levels of operations and revenue.
According to Morobe, this time last year, SME confidence take a knock which can be attributed to South Africa’s energy crisis but plans to recover the country’s energy generating capacity can breathe new life into the economy.
Several factors that are regarded as being the main contributors to SME confidence saw significant increases both on a quarter-to-quarter basis and from a year-on-year perspective.
SMEs’ confidence levels that their business will grow in the next 12 months was 83%, up 5 percentage points from the previous quarter and up 12 percentage points year-on-year.
SMEs' confidence levels that the local economy will be conducive for business growth in the next 12 months was 69%.
SMEs also reported confidence levels of 76% that they will find staff with the right skills set and experience to facilitate the growth of their business.
The ease of access to business finance improving in the next 12 months also contributed to confidence business owners. At 67%, this was up by 10 percentage points from the previous quarter, and up 12 percentage points compared to Q1 2023.
Given that cashflow and economic conditions remain 2 of the top 3 challenges faced by SMEs, this could be a good sign for entrepreneurs looking to use finance as a stepping-stone to success as they enter the highly competitive business arena.
While SME confidence levels remain positive, there are a number of challenges that the industry facing with crime once again resurfacing as the last of the top 3 hurdles to success.
Morobe said: “Given that crime remains one of the major causes of business interruption, small businesses need to take measures to manage the risks involved and be proactive about planning ahead.”
Government and private sector stakeholders have their work cut out for them to ensure small businesses less prone to the damage and destruction that comes with operating within a high-crime environment.
“Hopefully, we will see a fundamental shift in this regard as the year progresses,” Morobe said.
The only marginal quarter-on-quarter decrease observed was a marginal 1 percentage point decrease with regards to ‘SMEs' confidence that the current labour laws are conducive to the growth of SA businesses.
This dropped from 63% in Q4 2023 to 62% in Q1 2024. Year-on-year, this indicator is up 10 percentage points.
On a positive note, 56% of business owners that were surveyed reported that they have seen positive developments in the SME sector since the dawn of South African democracy in 1994.
Although these businesses did express that more needed to be done to provide SMEs with much-needed support.
IOL