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The mixed fortunes that marked 2023 are reflected in the most recent Business Partners Ltd SME Quarterly Confidence Index (SME Index), which saw increases and decreases in business confidence on several fronts. These are the sentiments of Jeremy Lang, the company’s Chief Investment Officer who says, “As 2024 gains momentum, expectations are high that it will be a year of progress for South African SMEs.”

Jeremy identifies the top four items on SMEs’ wish list for the months ahead:

  1. Safety and stability

The greatest decrease in the SME Index recorded related to anticipated growth. The 66% confidence level of business owners that their companies would grow in the next 12 months was 5 percentage points lower than in the previous survey.

Jeremy believes that free and fair elections and decisive and tangible economic and infrastructure improvements can restore SMEs’ optimism during 2024. New research by Xero confirmed that political and economic stability is the main concern of local SMEs.

“The destructive looting of 2021 is still fresh in business owners’ memories and from my discussions with many different types of small businesses in recent times, it is clear that SMEs need the election process to run safely and smoothly,” says Jeremy. “Given the highly charged political environment, the state needs to prioritise safety measures.”

  1. Energy breakthrough

Unsurprisingly, SMEs are also wishing for sustainable solutions to the energy crisis. The prospect that the National Transmission Company of South Africa (NTCSA) will be fully operational by April 2024 brings with it the hope that expensive generators could be a thing of the past sooner rather than later.

Happily, the NTCSA will also give SMEs the option to generate income from their solar-power investments by selling power back to the grid in future.

  1. Government support

The Business Partners Ltd’s SME Index showed that small business owners’ confidence in government support is improving, with the indicator having jumped by 12 percentage points to 59% compared to the previous quarter.

Jeremy attributes much of this confidence to recent legislative developments. “The National Small Enterprise Amendment Bill contains changes that bode well for small businesses, notably the proposed establishment of the Small Enterprise Ombud Service. With a mandate to handle disputes between small enterprises, their customers and consumers, such an office could go a long way in preventing long and costly legal proceedings,” he says.

Proposed legislation is one thing, infrastructure quite another. “SMEs depend on bridges, roads and railway lines for market access and on water and energy to operate effectively,” notes Jeremy. As such, SMEs want to see the rollout of the National Infrastructure Plan to improve infrastructure on the one hand and boost SMEs through the procurement of services from their businesses on the other.

  1. Access to working capital

Jeremy says that the persistent challenges of access to markets and finance need to be addressed in 2024. “Cashflow problems continue to stand in the way of existing small businesses wanting to grow, as well as those in their first years of operation. The SME Index also showed that access to loans and other credit solutions remains a priority for the SME ecosystem.”

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 ongoing education and training initiatives.

“As key industry stakeholders, we are fully aligned with the private sector’s objective to drive financial inclusion in the country and provide business owners access to the market through funding,” Jeremey concludes.

About the Author: Jeremy Lang

New Asset- and Short-term Finance solutions to cater to the need for growth-stage funding
Jeremy Lang is our Chief Investment Officer and has been with our company for more than 15 years and is our go-to-spokesperson for all things business finance and business leadership.