TymeBank provides monthly outlooks on events that are expected to positively and negatively impact SMEs in the country.
Most small and medium enterprises (SMEs) in South Africa are looking forward to the upcoming Global SME Finance Forum to see if the event will bring about any changes to the sector.
The event takes place in Johannesburg from September 15 to 17. The forum’s focus on market access aligns with South Africa’s urgent need to diversify its export relationships and funding sources.
“With global economic uncertainties persisting and traditional funding channels becoming increasingly constrained, we look forward to the forum’s roundtables and breakaway sessions which offer direct engagement with international lenders actively seeking emerging market opportunities,” said Miguel da Silva, group executive for business banking at TymeBank.
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SME Finance Forum
The forum will host more than 1 200 participants from more than 60 countries and 240 financial institutions. This is one of the official side events of the G20.
Da Silva added that participants will explore innovative financing mechanisms, including blended finance structures and guarantee programmes that could unlock previously inaccessible capital for local businesses.
“The concentrated presence of decision-makers from major development finance institutions and commercial banks represents a rare window for securing expansion capital and establishing international partnerships.”
SME jobs fund
TymeBank provides monthly outlooks on events that are expected to positively and negatively impact SMEs in the country.
One of the most significant factors that will positively impact small businesses in the country going forward is collaboration between the National Treasury and the pension fund industry.
Da Silva said the two have successfully mobilised almost R1 billion for SME financing, suggesting a scalable model for addressing the country’s persistent funding gap.
“The initiative leverages R90 million from the Treasury’s Jobs Fund to attract R900 million from pension funds through an innovative risk-mitigation structure.”
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Treasury’s funding target
He added that the funding mechanism is implemented through Ashburton Investments, addressing the traditional reluctance of pension funds to engage in perceived high-risk SME lending.
“By positioning the Treasury’s contribution as first-loss capital within an independent trust structure, the arrangement provides sufficient risk absorption to meet pension fund boards’ fiduciary requirements.
“This 10% buffer effectively transforms the risk profile of SMME lending, making it palatable for institutional investors managing R19.8 trillion in household wealth.”
Da Silva said that the funding targets high labour-absorption sectors, including the green economy, sustainable agriculture, waste and water management, and the informal economy.
“Prior rounds have resulted in the jobs fund disbursing R7.4 billion, which has created 210 719 permanent positions and 114 534 temporary roles while supporting over 63 000 SMEs.”
Inflation target
Another significant event set to affect small businesses is the South African Reserve Bank’s Monetary Policy Committee meeting on 18 September. This meeting will be the first under the newly revised 3% inflation target.
In July, the committee decided to cut the repo rate by 25 basis points to 7%. Analysts are predicting one more cut before the end of the year, or to keep the repo rate at 7%.
“Governor Lesetja Kganyago and the committee face limited room for manoeuvre. The recalibrated monetary policy objective creates a fundamentally different landscape for SME financing and operational planning,” Da Silva said.
“SMEs hoping for further rate relief to ease working capital pressures may need to adjust their expectations and financing strategies accordingly.”
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AGOA expiration threatens established export channels
The African Growth and Opportunity Act (Agoa) is set to expire this month, potentially disrupting trade relationships that currently account for 35% of South African exports to the US.
This deadline arrives in an already strained trade environment, following the implementation of 30% US tariffs earlier this year.
“Export-oriented SMEs face a double challenge: the immediate uncertainty around Agoa renewal and the compounding effect of existing tariff barriers.
“Manufacturers in the automotive components, agricultural products and textiles sectors must now accelerate their contingency planning. The absence of Agoa preferences would eliminate duty-free access for thousands of product lines, fundamentally altering the economics of US-South Africa trade.”
Fuel prices
Petrol prices for September decreased by 4 cents per litre, while diesel prices with 0.05% sulphur fell by 56 cents per litre, and 0.005% sulphur decreased by 57 cents per litre.
Da Silva notes that for logistics companies, manufacturers and service businesses with significant vehicle fleets, these reductions translate directly into improved cash flow and margin recovery.
“The timing of this relief, coinciding with the typically busy fourth-quarter trading period, should enable businesses to rebuild working capital reserves depleted by earlier cost pressures.”
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