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Key trends and challenges for SA SMEs in late August 2024
![Source:](https://biz-file.com/c/2408/747923-700x467.jpg)
This could just be the start of myriad legislation revisions that will positively impact SMEs from this year onwards and is something SiMOdisa’s StartUp Act has been lobbying for since 2014. Twenty years on, it seems that the time has finally arrived for real, actionable change to take place.
With all of this in mind, here Miguel da Silva, managing executive of Retail Capital, a division of TymeBank, unpacks what lies ahead for SMEs in the August 2024 Retail Capital SME Forecast.
“Optimism around the GNU and the anticipation of a review and renewal of previously ineffective economic policies is palpable, especially among the SME sector, and as evidenced by the revival of the Business Act.
“The lofty goal of the NDP to have 90% of all jobs created by SMEs by 2030 is widely known, and perhaps, with the GNU now steering the country, it may be possible.
“Time will tell of course, but there is certainly a revival of commercial opportunity, which I hope will remain as policies are revised to enable easier access for SMEs to set up shop – and keep their doors open,” says da Silva.
The highs and lows of the USD
To say the rand has been on a rollercoaster with the US Dollar is an understatement. In 2022, just a couple of years back, it was R14.50/USD, today it is R18.20 (at the time of writing).
The USD/ZAR relationship has had its peaks and troughs, and each fluctuation is felt on the ground among our SME base.
SMEs who import or export goods feel the currency moves more acutely as the cost of buying and bringing in items to the country gets more or less expensive due to import taxes and USD/ ZAR rates.
SMEs who are importers or exporters would thus be wise to renegotiate their contracts with foreign wholesalers, with an understanding that the dollar may weaken or possibly strengthen depending on the outcome of the Convention, and then later in November, the election.
There is also the need to consider the US’s trade agreements with South Africa should Trump win at the polls, given his stance on ‘Make America Great Again’ and turning inward, away from globalism to nationalism - again. As an SME importer, looking for local producers and wholesalers is a good idea, even if it’s for a “just in case” exercise.
Semigration trends and its opportunities for SMEs
Since the Covid-19 pandemic firmly made remote working a thing, there has been a steady flow of people moving from one province to another in South Africa.
While the core age group of those moving is between 49 and 64, younger South Africans between 36 and 49 years old make up the second-largest cohort. There is also an increasing trend among those who emigrated in their teens or early twenties to return home to SA too.
Although the Western Cape is arguably the province of choice for most, there is also a noteworthy interest to move to Gauteng, especially among younger emigrants, with Jo’burg’s Northern Suburbs the most attractive area, impacting the sub-luxury sector of between R5m and R10m worth homes.
Reasons for this are likely due to the economic opportunities that the City of Gold presents, with the region accounting for a third of the country’s GDP (between 2013 – 2022).
KwaZulu-Natal also makes up part of the semigration picture with citizens leaving the coastal province because of a pronounced lack of service delivery, with Gauteng the desired destination for most KZN movers.
This interprovincial migration leads to an increase in property purchases, with the Western Cape’s personal and professional property market showing the most growth.
When looking at the data, Lew Geffen Sotheby's International Realty notes that 6406 households moved to the Western Cape during 2023. Households making the move typically come from middle-income to higher-income segments as they are most likely to be able to afford the move.
What this means for residing and aspiring business owners in the province is opportunity. More residents in key areas such as the Winelands, coastal towns and even the City of Cape Town means more commercial activity for existing SMEs, those who have relocated their businesses or opened up entirely new ventures.
Time to gear up for Black November
Dare we say it: November…. Somehow, we find ourselves in the eighth month of the year. Now that we are fast approaching Spring, it is time for those SMEs whose trade pick-ups during the warmer months to start planning for The Season, which is historically marked by Black November, now less than three months away.
While Black Friday only happens on 29 November, the entire month has become a ‘sales’ period with merchants selling their wares at lower prices and discounts, possibly to move old stock but also to give their revenue a boost even if it’s close to cost.
In 2023, Black Friday weekend failed to live up to its annual expectations, falling by as much as 12%, according to Ecentric’s payment dashboard. It monitors sales of South Africa’s largest retailers and processed more than R1.1bn in deals, although y-o-y there was a 5.06% decline in transaction volume.
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