Johannesburg - Business confidence is returning, even in South Africa, where small and medium enterprise (SME) owners are optimistic about prospects for their businesses, according to the Sage Business Index Survey, which was published on Friday.
The overall local index rose nearly two points to 65.80 out of 100 points. But when it came to rating the economy, local business owners were less confident, sending this rating down 3.11 points to 39.92 from 43.03 last year.
Overall, entrepreneurs polled worldwide were more confident in the global economy. The emerging market bloc of Brazil, Russia, India, China and South Africa slowed, but still contributed significantly to growth worldwide, according to Rob Wilkie, the chief financial officer of Sage Africa, Australia, Middle East and Asia.
In South Africa, the SME sector is critical for economic growth, particularly as the number of employers in this sector rose 6 percent year on year in the second quarter, according to the Absa SME Index published last week. There were 737 000 SME employers recorded in the second quarter.
Locally, bureaucracy and business legislation were the main challenges, according to 23 percent of the local respondents in the Sage survey.
A further 15 percent believed that the government’s handling of current economic challenges was an obstacle. Skills development and education were the most important issues the government should address, the respondents said.
The survey was conducted by Populus on behalf of Sage, and 1 239 interviews were conducted in South Africa on the local and global economy, with topics including challenges, business confidence and sentiment. Globally, more than 11 000 SMEs were surveyed in 17 countries.
About 63 percent of South African participants indicated that the major banks and the government were “behind the curve” and were failing to make the most of opportunities for business. Nearly half said the government should put pressure on banks to lend freely to small businesses.
But panellists at the presentation on the index, who included financial journalist and entrepreneur Alec Hogg, argued that it was not the responsibility of banks to lend to start-ups.
“The reason banks don’t lend money is because it is such a high-risk venture,” said Ivan Epstein, the chief executive of Sage’s Africa, Australia, Middle East and Asia region. Second-tier banks had spotted the gap, which had led to the rise in unsecured lending.
Wilkie said venture capitalists also tended to fund enterprises that were in a maturer phase of starting up.
Entrepreneurs were often forced to apply for personal loans to fund their businesses.
He argued that the 90 days required to process paperwork and register a new business in South Africa should be cut. In comparison, the US had a six-step registration over six days.
Meanwhile, JPMorgan Chase, the US-based banking group, announced the end of its two-year pilot programme for SMEs on Friday. The JPMorgan Chase Foundation had invested more than $1 million (R9.78m) and attracted investment partners such as the Cadiz Asset Management Protected High Impact Fund, GroFin and Imprint Capital.
The partners gain access to a pipeline of high-performing SMEs that are seeking finance and have information for investment already collated and verified by the business development support providers. - Business Report