Small business in SA is brutally impacted by the economy

Jan 28, 2020 Blog  SA economy , SME



The financial services company, Retail Capital, recently published a new study which shows that small business in South Africa is being seriously hampered by a low-growth economy, rising operating cost and unreliable utilities.

Only 10% of our SMEs are thriving, while the other 90% are in dire straits, according to the study called “Rolled with the punches”.  SMEs collectively contribute 20% to the GDP and employ 10.8 million people – very much South Africa’s lifeline.

The study was done in October 2019 with input from over 700 entrepreneurs and the results were as follows:

  • 58% of the respondents said that operating costs are threatening their business;
  • 55% said that people are spending less, thereby decreasing the demand for their services/products;
  • 47% are being impacted by unreliable services such as load-shedding and fuel levies;
  • 33% said red tape and governance and compliance regulations are holding them back;
  • 59% found banks to be the least likely to support SMEs


Karl Westvig, Retail Capital’s chief executive officer said: “small business fight the good fight, to feed their families and bring home the bacon, all the while trying to contribute to our economy, but they are operating in an extremely challenging environment”.  He said that SMEs need support, which is not always at hand.

32% of the respondents said that technology and rapid digitisation is also a threat to their business.  Anni Wilhelmi from the Women President’s Organisation says: “SMEs often don’t have time to work on their business vision, or plan too far ahead as they are tied up in the operational daily grind – this could affect their sustainability and longevity”.  13% of the respondents said they had to start a side business as well for an additional income.

It is pleasing to see that more women are starting their own business.  In fact, they seem to be dominating the SME sector  – 65% of the survey respondents were female business owners.

Westvig said that “the report’s data provides a sense of how brutally tough it is out there”.  His advice to small businesses is “to dig deep, put in the time and ride it until you come through on the other side”.


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