SME confidence in South Africa has surged following the formation of the Government of National Unity, according to a recent survey by fintech firm iKhokha. The survey found 79% of small and medium enterprises now express confidence in the economy’s growth under the new coalition government, a stark contrast to the uncertainty prevalent earlier this year.
Before the GNU’s formation, the business sentiment was grim. The iKhokha survey revealed 76% of respondents believed government support was ineffective in promoting small business growth. This sentiment was reflected in economic indicators.
Retail spending dipped 0.7% month-on-month in May, while new car sales fell 14.2% during the same period. iKhokha itself recorded an 8% decrease in SME turnover between May and June as South Africans awaited the outcome of coalition negotiations.
Related: Africa’s AI Push Needs Workflow Proof, Not Training
The uncertainty cast a shadow over spending and expansion plans. Families postponed major purchases, and entrepreneurs delayed business growth strategies. The country yearned for change.
Last month, South Africa breathed a collective sigh of relief and entered a new era of our democracy with the formation of the Government of National Unity (GNU). The follow-up iKhokha survey showed 79% of SMEs felt confident about economic growth under the GNU’s leadership, a 3-point swing from those who previously deemed government support ineffective.
iKhokha CEO Matt Putman commented, “The future looks promising following the formation of the Government of National Unity. It’s a positive outcome for SMEs and our hope is that the new leadership will help stimulate our economy and create more opportunity for small businesses.”
Respondents also hoped the GNU would address long-standing challenges, with 78% believing it would successfully represent their best interests. Promised initiatives include infrastructure revitalisation, boosting tourism, and the ending of the load shedding crisis.
Related: Key Factors to Evaluate When Buying a Franchise
Early indications from new ministers signal that the GNU is focused on building a more fertile environment for SMEs to flourish. The Department of Public Works & Infrastructure and the Department of Tourism hold significant sway in effecting change that will benefit SMEs. Dean Macpherson, Minister of Public Works & Infrastructure, said: “I really want infrastructure to become the pride and place of economic growth in South Africa…we cannot grow an economy without an infrastructure boom in this country.” Minister of Tourism, Patricia de Lille, has also made her intentions clear to stimulate the small business sector via tourism. “The department together with SA Tourism will continue and aggressively ramp up efforts to market South Africa as a top tourist destination, implement programmes to stimulate economic growth, job creation and transformation,” says de Lille.
This renewed optimism under the GNU is reflected in the adoption of iKhokha’s cash advance product, with the fintech noting a 20% increase in working capital distributions in July. With expectations high for stability and supportive policies, businesses are recommitting to growth initiatives and investing in their futures. Furthermore, iKhokha also reports a 4% increase in small business turnover in SA as of mid-July, compared to figures from June. Putman says, “It’s encouraging to witness market confidence returning, the Rand strengthening and reductions in petrol and diesel prices and we hope to see interest rates cuts soon as inflation cools. iKhokha remains focused on helping build our economy by empowering SMEs to handle this new setting with the digital tools and support they need to start, manage and grow their respective businesses.”
While early signs are promising for SMEs, it remains to be seen whether the GNU will drive meaningful long-lasting impact. For the moment, SME confidence is high as their hopes cling to the positive change both incoming ministers and the GNU may have on the small business setting. To find out more about iKhokha’s work to help South Africa’s entrepreneurs do better business, visit www.ikhokha.com.
