SA may be facing 'perfect economic storm' but determined SMEs will rise above adversity
Standard Bank says there is hope that SMEs will rise above adversity despite the tough economic times the country is facing.
Many would say that South Africa is at the centre of a 'perfect economic storm'. The country is facing economic trials, and as job losses mount, we continue to face massive unemployment. Businesses, particularly SMEs, face rapidly increasing input costs as they turn to diesel, petrol and gas to cope with continued load-shedding and the power outages that have become an almost daily part of our lives.
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Although we have heard the voices of big businesses about the current state of our nation, comparatively little has been said about the SME sector which contributes about 34% to SA’s GDP and is vital to the growth of the nation's economy. SMEs are also prime providers of employment opportunities, engaging between 50% and 60% of the national workforce.
Unfortunately, these same SMEs are also among the most vulnerable when it comes to shouldering losses caused by load-shedding, increasing interest rates, and dwindling levels of discretionary income. Compounding their difficulties is the lack of financial reserves and resources available to the more established corporate sector.
As established entrepreneurs tackle their difficulties head-on, new green shoots of hope are breaking through the surface. For instance, during the first quarter of 2023, new business registrations increased by 10%, when compared to the same period in 2022. Many business owners have taken advantage of new revenue channels enabled by technology. Digital technology and eCommerce sites have made it easier for SMEs to access markets, customers, and suppliers.
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At Standard Bank SMEs form a major pillar of our broader focus on driving Africa’s growth and our strategic objective is to increase support to this key driver of the economy. Although access to funding is still an essential requirement, Standard Bank is receiving more inquiries about assistance in purchasing generators and solar panels. Standard Bank’s answer is the introduction of the PowerPulse energy solution.
Rapid answers to finance requests have become critical in 2023. Standard Bank’s response is a flexible loan repayment offering tailored to small businesses. This enables companies with turnovers that fluctuate monthly to pay their debts as income is earned.
We also continue to offer non-financial support to SMEs to thrive for years and are aimed at helping to bolster the skills that new business owners need. This includes advice on efficient business operations, cash flow management, market access, and mentoring via platforms like the BizConnect portal.
Additionally, we also support or create sharing platforms, master classes, and networking opportunities to help SMEs develop their business models, improve cash flow management, and establish valuable connections within their industries and value chains.
Entrepreneurs are the lifeblood of South Africa's economy and central to the country reaching its growth and development potential. Standard Bank, in line with our commitment to drive South Africa’s growth, will be there to help make this prediction a reality.
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