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Subdued performance by small business in last quarter of 2013 – survey

Subdued performance by small business in last quarter of 2013 – survey

Photo by Bloomberg

18th March 2014

By: Zandile Mavuso

Creamer Media Senior Deputy Editor: Features

  

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Business confidence in the small business sector remained subdued in the last quarter of 2013, which reflected the impact of a challenging economic environment, revealed the fourth quarter survey results of the Nedbank Small Business Index (NSBI).

“This result tied in with economic growth having slowed in the third quarter to a disappointing 0.7% on a quarter-on-quarter seasonally adjusted and annualised basis, as strikes in the automotive sector took their toll. However, it then improved from that low base to 3.8% in the fourth quarter,” said South African bank Nedbank Group chief economist Dennis Dykes at the results presentation of the latest NSBI survey on Monday.

He noted that the findings of the survey were based on business owners’ views regarding their current financial situation, operational costs and support from the private sector and government.

According to Dykes, the main areas of concern for business owners during the fourth quarter were the struggle to obtain new business; the rising cost of materials, fuel and electricity; labour disruptions; high wage demands and cash flow problems.

Businesses that were particularly affected by financial pressures were those that had invested in their businesses over the past 12 months and that were now forced to downscale their operations slightly.

Also, the survey indicated that access to finance remained an issue, with four out of ten respondents indicating that it was difficult to obtain finance. However, of the 47% of businesses that tried to obtain finance in the past 12 months, 60% were successful.

“Companies that did obtain finance also felt that it was relatively affordable, [while] younger and smaller companies perceived it to be more difficult to obtain finance than older, larger companies.

“Also, about 86% of businesses in the fourth quarter indicated that they still obtained their financing through commercial banks, although there was an increase in the use of government grants. Ten per cent of businesses used government grants in the fourth quarter compared with 2% in the third quarter and 1% in the first quarter,” stated Dykes.

Given the challenges faced by small businesses in the country, National African Chamber of Commerce and Industry head of business development Gordon Malebo highlighted that there was a need for government to create a small businesses and entrepreneurship Ministry focused on helping small businesses to succeed in driving economic growth.

“We have to encourage opportunity-driven entrepreneurs and small business owners as this will create an environment that realises the importance of small businesses and how this supports economic growth in the country,” he added.

Edited by Tracy Hancock
Creamer Media Contributing Editor

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