South Africa: SMEs suffocated by the economic environment.

South Africa’s small and medium-sized enterprises are going through a critical period. As business confidence falls to its lowest level in four years, these engines of employment and growth are being slowed down by power cuts, bureaucracy and lack of access to finance.

The latest PMI data reveal a clear slowdown in activity, particularly in townships and secondary towns, where SMEs are struggling to stay afloat. Added to this is a high dependency on public contracts, particularly for black-owned businesses, which accentuates their vulnerability to late payments and corruption.According to business development specialist David Uwah, heavy compliance regulations are holding back private initiative: “Many SMEs give up in the face of red tape.” He advocates strategic diversification towards resilient sectors such as agriculture, manufacturing or franchising.

Against this backdrop, economic players are calling on the state to simplify procedures, **invest in township infrastructure and expand access to credit, notably via public guarantee mechanisms.

SMEs account for more than 60% of private-sector jobs in the country, and their survival directly conditions the recovery of the South African economy.

source: Africa news