EDITORIAL THOUGHT LEADERSHIP
South Africa is on a firmer economic footing than in recent years, with a steadier macro backdrop and modest growth prospects beginning to take shape. That should be positive for the country’ s small business sector, which picked up some momentum in the second half of last year off a low base, as sentiment improves and confidence returns in a measured, cautiously optimistic way rather than with outright bullishness.
Digital channels and efficiency shape competitiveness
The extent to which those intentions translate into action will be determined by how conducive the operating environment proves to be, and by how quickly small businesses are able to adapt to it. There is no one-size-fits-all approach, but some common principles are starting to take shape.
It comes as a welcome breather for a sector that accounts for the bulk of formalised businesses and employment in the country, one which has spent the years since the Covid-19 pandemic contending with persistent headwinds and rising cost pressures that have steadily squeezed its room to grow. January arrived with fuel costs at their lowest in almost four years, more than 200 days without load shedding, a rand trading below 17 to the dollar for the first time since 2023, and interest rates at their lowest since 2024. If those conditions hold, or even stabilise around current levels, they will ease operating pressure materially and make it more attractive for businesses to consider funding and expansion again, two areas that have been among the most persistent constraints for small businesses.
Stability returns, but momentum remains fragile
According to the Small Business Growth Index( SBGI), South Africa’ s first real-time barometer tracking the conditions shaping small business performance, only 38 % of businesses surveyed in 2025 believed they could survive for more than a year under cost pressures without external support. Those pressures were concentrated around input costs, energy reliability, and the broader economic environment, with many respondents pointing to the need for government action that reduces administrative friction and provides relief from energy-related costs. Additionally, more than two thirds( 70.5 %) expected to require additional financing within six months, largely to fund working capital, capital equipment and marketing, or refinance existing debt. In practice, at least 40 % were relying primarily on self-funding, with others turning to family and friends or informal and private lending.
Taken together, this resolves into a composite SBGI reading that points to a fragile stability as the sector enters 2026. The Index shows that around 59 % of small businesses anticipate moderate to strong growth over the next 12 months. Growth intentions are largely domestic, with 92 % planning to expand locally, and 72 %, nationally, while a smaller but notable share( 45 %) is looking outward, intending to export, and 67 % are aiming to grow their online presence.
January arrived with fuel costs at their lowest in almost four years, more than 200 days without load shedding, a rand trading below 17 to the dollar for the first time since 2023 …
Market access will be vital, with greater emphasis on the channels through which customers are reached. Many businesses are meeting customers where they already transact, whether by extending physical operations online or by using digital marketplaces to sell products and services. Part of this is the way businesses make and receive payments, with instant payment platforms and digital wallets gaining traction especially among underbanked businesses, helping to stabilise cash flow and reduce delays. This area is likely to see further innovation as the year unfolds, and owners, especially those with smaller operations, will need to take a deliberate digital- and mobile-first approach to stay relevant.
Technology is also becoming more consequential inside the business, with efficiency becoming a defining factor in competitiveness. Tasks that were previously manual are now being digitised through AI-powered chat assistants, cloudbased financial reporting, diary management, and employee management tools. These tools are more accessible than ever and are worth serious consideration. For larger businesses within the SME segment, this brings a parallel requirement: more deliberate investment in cybersecurity, particularly as digital tools are adopted more broadly across operations.
Meanwhile, through conversations with business owners, it’ s clear that concerns around infrastructure have not eased, despite the extended period without load-shedding. Water security, in particular, has become the dominant worry. Many businesses are already investing in backup and storage
SA PROFILE www. saprofilemagazine. co. za
29