finance, budget, sme Finance Minister Enoch Godongwana, Image: GCSI
South Africa’s small businesses—widely recognized as the backbone of the economy—are facing an unprecedented financial squeeze.
With the upcoming Budget Speech, all eyes will be on the Finance Minister to see if tangible solutions are on the table or if it’s just another round of empty promises.
Fresh data from Lula paints a sobering picture: SME turnover has plummeted by a staggering 50% year-on-year.
The culprit, sky-high interest rates—at their highest in over 15 years—have throttled consumer spending, squeezing revenue streams across industries.
An economy that barely grew in 2024 and even shrank in the third quarter. This isn’t just a crisis on paper; it’s a daily fight for survival for thousands of entrepreneurs.
“Our latest data shows South African SMEs are under immense pressure. Many business owners are having to make tough decisions just to stay afloat,” says Garth Rossiter, Chief Risk Officer at Lula. “While there’s been some improvement in political stability and electricity supply, cash flow remains a major hurdle for businesses trying to keep their doors open.”
And while President Cyril Ramaphosa’s recent State of the Nation Address (SONA) touched on SME funding, venture capital, and reducing business barriers, it lacked the detail that entrepreneurs need.
Rossiter believes this is where the Budget Speech must step up.“It would be a welcome move if the Finance Minister could provide concrete plans to back up the commitments made at SONA,” he says.
Year after year, the same narrative plays out—SMEs are celebrated as the engine of job creation, yet they continue to be burdened by red tape and inefficiencies.
With SMEs employing between 50% and 60% of South Africa’s workforce and contributing around 34% to GDP, it’s time for a serious policy shift.
“If the government is truly committed to reducing unemployment, this budget must outline how they will cut unnecessary bureaucracy, simplify regulations, and allow businesses to operate more effectively,” Rossiter asserts.
“Rather than trying to manufacture jobs within an already bloated public sector, government should focus on empowering entrepreneurs—because thriving businesses naturally create jobs.”
The roadmap is simple: fix the basics. Reliable electricity, functional infrastructure, and efficient ports are non-negotiables. South Africa’s ports rank among the worst globally—an unacceptable reality for a country reliant on imports and exports.
“Government doesn’t need to create the jobs themselves; they just need to fix the fundamentals. If they get the basics right, businesses will thrive, employment will rise, and tax revenue will increase,” Rossiter explains.
With the Budget Speech looming, SMEs aren’t looking for lofty rhetoric—they need actionable commitments.
Reliable energy, robust transport networks, and a streamlined regulatory environment could be the difference between survival and collapse for thousands of small businesses.
The question remains: will the Finance Minister on Wednesday next week rise to the occasion, or will SMEs be left fighting the same battle yet again?
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