As the nation approached the polls, iKhokha conducted a survey across its national base to learn more about SME confidence in our government. The survey revealed that 76% of SMEs felt government support to be ineffective in promoting small business growth and development.
In May, retail spending fell by 0.7% month-on-month as uncertainty lead to more frugal consumer spending. This downturn was mirrored in the automotive sector, where new car sales saw a 14.2% drop. iKhokha also observed an 8% decrease in SME turnover in May and June as the nation held its collective breathe, watching potential coalition discussions play out in the media, further unsettling South African nerves.
Last month, South Africa breathed a collective sigh of relief and entered a new era of our democracy with the formation of the Government of National Unity (GNU). While the new-look government has been criticised by some, a follow-up iKhokha survey found that 79% of SMEs are now feeling confident that the economy will grow under the leadership of the GNU.
“The future looks promising following the formation of the Government of National Unity. It’s a positive outcome for SMEs and our hope is that the new leadership will help stimulate our economy and create more opportunity for small businesses,” says iKhokha CEO Matt Putman.
What does this mean for SMEs?
SMEs hope that the plethora of challenges they face will be addressed by the GNU, giving them a better chance at building thriving businesses. Amid talk of infrastructure revitalisation, initiatives to boost tourism and the ending of the load shedding crisis, 78% of iKhokha’s survey respondents said they believe the GNU will successfully represent their best interests.
Early indications from new ministers signal that the GNU is focussed on building a more fertile environment for SMEs to flourish. The Department of Public Works & Infrastructure and the Department of Tourism hold significant sway in effecting change that will benefit SMEs.
Dean Macpherson, Minister of Public Works & Infrastructure, said: “I really want infrastructure to become the pride and place of economic growth in South Africa…we cannot grow an economy without an infrastructure boom in this country.”
Minister of Tourism, Patricia de Lille, has also made her intentions clear to stimulate the small business sector via tourism. “The department together with SA Tourism will continue and aggressively ramp up efforts to market South Africa as a top tourist destination, implement programmes to stimulate economic growth, job creation and transformation,” says de Lille.
This renewed optimism under the GNU is reflected in the adoption of iKhokha’s cash advance product, with the fintech noting a 20% increase in working capital distributions in July. With expectations high for stability and supportive policies, businesses are recommitting to growth initiatives and investing in their futures. Furthermore, iKhokha also reports a 4% increase in small business turnover in SA as of mid-July, compared to figures from June.
Putman says, “It’s encouraging to witness market confidence returning, the Rand strengthening and reductions in petrol and diesel prices and we hope to see interest rates cuts soon as inflation cools. iKhokha remains focused on helping build our economy by empowering SMEs to navigate this new landscape with the digital tools and support they need to start, manage and grow their respective businesses.”
While early signs are promising for SMEs, it remains to be seen whether the GNU will drive meaningful long-lasting impact. For the moment, SME confidence is high as their hopes cling to the positive change both incoming ministers and the GNU may have on the small business landscape.
To find out more about iKhokha’s work to help South Africa’s entrepreneurs do better business, visit www.ikhokha.com.