Political stability tops SMEs’ wish list as elections loom

With 2024 beginning to gain momentum, expectations remain high that this will be a year of progress for local SMEs. Picture: Jacques Naude/Independent Newspapers.

With 2024 beginning to gain momentum, expectations remain high that this will be a year of progress for local SMEs. Picture: Jacques Naude/Independent Newspapers.

Published Feb 1, 2024


Last year, small businesses in South Africa faced a hard year.

The most recent Business Partners SME Confidence Index (SME Index) saw increases and decreases in business confidence on several fronts.

With 2024 beginning to gain momentum, expectations remain high that this will be a year of progress for SMEs.

Jeremy Lang, the chief investment officer at Business Partners, says that although the outlook for 2024 is positive, SMEs will be keeping their eyes on the key developments and hope to see their 2024 wish list come to fruition.

These include:

1. More government support and a conducive operating environment

According to the most recent Q2 2023 SME Index, the biggest increase in small business confidence was seen in the realm of government support.

At 59%, SMEs’ confidence levels that the public sector is doing its part in fostering small business development increased by 12 percentage points when compared to the previous quarter.

“The National Small Enterprise Amendment Bill has put forward a few instrumental changes that bode well for small businesses in South Africa. Among these is the proposed establishment of the Office of the Small Enterprise Ombud Service, which will be mandated to adjudicate and mediate disputes and matters between small enterprises, their customers and South African consumers,” Lang said.

“This could go a long way in preventing unnecessarily long and cost-intensive legal proceedings.”

In line with the changes, top on the SME wish list would be similar developments and changes that could result in the creation of a conducive environment in which they could operate.

Furthermore, SMEs need market access and an improvement in the country’s infrastructure.

“SMEs depend on infrastructure such as bridges, rail and roads, both as downstream service providers who compete for the tenders to improve these elements and as beneficiaries of better service provision.

“As such, SMEs would want to see the government roll out the National Infrastructure Plan to improve the country’s struggling infrastructure while also boosting SMEs through the procurement of services from their businesses,” Lang said.

2. SMEs call for safety and stability

The greatest decrease in confidence, as reported by respondents to the SME Index, related to the small business community’s confidence levels that their business would grow in the next 12 months. Confidence levels saw a decrease of 5 percentage points, with SMEs expressing confidence levels of 66%.

Given the worsening energy crisis, which hit record highs in 2023, the finding was to be expected.

Lang says that over the course of the year ahead, an air of optimism could be restored if small businesses saw free and fair elections and decisive and tangible movements economically and infrastructurally.

All eyes will be on the outcome and political climate around the upcoming national elections.

Research by Xero found that the main concern of SMEs across the country was political and economic instability.

The spate of looting that broke out throughout parts of the country in 2021 was a prime example of the real cost of civil unrest, especially for the SME sector.

In Durban alone, estimates put the total loss in stolen stock and damage to property and equipment at R16 billion, with 45 000 businesses negatively impacted as a result.

Considering this; and having interfaced with many types of small businesses across a broad spectrum of industries, Lang say SMEs want – and need – the election process to run safely and smoothly.

“We know that many small business owners experienced concern around growing levels of crime last year. In 2024, given the highly charged political environment, the state needs to prioritise safety measures to guard against this risk.”

3.Hopes for an energy breakthrough

Next on the wish list are viable and sustainable solutions to the energy crisis.

Of great encouragement is the significant strides that have been made towards getting the National Transmission Company of South Africa (NTCSA) up and running.

According to the most recent report on Operation Vulindlela, the NTCSA is expected to be fully operational by April 2024.

What this means for SMEs is that alternative power supplies and backup generators will probably not become a thing of the past over the course of this year,” Lang says.

“However, with the plans in place to roll out operations by the NTCSA, hope is on the horizon that ‘business as usual’ can resume.

4. An industry mainstay: improved access to working capital

Lang says ease of access to finance needs to improve significantly in order to fund the ambitions of the country’s thriving community of innovators and problem-solvers.

Traditional and non-bank financiers have their work cut out for them in this regard. Removing barriers to access will rely heavily on the implementation of more flexible lending criteria, the offering of risk-tailored products, streamlined funding application processes and educational and training initiatives.