This is according to Ben Bierman, Chief Financial Officer of Business
Partners Limited (BUSINESS/PARTNERS), who was commenting on the overall
sentiment of business owners and the findings of the latest Business
Partners Limited SME Index (BPLSI), which measures the attitudes and
confidence levels of South African SME owners.
The Q4 2015 BPLSI revealed a significant decline in confidence levels
that the South African economy will be conducive for business growth in
the next 12 months – a decrease of 6 percentage points from the third
quarter to a recorded confidence level of only 51%.
“In 2015 SME owners faced challenges such as load shedding and the
implications it brought about. As if the drought and water-shedding was
not challenging enough, the broader economic events such as the firing
and re-hiring of the Finance Minister, and a number of international
developments – such as sluggish growth in global markets, adverse
exchange rates and the lack of exports – all had a notable impact on SME
owners’ confidence levels as they started preparing for 2016,” says
The BPLSI also revealed a sharp decrease in business owners’
confidence levels relating to the ease of access to business finance in
the next 12 months – a decline from 51% in the third quarter to 44% this
quarter. Confidence levels are also down 9 percentage points y/y.
Bierman says that this drop in confidence is a real concern. “From a
broader economic perspective, it appears as if credit extension from
financial institutions will be under pressure as a result of increased
interest rates as well as the high levels of uncertainty in the economy.
A vital part for any SME’s growth and sustainability is access to
funding, and these confidence levels reveal that the average SME owner
is concerned about being able to access bridging capital or financing to
ensure that their business can ride out this economic storm in the next
six to nine months.”
The other noteworthy concern that the BPLSI fourth quarter report
highlights, is SME owner’s ability to find staff with the right
skills-set and experience to facilitate the growth of their business,
with the average confidence level decreasing significantly by 8
percentage points from the third quarter to 55%. “This could be
attributed to the debates which were taking place in December 2015
regarding the Annual National Assessments (ANAs) and the anticipated
Matric results , combined with a general uncertainty in the ability of
the country’s universities to adequately prepare and equip students for
the jobs available in the market,” says Bierman.
Business owners have average confidence levels of 38% that the
current labour laws are conducive to the growth of South Africa
businesses – a decline of 8 percentage points q/q. “While there hasn’t
been any amendments to labour laws to suggest this decrease in
confidence, the broader economic uncertainty and the Government’s
perceived ability to facilitate growth in the SME industry is weighing
on SME’s minds.
“We hope that the upcoming Budget Speech will provide clarity on
these matters, especially with regards to the role that Government will
play in uniting business and labour behind an economic plan that will
prevent a ratings downgrade and maximise our economic potential.”
However, amidst the concerns and waning confidence, Bierman suggests
that SMEs concentrate on strategically riding out this proverbial storm.
“When you find yourself in extremely stormy waters, the natural
instinct is to drop sails and wait for the storm to pass. By doing this,
you lose control especially the ability to navigate out of the storm or
situation. SMEs should therefore continue to manage their businesses
pro-actively, plan for the adverse headwinds that they might face and
choose a direction to steer their businesses toward. It is especially
important to carefully estimate their cash flow to ensure they know in
advance whether they need additional capital to face the challenges
successfully,” concludes Bierman.