For all the uncertainties and potential disruptions that go hand-in-hand with a national election in a young democracy, South African small and medium business owners seem to be coming out on the side of hope, says Megan Dedekind, Area Manager at Business Partners Limited.
Based on her interactions with business owners, Megan has little doubt that the entrepreneurial community has been through a harrowing past twelve months, dominated by the devastating effects of load shedding, the significant disruptions in South African port, rail and road infrastructure, the emergence of a mafia-type organised crime in several industries, and high interest rates to combat stubborn inflation.
The effects of these hardships are visible in the number and types of finance applications from business owners that Megan has seen over the past year. “It is clear that business owners have been struggling with their cash flow and that traditional financiers have tightened their risk criteria, not only looking at the finances of the businesses, but at the financial positions of the owner-managers.”
Against this background, one would expect that entrepreneurs would batten down the hatches even more as the election and its uncertainties approach, sit tight and wait for the storm to pass. Yet, says Megan, there are clear signs over the last three months that business owners have started thinking about expanding their operations and starting new ventures. There has been an unpick in the number of applications, and also a shift away from emergency-type borrowing to growth finance.
Megan says it is too early to say if it is the start of a turnaround, but it seems certain that the election does not loom large as a potential disruptor for many business owners. Probably the biggest immediate impact of the election on businesses is the day itself. As a public holiday many businesses will have to close their doors or, if they decide to remain open, pay double wages and ensure that their staff all have an opportunity of getting to a polling station.
By now, South African business owners all have well-practised protocols for dealing with disrupted weeks, but the impact of yet another public holiday on the bottom line is not trivial, especially following the annual April holiday run. No doubt some intrepid retailers won’t miss the opportunity to devise an election-day special offer or a sale to capitalise on the movement of voters, says Megan.
The possibility of disruptions on election day seems to be limited to KwaZulu-Natal, which suffered serious unrest three years ago in the form of the July 2021 riots. Some businesses there have reportedly been stockpiling resources and preparing for disruptions, but even in that region, South Africa’s most volatile, fear of unrest is much lower than it was in past elections.
As for any uncertainties that the potential range of outcomes of the elections hold, South African business owners seem phlegmatic and perhaps even hopeful that it might help resolve the most serious problems of the business environment. Right at the top of the formidable list is load-shedding which has caused so much damage to South African businesses that it will never be recouped, says Megan. Far more important than any political outcome for business owners is their wish that the pre-election lull in load-shedding turns out to be a permanent one.
Almost just as urgent for business owners is the need for delays and disruptions at the ports and railways to end, and for the criminal justice system to stem the spread of crime and corruption in the business world. By no means last on the wishlist of business owners is that the outcomes of the election might strengthen some provincial governments to intervene more effectively to turn around failing municipalities.
Despite all the hardships that business owners have been through the last few years, says Megan, one of South Africa’s positive trends is perhaps growing even stronger: that the focus of each election is less and less on the stability of the process itself, and more and more on how to use the vote to make South Africa a better place.