DOING BUSINESS

Big drop in business confidence among South African SMEs, study finds

By our News Team | 2022

Business confidence amongst South African small business owners was decidedly low towards the end of 2021, after a notable increase in the second quarter of last year.

This drop in confidence is according to the recently released Q3 2021 SME Index conducted by Business Partners Limited, a business loan provider that operates in seven countries in sub-Saharan Africa.

The index shows that the confidence which small-to-medium sized enterprise (SME) owners have that their businesses will grow in the next 12 months plummeted from 61 percent in Q2 2021 to only 33 percent in Q3 2021 – a stark contrast with where confidence was during the same period in 2020 (72 percent). The sharp decline can be attributed to multiple market disturbances.

Unfavourable economic conditions, exacerbated by power shortages, a record petrol price hike, the lingering effects of Covid and subdued profits are some of the main driving forces behind this reported pessimism. As expected, the unrest that broke out in two provinces in July 2021 also made its mark on business confidence.

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The results of the SME Index align with the November 2021 SACCI Business Confidence Index and the Q3 Quarterly Labour Force Survey conducted by Statistics SA, which reports record-high unemployment.

Cash flow challenges are expected

Commenting on the results of the SME Index, Rayna Dolphin, Executive Director at Business Partners Limited explains: “After taking some significant strides towards economic recovery, we saw a slump in GDP in Q3 2021 – the ripple effect of which we saw in the results of the SME Index. Poor economic conditions and cash flow were the main challenges that SMEs predicted for the next six months. The two of course, are inextricably linked.”

In Q2 2021, the company reported that confidence levels had steadily increased quarter-on-quarter from Q2 2020 – a pivotal period for small businesses who were hard hit by the outbreak of the pandemic and the subsequent imposition of a national lockdown. 

For many SMEs, better prospects seemed within reach with the onset of the festive season, but hopes were clouded with the arrival of the new Covid variant, Omicron.

In a media statement, the company says the clear drop in business confidence should be seen within the context of a number of external factors that were the direct cause of disturbances in the market and ultimately, instability for SMEs. 

As the SME Index demonstrated, only 44 percent of SMEs report that they are on track to recover some of the profit margins lost in 2020.

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    Dr Kin Kariisa

    Group CEO - Next Media

    Dr. Kin Kariisa is an extraordinary force at the helm of Next Media Services, a conglomerate encompassing NBS TV, Nile Post, Sanyuka TV, Next Radio, Salam TV, Next Communication, Next Productions, and an array of other influential enterprises. His dynamic role as Chief Executive Officer exemplifies his unwavering commitment to shaping media, business, and community landscapes.
    With an esteemed academic journey, Dr. Kariisa’s accolades include an Honorary PhD in exemplary community service from the United Graduate College inTexas, an MBA from United States International University in Nairobi, Kenya, a Master’s degree in Computer Engineering from Huazong University in China, and a Bachelor’s degree in Statistics from Makerere University.
    Dr. Kariisa pursued PhD research in Computer Security and Identity Management at Security of Systems Group, Radboud University in Nijmegen, Netherlands. As a dynamic educator, he has shared his expertise as a lecturer of e-Government and Information Security at both Makerere University and Radboud University.

    Dr Kin did his PhD research in Computer Security and Identity Management at Security of Systems Group, Radbond University in Nigmegen, Netherlands. He previously served as a lecturer of e-Government and Information Security at Makerere University in Kampala, Uganda and Radbond University in Netherlands.

    Dr Kin did his postgraduate courses in Strategic Business Management, Strategic Leadership Communication and Strategies for Leading Successful Change Initiatives at Harvard University, Boston USA.

    • Other current and previous roles played by Dr Kin Kariisa:
    • Lecturer of e-Government and Information Security to graduate students at Makerere University, Kampala and Radbond University in the Netherlands
    • Director of Eco Bank Uganda Limited, one of the largest banks in Africa
    • Chairman of the National Association of Broadcasters, an umbrella industry association for all Television, Radio and online broadcasters in Uganda.
    • Chairman of Board of Directors of Nile Hotel International, that owns the leading hotel in Uganda, Kampala Serena Hotel.
    • Chairman of Board of Directors of Soliton Telmec Uganda, the leading telecom company in Optic fibre business managing over 80% of optic fibre in Uganda.