SME confidence dips in Q3 2025

CONFIDENCE among South Africa’s small and medium enterprises (SMEs) declined broadly in the third quarter of 2025, even as key macroeconomic indicators improved, according to the latest SME Confidence Index released on 18 February by Business Partners Limited.

The index shows sentiment weakened across almost all performance indicators compared with both the previous quarter and the same period in 2024, suggesting that positive national economic trends have yet to translate into tangible relief for smaller firms.

South Africa recorded GDP growth of 0.5% during the quarter, while inflation expectations fell to a record low and interest rates dropped to their lowest levels since 2022. However, these gains did little to bolster business sentiment on the ground.

“Several encouraging economic signals emerged during the quarter… yet these improvements have not translated into stronger business sentiment,” said Jeremy Lang, managing director at Business Partners Limited.

SME confidence that their own businesses would grow over the next 12 months slipped to 79%, down two percentage points quarter-on-quarter and year-on-year. Confidence in the broader economic environment fell to 64%, also down two points from the previous quarter and four points compared with a year earlier.

Access to finance recorded one of the sharpest drops, declining to 61%, while confidence in labour laws (58%), availability of skilled staff (69%) and private-sector support (54%) all edged lower. The only measure to improve slightly was sentiment that government is doing enough to support SME development, rising one point to 49%, though still below the neutral 50% mark.

Payment reliability emerged as the most significant concern. Confidence that clients would pay on time fell four points to 68%, mirroring SMEs’ top anticipated challenges for the next six months: cash-flow pressures and economic conditions, with crime ranking third.

Despite these short-term pressures, longer-term outlook indicators were more upbeat. Hosting the G20 Summit was viewed as the strongest positive sentiment driver, with 83% of surveyed SME owners expecting beneficial outcomes, particularly in trade access, financing support and global investment confidence.

The report concludes that while the macroeconomic backdrop is stabilising, SMEs remain cautious, highlighting a gap between improving national indicators and day-to-day operating realities.