The disconnect: why South Africa's SMEs are not benefiting from economic growth

Despite a climate of cautious optimism surrounding the South African economy, small and medium enterprises (SMEs) are reporting increasing levels of uncertainty and dissatisfaction.

The recently released Business Partners Limited SME Confidence Index for the third quarter of 2025 reveals a troubling dip in confidence levels among SMEs, suggesting a disconnect between macroeconomic improvements and local business realities.

South Africa, during this period, experienced a modest 0.5% growth in GDP, alongside stabilising inflation rates and the lowest interest rates since 2022.

Yet, these positive developments have not translated into robust confidence among SMEs.

According to Jeremy Lang, Managing Director at Business Partners Limited, “These improvements have not translated into stronger business sentiment.”

Among key performance indicators, confidence in business growth over the next year fell to 79%, marking a decrease of two percentage points both quarter-on-quarter and year-on-year.

This prevailing sentiment illustrates an alarming trend within the SME sector, which represents a significant portion of the economy.

The index highlights that confidence regarding the overall economic environment conducive to business also declined to 64%, down by 2 percentage points from the previous quarter and 4 from the same period last year.

Access to finance—a crucial element for SMEs—has emerged as a significant concern, with confidence levels plummeting to 61%. This indicator alone saw a drop of 6 percentage points in just three months, indicative of a worrying landscape for businesses reliant on capital for growth and sustainability.

Another point of concern is that confidence in labour laws enabling business expansion fell to 58%, while the ability to find suitably skilled staff declined to 69%.

Amid growing worries over operational capacity and compliance, these challenges are compounded by the external environment, where only 54% of SMEs feel supported by the private sector.

In stark contrast, the only area showing improvement is the perception of government efforts to support SMEs, with confidence edging up to 49%.

While this increase may signify a positive response to government initiatives, it remains below the vital 50% threshold, underscoring a persistent disconnect between policy intentions and ground-level realities.

The survey also highlighted growing fears concerning payment reliability, with expectations that clients would meet their payment obligations falling to 68%, a sharp decline of 4 percentage points.

This lack of certainty in cash flow, combined with anticipated economic challenges, is sowing seeds of doubt, making it difficult for SMEs to plan for the future.

“When payment certainty weakens, it has an immediate impact on cash flow, planning, and overall resilience,” Lang explains.

Conversely, the potential impact of hosting the G20 Summit has stood out as a potentially positive catalyst for SME growth.

An impressive 83% of SME owners surveyed believe that the outcomes from the summit will lead to constructive impacts on both SME growth and the broader economic landscape.

Key outcomes such as improved international trade, enhanced financing commitments, and boosted global investment confidence have emerged as focal points of optimism.

However, Lang warns that while these prospects are encouraging, they do little to alleviate the short-term pressures currently faced by SMEs: “While global engagement creates opportunity, it does not automatically ease the short-term pressures facing businesses on the ground.”

Interestingly, SMEs have indicated their ongoing need for access to sector-specific information, which has risen to 85%.

The importance of social media as a marketing tool has also increased to 88%, highlighting the digital pivot many SMEs are making. However, with 82% of respondents underscoring the importance of access to finance, the need for immediate financial solutions remains urgent.

In summary, the Q3 2025 SME Confidence Index paints a complex picture of resilience amid systemic challenges.

South Africa’s positive economic indicators may signal long-term potential, yet immediate business conditions remain fraught with uncertainty.

“Sustained growth will require not only positive macroeconomic signals but also meaningful improvements in liquidity, demand, and operational certainty for small businesses,” Lang concludes. As SMEs brace for the months ahead, bridging this disconnect between opportunity and reality will be paramount for survival and growth.

BUSINESS REPORT