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SMEs positive about business growth, less confident about sector support

Mar 11 2018 12:12

Cape Town - SMEs are confident that the South African economy will be conducive for business growth in the next 12 months, according to the latest Business Partners Limited SME Index.

The survey measures the attitudes and confidence levels of small and medium enterprise (SME) owners in SA.

The index for the fourth quarter of 2017 reveals confidence levels have increased to 64%. This is 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.

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.

At the same time SMEs indicated that they 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.

Ben Bierman, managing director of Business Partners Limited, believes the increased overall confidence level 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,” said Bierman.

Action

In his view, SMEs should prepare to take action and plan for increased growth in 2018.

“In the recent State of the Nation Address (SONA) and Budget 2018 we saw government acknowledging the important role small, micro and medium enterprises play in the SA economy and emphasise its commitment to these businesses, said Bierman.

To him 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, in his view.

“It is time for businesses to take a hard look at recent macro-economic developments and assess how these can positively impact their industries,” he said.

"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.”

Bierman said businesses also need to weigh up their options for expanding beyond South African borders. About 43% of surveyed companies indicated that they are planning to expand into other African countries.

“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," he said.

Private sector

At the same time, Bierman stressed 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 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 said.

"Despite the positive sentiment and new political dawn, we are still not out of the woods. The positive, virtuous circle that has instilled SA’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.

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