Anxiety levels around what the outcome of the 2024 South African elections would mean for small businesses, were relatively low in the lead up to 29 May. Like many of the country’s everyday citizens, many SME owners became caught up in the frenzy of the first quarter of the year as political contenders ramped up their campaign efforts. However, despite the uncertainty of the times, small business confidence has maintained its steady upward trajectory as SMEs press on towards positive post-election horizons.

This was one of the primary insights to emerge from the Q1 2024 SME Confidence Index – a survey conducted by specialist SME financier, Business Partners Limited. As David Morobe, executive general manager for Impact Investing at Business Partners Limited explains: “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% reported feeling optimistic about the outcome of the elections. Overall, these findings point to a small business community that is determined to weather the storms that stand in the way of long-term success. 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.

This time last year we saw SME confidence take a knock – a reality that can be attributed to the incessant energy crisis. Now, with plans to recover South Africa’s energy generating capacity and breathe new life into the country’s economy, hope has made a comeback. As always, small business owners continue to demonstrate their inherent resilience and tendency to always hope for the best.”

Overall, several of the indicators 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.

Similarly, SMEs' confidence levels that the local economy will be conducive for business growth in the next 12 months was 69% – up 9 percentage points from the previous quarter and up 13 percentage points year-on-year. 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 – an increase of 7 percentage points from the previous quarter, and up by 11 percentage points compared to last year.

The biggest increase was seen in the confidence business owners have that ease of access to business finance will improve in the next 12 months. 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 bodes well for entrepreneurs looking to use finance as a stepping-stone to success as they enter the highly competitive business arena.

In terms of the remaining major challenge facing SMEs, crime once again resurfaced as the last of the top 3 hurdles to enduring success. As Morobe comments: “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.

Likewise, the government and private sector stakeholders have their work cut out for them in terms of making 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.”

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,’ which dropped from 63% in Q4 2023 to 62% in Q1 2024. Year-on-year, this indicator is up 10 percentage points.

Of particular encouragement was the fact that more than 56% of business owners surveyed reported that they have seen positive developments in the SME sector since the dawn of South African democracy in 1994. Although this audience segment did however express that more needed to be done to provide SMEs with much-needed support, the general sentiment around what lies ahead on the political front, was decidedly optimistic.

As Morobe concludes: “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.”
 

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