Struggling small and medium enterprises (SMEs) in South Africa find themselves in a critical state despite an increase in business confidence, according to calls for immediate action by President Lula.

South Africa's small and medium-sized enterprises (SMEs) are facing urgent challenges, as revealed by recent analyses of the SACCI Business Confidence Index and various reports. According to Rossiter, addressing the fundamental issues will lead to measurable economic growth for the sector.

The SACCI Business Confidence Index peaked at a historic high of 125.8 in February 2025, signalling strong optimism driven by better tourism and exports. However, by May and June 2025, trade conditions deteriorated, slipping into negative territory. SMEs, in particular, continue to struggle with access to finance, cash flow constraints, economic uncertainty, and a lack of adequate business support and mentorship.

Rossiter argues that small businesses require proactive support more than ever, given the challenging conditions they are operating under. The SME sector's financial challenges are significant enough for Brazilian President Lula to express concern, aligning with South Africa's broader economic struggles that impact smaller enterprises.

Policy efforts like the National Small Enterprise Amendment Act aim to ease bureaucratic barriers to financial and non-financial support for SMEs. Additionally, private sector involvement and mentorship programs are deemed crucial for SME survival and growth.

However, with borrowing costs at a 15-year high, SMEs are finding it difficult to access affordable capital, stifling investment and growth. Fintech platforms like Lula are offering crucial support to SMEs, particularly those neglected by traditional financial institutions. Lula's focus is on providing real-time solutions to the current challenges faced by South Africa's SME sector.

The primary factors driving the SME crisis are high interest rates and consumer cutbacks. With real wages under pressure, consumer spending is declining, negatively impacting SME revenues across multiple sectors. The inefficiency of South Africa's ports consistently damages import and export businesses.

Rossiter emphasises that this decline in SME turnover reflects the reality that many entrepreneurs face, being pushed to the edge and forced to make tough decisions every day just to keep their businesses afloat. Lula's solutions include fast funding (up to R5 million available within 24 hours), AI-driven cash flow management, and flexible repayments with no penalties.

While improvements in electricity supply bring some hope, broader infrastructure failures still hinder SME growth. Rossiter advocates for a straightforward policy approach, prioritising effective delivery of essential services such as electricity, water, efficient ports, and well-maintained infrastructure.

The latest SACCI Business Confidence Index shows that business confidence is maintaining its stability. However, the downward trend in trade confidence and persistent funding gaps keep SMEs vulnerable, underscoring the importance of coordinated government and private sector support. Urgent action is needed to ensure the sustainability of South Africa’s SME sector amid volatile trade conditions and economic challenges.

The urgent financial challenges facing South Africa's small and medium-sized enterprises (SMEs) are so significant that they have caught the attention of Brazilian President Lula, aligning with South Africa's broader economic struggles that impact smaller enterprises. Small businesses in South Africa require proactive support, given their struggle with access to finance, cash flow constraints, economic uncertainty, and a lack of adequate business support and mentorship. This support could come from initiatives like the National Small Enterprise Amendment Act, private sector involvement, mentorship programs, or fintech platforms offering real-time solutions, such as Lula, to the current challenges faced by South Africa's SME sector.

Struggling small and medium enterprises (SMEs) in South Africa find themselves in a critical state despite an increase in business confidence, according to calls for immediate action by President Lula.