Reasons for SA SMEs to smile

It’s not always easy to see, but there are unexpected positives in South Africa’s current financial situation. Of all the segments of our population who could be grumbling, many would say that SME owners are right up there. Squeezed like the middle-class tax payers, but with the added brutal success figures of less than 10 percent after two years, SMEs seem to have it doubly rough.

But could there be a silver lining?

Things cost the same

As Allan Gray noted recently, global markets’ gloomy outlooks have had a surprising upside here: “commodity prices have held up well, but are vulnerable should growth slow further. Inflationary pressures continue to be benign and the bias among central banks is towards monetary easing.”

While this is far from good for the US, Brexit-wracked UK and investors everywhere, it’s very good for people spending money in SA who cannot afford to spend a lot. 

Why? Because this means prices of goods are likely to remain stable, without the deflation woes of developed nations. That means SMEs needing to spend money to get their companies off the ground will need to spend less than if global markets were soaring.

Mboweni is on your side

Mboweni’s economic policy paper released at end August, titled Transformation, Inclusive Growth and Competitiveness: Towards an Economic Strategy for South Africa, has been cited as a likely catalyst for change. The paper was ground-breaking on several levels.

It introduced the idea that public sector companies must pay interest on late payments to private sector companies – never before suggested in SA – and gave the most specific plan on reducing SME red tape we’ve seen in years. The paper even proposed the creation of an entirely new regulator to boost business – a subcontracting ombudsman. All of this, if it comes through, bodes very well for business confidence figures, which have been one of the biggest negative impacts on SME growth in recent years.

If you’re running a small business and doing your bit to support the economy, take heart and keep going! It has been tough, but we’re seeing positive conversations taking shape.