SA’s small business landscape: Unpacking current trends

South Africa's small and medium enterprises (SMEs) are facing both challenges and opportunities in the country's current economic landscape. In a recent CNBC Africa interview, key industry experts shed light on the state of SMEs in South Africa and the support needed to bolster their growth and success. The conversation revolved around the critical role SMEs play as cornerstones of the economy in terms of employment and economic growth. However, despite their importance, SMEs have historically encountered obstacles in accessing finance, skills development, and markets, leading to a high failure rate with up to 70 percent of businesses failing within the first five years of operation. The experts highlighted the need to address these challenges and support SMEs to thrive in the evolving business environment. Oscar Siziba, the Head of Coverage for Business Banking in Standard Bank South Africa, emphasized the resilience of SMEs in the face of challenges. He pointed out that while access to finance remains important, other factors such as access to markets, networks, and information are becoming increasingly critical for business success. Siziba noted the growing trend of digital opportunities and the need for SMEs to adapt to a changing business landscape. Thabo Hleza, Head of Investment & Business Development at Old Mutual Masisizane Fund, discussed the SME ecosystem in the informal sector, where the majority of businesses operate. He highlighted the importance of capacity-building initiatives to help businesses access markets and capital effectively. Hleza also mentioned the pricing pressures faced by SMEs and the need for innovative funding solutions to support the informal sector. Mvelo Hlophe, CEO of Zio, shared his perspective as an entrepreneur in the ICT space, specializing in skills development. Hlophe highlighted the challenges faced by small business owners in accessing funding and emphasized the importance of support programs and information sharing for entrepreneurs. He noted the difficulties of meeting funding criteria, high interest rates, and the lack of collateral as barriers for small business owners. The experts acknowledged the knowledge gap among SMEs regarding support programs and emphasized the need for better dissemination of information and resources. They discussed the importance of partnerships, collaboration, and innovative solutions to address the needs of SMEs, particularly in the informal sector. Government support and policy frameworks were also a key focus of the conversation, with a call for a supportive environment that streamlines bureaucracy, provides training opportunities, and enhances access to finance for entrepreneurs. Overall, the discussion highlighted the challenges and opportunities inherent in South Africa's SME ecosystem, underscoring the need for holistic support and collaboration to drive the success of small businesses in the country.