Halfway through the year, how ready are SMEs for the next six months?

AS SMALL and medium-sized enterprises (SMEs) approach the midpoint of 2025, they have been urged to conduct a comprehensive financial health check.

- ASHLEY LECHMAN

This proactive audit is essential for navigating the current economic climate and ensuring sustained growth in the second half of the year, according to SME services provider Lula.

"The economic landscape continues to present a mix of challenges and opportunities for SMEs," Garth Rossiter, chief risk officer at Lula said.

South Africa's SME enterprises are the backbone of the economy, contributing over 50% to employment and 34% to GDP, and the macroeconomic outlook in which they operate is certainly improving.

The RMB/BER Business Confidence Index hit a five-year high in Q4 2024, while consumer confidence rebounded to pre-pandemic levels.

"Positive shifts are definitely emerging, power supply is more stable than before, and consumer spending shows signs of recovery.

"Despite lingering higher operating costs for businesses, the significant drop in inflation and declining interest rates make the future look brighter than it's been in recent times," Rossiter further added.

As domestic demand recovers, SMEs that invest now stand to gain market share and avoid late-cycle competitive pressures.

Rossiter said that access to finance remains a key hurdle for many, with traditional lending models often not suiting the needs of smaller and early-stage enterprises.

Global geopolitical events and domestic logistical challenges continue to impact supply chains and overall confidence.