SMEs hopeful of a better year

By Joseph Booysen Time of article published Feb 3, 2017

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Cape Town - South African small and medium enterprise (SME) owners believe this year will result in improved growth for their businesses.

This is according to Ben Bierman, managing director of Business Partners Limited.

He said 77 percent of South African SME owners surveyed in the fourth quarter 2016 Business Partners Limited SME Index believe this year will yield greater growth for their businesses than last year.

Bierman said, last year, the private sector and - particularly the SME sector - experienced how political uncertainty and noise can negatively impact an already struggling economy.

"Political uncertainty, however, stabilised somewhat towards the end of 2016 and the country narrowly escaped a ratings downgrade. This, coupled with various positive economic prospects in the current environment, such as good rainfall and improved commodity prices, has improved SMEs' confidence for business growth in the year ahead."

He said the survey showed an average confidence level of 59 percent that the South African economy will be conducive for business growth in the next 12 months.

Read also: What does 2017 look like for SMEs?

Bierman said local politics will always be a challenge given its inherent risk to the broader economy, especially with the ratings downgrade risk hanging over the country and the murmurings of a Cabinet reshuffle potentially threatening the rand.

"While these confidence levels remain below 50 percent, the perception is that government has over the last 12 - 18 months taken necessary measures to address the classic barriers for business formation and growth, namely access to funding, restrictive labour laws and red tape, and that SMEs are starting to see the impact of these changes, and in turn, feel more confident."

Bierman said the index showed that 47 percent of SMEs in last year's fourth quarter reported that they hired new employees in the last year.

Looking to the year ahead, Bierman said that SME funding needs to be a priority and encourages SME financiers to adopt a more positive outlook towards South Africa's future and consider taking more calculated risks.

"SMEs largely reflect what is happening in a broader economy. When confidence levels improve, this will positively impact on economic growth, leading to increased economic traction and business' ability to create employment. This upward growth trend then further allows SMEs to do better. As long as we have this multiplier effect in action, SMEs should have a better 2017."

BUSINESS REPORT ONLINE

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