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 Load shedding impacts SME confidence levels in SA

 

 Heading into 2015, South African Small and Medium Enterprise (SME) owners are cautiously optimistic that the current economic environment is conducive for business growth, but factors, such as the country's constrained power supply, are impacting confidence levels. This is according to Gerrie van Biljon, executive director of Business Partners Limited (BUSINESS/PARTNERS), speaking on the third quarter 2014 Business Partners Limited SME Index (BPLSI) results

The BPLSI, which measures attitudes and confidence levels amongst SMEs in South Africa, revealed average confidence levels of 55% that the economy will be conducive for business growth in the next 12 months, which is a decrease of 3% when compared to the second quarter of 2014.

The introduction of national load shedding by Eskom from mid June 2014 has had a significant impact on the SME sector, resulting in decreased productivity and financial losses. The power crisis has been referred to as one of the most critical structural impediments to economic growth in the country, and continues to have far reaching effects on SMEs across all industries says van Biljon.

He says that in addition to the power crisis, the July cut to South Africa’s 2014 GDP growth forecast by the International Monetary Fund (IMF), which was reduced from an initial 2.7% to 1.3%, plus the two instances of raised interest rates by South African Reserve Bank, albeit marginal, have also taken its toll on SME owners confidence levels.

On a more positive note, the quarterly index revealed that SME express average confidence levels of 75% that their business will grow in the next 12 months, a year-on-year increase of 2% and on the same level as the second quarter of 2014. Van Biljon says that it is a positive indication for 2015 that SMEs remain confident in their own businesses and staff, despite the negative sentiment that is widespread in many industries.

SMEs’ average confidence levels that the ease of access to business finance will improve in the next 12 months remained relatively unchanged at 51% when compared to the previous quarter, which recorded average confidence levels of 52%. When comparing year-on-year however, the survey notes a steady increase since 2012, which recorded an average confidence level of 43% in the third quarter, while 2013 recorded 49%.

icated specialist funds, such as the Education Fund launched in November, which aim to meet the needs of business owners in specific sectors as each industry is a host to unique needs and possible challenges,” says van Biljon.

 

When asked about the biggest challenges that SMEs will face in the next 12 months, skills were ranked as the biggest concern by business owners, followed by economic conditions, cash flow and funding​

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