SMEs are confident that the South African economy will be conducive for business growth in the next 12 months, based on a survey measuring the attitudes and confidence levels of South African small and medium enterprise (SME) owners.
Ben Bierman, Managing Director of Business Partners Limited (BUSINESS/PARTNERS), commenting on the latest Business Partners Limited SME Index, says Small and medium enterprises (SME) should prepare to take action and plan for increased growth in 2018.
He says that the 2017 fourth quarter index reveals that confidence levels have risen to 64% – an 11 percentage point increase in comparison to the third quarter of 2017 – and the most substantial change recorded since the index was launched in 2012.”
|Area of Confidence||Quarter 3, 2017||Quarter 4, 2017||Difference from previous quarter|
|SMEs’ confidence that their business will grow in the next 12 months.||72%||78%||6|
|SMEs’ have confidence that the SA economy will be conducive for business growth in the next 12 months.||53%||64%||11|
|SMEs’ confidence that government is doing enough to foster SME development in SA.||34%||33%||-1|
|SMEs’ confidence that the private sector is doing enough to support SMEs in SA||46%||44%||-2|
|Following the ANC elective conference 2017, do you believe the outcome will have a positive impact on SMEs in 2018?|
|Yes, I have confidence that this will be conducive to the economic environment||72%||na|
|No, I don’t believe this will make a difference for my small business going forward.||28%||na|
|Have you expanded your small business to operate in other parts of Africa?|
|Yes, doing business in other parts of Africa has resulting in growth for my business.||11%||na|
|No, I don’t have the capacity to expand my business beyond South Africa.||31%||na|
|No, however, I’m planning to explore this opportunity.||43%||na|
|This doesn’t apply to my business.||15%||na|
On another positive note, Bierman says that SMEs have confidence levels of 78% – a 6 percentage point increase in comparison to the third quarter of 2017 – that their own businesses will experience growth in 2018, which he believes is largely due to the outcomes of the ANC’s Elective Conference in December 2017. “When asked whether the outcome of the conference will have a positive impact on SMEs in 2018, an overwhelming 72% of respondents agreed that the decision made will directly impact the sector.”
Amongst these positive indicators, SMEs are less confident that the private sector and Government are doing enough to foster and support SME development. Confidence levels in this regard are 44% and 33% respectively.
“During the recent SONA and National Budget Speech, we saw Government acknowledging the important role that small, micro and medium enterprises play in the South African economy and emphasise its commitment to these businesses. An example of this commitment is the move to ensure all Government departments pay their suppliers on time – or face possible charges of financial misconduct. This reinforcement is likely to positively impact confidence levels regarding support from Government.”
However, Bierman stresses that the private sector has more of a role to play in fostering SME growth. “Given all the positive indicators that the SME sector has seen recently, we believe that the private sector needs to come to the party now more than ever. It is now time for the private sector to take responsibility and put measures in place to support SME activity and growth in the country’s economy.”
He says that nonetheless, SMEs do seem to be more confident overall, and he believes that business owners need to be ready for a higher level of growth this year. “It is time for businesses to take a hard look at recent macro-economic developments and assess how these can positively impact their industries.”
Bierman says that with this in mind, SMEs need to start planning to grow their footprint, as well as their production capabilities. “This may involve bringing in new skills into the business, hiring more staff or acquiring additional infrastructure. Business owners should also look at their balance sheet to ensure that they have the capital available to expand when opportunity knocks.”
Along with this, he says that businesses also need to weigh up their options for expanding beyond South African borders. 43% of surveyed companies have indicated that they are planning to expand into other African countries. Reasons for this is likely to do with the consumer markets north of our borders growing at a substantially higher rate than in our own country. “We believe that if more SMEs – especially in the manufacturing industry – can start exploring the bigger African market, it can also result in even more accelerated growth locally.
“Despite the positive sentiment and new political dawn, we are still not out of the woods. The time for action is now, and all stakeholders and role-players need to start believing in South Africa’s growth potential and the role they can play in fuelling it. The positive, virtuous circle that has instilled South Africa’s business community with such a great sense of optimism and positivity about the future is something that we need to continue to nurture,” Bierman concludes.