Business confidence jumps
SMALL ENTREPRENEURS: INDEX SHOWS THAT BUSINESSES FEEL THEY CAN RECOVER
Despite Covid and other major setbacks, SMEs are poised to make most of 2022.
Executive director at Business Partners Limited Rayna Dolphin gave her thoughts on the results of the Q4 2021 SME Index.
There has been a significant uplift in business confidence amongst South African small business owners, returning levels to those pre-Covid, despite a number of ongoing market challenges, she said.
According to the Q4 2021 SME Index, conducted by specialist business financier Business Partners Limited, the confidence of small-and-medium-sized enterprise (SME) owners has increased to 71% – up almost 40% from the previous quarter.
A holistic view of the index points to an overarching outlook that is positive, although several socioeconomic, political and infrastructural challenges continue to necessitate prudence.
Dolphin explained: “When we compare the results of the Q4 2021 SME Index with the results of the previous quarter, we see an undeniable shift towards a more positive sentiment, a shift that we hope will continue into the first quarter of 2022.”
The third quarter of 2021 proved decidedly difficult for South African SMEs.
The increase in frequency of loadshedding and a record petrol price hike were among the market factors impacting.
The results of the Q4 2021 SME Index paint a different picture, despite many of the same market challenges continuing to impact.
Relaxed Covid restrictions seem to have made a marked impact on business confidence, with just under 80% of small businesses claiming that they felt optimistic about the “return to normal”.
“A number of other findings support the positive upturn in business confidence among South African SMEs, suggesting that business owners have transcended survival mode and the struggle to stay afloat,” Dolphin said.
They are beginning to consider other important market indicators that are imperative for their future sustainability and growth.
“About 71% of survey respondents demonstrated a high level of confidence that economic recovery will start to take shape.”
In general, the improved confidence and sentiment is across multiple segments of the SME Index, returning to levels last seen in the second quarter of 2019.
All things being equal, the prevailing sentiment among small businesses indicates that the “worst is over”.
This is supported by the South African Chamber of Commerce and Industry’s (Sacci) January Index, which after an excessive drop in business confidence since 2020, showed gradual recovery.
Sacci attributes the return to stability in confidence levels to sub-indices such as increased merchandise export volumes, more new vehicle sales and higher share prices on the JSE.
It cautions, however, that high inflation, lower international commodity prices and higher debt servicing costs will continue to erode confidence in 2022.
The Index showed that 46% of small businesses suffered a decline in productivity due to the reintroduction of load shedding. Encouragingly, 41% of respondents claim to have measures in place to mitigate the impact thereof.
About 88% of respondents were impacted by the record-high petrol price hike in December 2021 .