Business confidence at low ebb
IN THE 2015 Business Partners SME index third-quarter research, business confidence has dropped for the second successive quarter.
Small company owners unanimously responded that for the next year the biggest challenges facing them were the economic conditions, cash flow and funding.
However, according to the research, they felt slightly more confident that labour laws were not a challenge to their growth and they were able to employ appropriately skilled staff.
Also, they said the government was doing enough to promote growth in the sector.
Business Partners managing director Nazeem Martin said the sentiment on future prospects was influenced by the current tough economic environment and the negative prognosis for a quick economic recovery.
He said cash-flow
challenges were owed to the turbulent economic conditions since 2009, and difficulties in getting affordable funding amid a rising interest rate where traditional lenders had introduced more stringent lending criteria.
He said the secondquarter contraction in gross domestic product, with some economists’ hinting of possibly also a third quarter GDP contraction that would technically signal that we are in a recession, had impacted on sentiment and business operations.
“This October, the International Monetary Fund projected South Africa’s growth to be below 1.5% for both this year and next year,” Martin said.
“The rand reached an all-time low against the dollar and we are hearing talk of retrenchments in the mining sector – all these aspects have taken their toll on small business confidence, as more and more of their clients are cutting on their spending.”
He said while business owners reported improved confidence in the labour laws and the government’s ability to promote the sector, he believed these responses were based on an expectation that the Small Business Ministry would improve trading conditions and the reform processes which included the establishment of a small business help desk at SARS.
Martin warned, however, that the confidence levels were still under 50%.
“We need to see more business investment from the private sector and concerted efforts to include small and medium enterprises into their supply chains,” he said.
“And the bottlenecks that are delaying some of the government’s infrastructure programmes need to be eliminated.” www.businesspartners.co.za