SMES under pressure as business confidence hits four-year low in South Africa

Small businesses in South Africa are feeling the heat as new data shows business confidence has fallen to its lowest level since July 2021. The June 2025 Purchasing Managers’ Index (PMI) dipped to 50.1, signaling sluggish private sector activity and fuelling concerns about the long-term survival of small and medium-sized enterprises (SMEs).

The latest figures confirm what many entrepreneurs across the country already know: economic pressure is mounting. Power cuts, limited access to funding, and red tape continue to strangle growth—especially in underserved regions like second-tier cities and townships.

“SMEs are the bedrock of any economy’s growth… but in South Africa, they’re weighed down by infrastructure failures, corruption, and a lack of access to funding,” said one economic voice familiar with the sector. “Strict red tape and compliance regulations have made many businesses despondent.”

Many Black-owned SMEs in particular rely heavily on government procurement contracts—a model some argue is no longer sustainable. Without diversification into sectors such as agriculture, real estate, franchising, or light manufacturing, experts warn that long-term resilience will remain out of reach.

“I’ve always advocated for SMEs to channel profits into sectors like agriculture, property, manufacturing and franchising.” “That way, we not only create jobs but also ensure long-term business sustainability.”

As economic uncertainty lingers, there are growing calls for the public and private sectors to work together to ease regulatory burdens, invest in township economies, and expand financing opportunities for entrepreneurs locked out of traditional systems.

Whether this moment of stagnation becomes a turning point will depend largely on how quickly policy and capital respond to the urgent needs of the country’s most dynamic — but most vulnerable — economic players.

Cover photo:  cleared  -