The Power Table: South Africa: Hospitable or hostile for SMEs?

In a recent panel discussion on CNBC Africa, the conversation revolved around the challenges and opportunities faced by Small and Medium-sized Enterprises (SMEs) in South Africa's volatile business environment. The panelists included Oscar Siziba, Head of Client Coverage at Standard Bank, Claudia Manning, Investment Head at SA SME Fund, and Arthur Mukhuvha, General Manager at MTN SA Foundation. The discussion shed light on the survival strategies of SMEs and how they are coping with the sustainability of their businesses in the face of various challenges. Oscar Siziba highlighted the resilience of the SME sector despite facing tough times with changes in the law, the energy crisis, high costs, and high interest rates. While many SMEs have closed down, new business opportunities are also emerging. Claudia Manning emphasized the impact of the COVID-19 pandemic and load-shedding crisis on SMEs, making it challenging for them to access funding. She mentioned the struggle for SMEs to establish formal banking relationships and access financial support. Arthur Mukhuvha discussed the initiatives of the MTN SA Foundation in assisting SMEs to grow their businesses. The foundation has focused on business development programs and providing seed funding, with a recent emphasis on digital skills for job creation. The foundation aims to equip unemployed youth with entrepreneurial skills and connect them with job opportunities in the digital market. One of the key themes of the discussion was the importance of financial management for SMEs. The need for proper governance, access to funding, scaling products, and digital skills were highlighted as critical for SME success. The panelists also addressed the challenge of late payments from large corporations, which significantly impact SME cash flow and operations. Claudia Manning discussed the 'Pay in 30' campaign to encourage corporates to pay SMEs within a shorter period to alleviate financial strain. The importance of changing corporate behavior towards timely payments was emphasized to support SME sustainability. Collaboration between the private sector and government was highlighted as crucial for supporting SME growth. In summary, the panelists stressed the need for SMEs to adapt to the digital economy, improve financial management, and access funding opportunities. The role of non-bank lenders in filling the gap for SME financing was recognized, along with the importance of creating a conducive environment for SMEs to thrive. The panelists acknowledged the entrepreneurial spirit of SMEs and the potential for innovation to drive business growth in South Africa's evolving economy.