South African Small and Medium Businesses: Rising Above Costs with Tech and Efficiency

Pieter Bensch
  • South African small and medium businesses (SMBs) are expressing increased confidence in their future success, despite grappling with rising costs and inflation. Enhanced operational efficiency is a key driver behind this optimism.
  • Technology adoption is seen as a crucial growth catalyst. Nearly half of the SMBs plan to increase their tech investment, intending to incorporate advanced technologies like 5G, artificial intelligence, and robotics over the next three years. However, budget constraints and difficulties in selecting the best tech options are major barriers.
  • Governmental support is crucial for overcoming challenges such as load shedding and to foster a more conducive environment for SMBs. Business leaders, including Pieter Bensch, Executive VP for Sage Africa & Middle East, are urging the government to prioritize SMBs in their decision-making and to accelerate economic reforms.

South African small and medium businesses (SMBs) are demonstrating a heightened confidence in their future, despite grappling with rising costs and inflation, according to Sage’s annual global survey ‘Small Business, Big Opportunity’.

In a study involving nearly 12,000 SMB leaders globally, the report reveals that 83% of South African business decision-makers express confidence in their company’s success over the next year, a substantial rise from 76% in 2022. Moreover, 41% attribute this confidence to increased efficiency in their operations, the highest percentage among all countries surveyed.

South African SMBs are also expecting positive growth trends, with 54% forecasting a rise in revenue and 42% planning to expand their workforce in the coming year.

The study highlighted that South African SMBs confronted severe cost barriers in 2022, with 77% citing inflation as a significant impediment to their business outlook. In Johannesburg and Cape Town, this figure rose to 81% and 80% respectively. Despite these challenges, businesses are tackling these hurdles head-on, with many introducing new products and services to stay afloat. A solid 82% reported satisfaction with their current productivity levels.

An area where South African SMBs see potential for growth is the adoption of advanced technology. Approximately half of the businesses surveyed (47%) plan to increase their technology investment, with the intent to incorporate 5G (23%), artificial intelligence (21%), and robotics (19%) in the next three years.

However, the anticipated increase in technology investment is only 14%, a decline from 2022 and below the global average. The report points to a lack of budget and difficulty in understanding the best tech options as the primary obstacles to higher technology investment.

Pieter Bensch, Executive Vice President for Sage Africa & Middle East, lauded the resilience of South African SMBs. He stressed the importance of governmental support in fast-tracking economic reforms and addressing the load shedding crises, which would foster a more conducive environment for SMBs to thrive.

Highlighting the crucial role of SMBs in the South African economy and their potential to create jobs, Bensch stated, “With utility costs rising, slow economic growth, and global inflation, more must be done to help our SMBs to survive and thrive.”

Andrea Graham, owner at Quality Accounting Complete Reporting, and Heidi, office manager of Highveld Fire Safety, echoed Bensch’s sentiments, expressing optimism about the future, buoyed by the right technology platforms and a customer-centric approach.

As South African SMBs navigate the complex landscape of rising costs and inflation, their resilience, optimism, and increasing efficiency have emerged as crucial contributors to their sustained growth and success.

Table 1: Confidence Levels and Growth Expectations of South African SMBs

Confidence in Future Success (%)7683
Expecting Revenue Increase (%)Not Provided54
Planning Workforce Increase (%)Not Provided42

Caption: Table 1 shows the rising levels of confidence and growth expectations among South African SMBs from 2022 to 2023.

Table 2: Impact of Inflation on SMBs in South African Cities

SMBs Citing Inflation as Business Outlook Drag (%)
South Africa (Overall)77
Cape Town80
Caption: Table 2 provides a snapshot of the adverse impact of inflation on SMBs across South Africa, with a specific focus on Johannesburg and Cape Town.

Table 3: Anticipated Technology Adoption by South African SMBs

TechnologyAdoption Percentage (%)
Artificial Intelligence21
Caption: Table 3 details the percentage of South African SMBs planning to adopt advanced technologies over the next three years.

Table 4: Tech Investment Trend among South African SMBs

Tech Investment Increase (%)Not Provided14
Caption: Table 4 illustrates the anticipated change in technology investment among South African SMBs from 2022 to 2023.
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