Business Confidence Declines Further In Q2 2017

Posted on September 15th, 2017
Biz News

Today's Top Entrepreneurship and Business Stories (15 September)

 

Business confidence indicators plummeted further in the second quarter of this year as the South African macroeconomic environment remains dire, resulting in increased pressure on small and medium enterprises (SMEs) and their ability to deliver as one of South Africa’s leading growth engines.

This is according to the second quarter 2017 Business Partners Limited SME Index, a survey measuring the attitudes and confidence levels of South African SME owners.

Ben Bierman, MD of Business Partners Limited, says that small business owners’ confidence has slowly been eroded by the broader environment in which the country finds itself operating in.

During the second quarter of 2017, SMEs’ confidence levels related to the growth expectations of their businesses and the likelihood of the South African economy being conducive for business growth in the next 12 months, reported a sharp decline of -7 and -8 percentage points respectively when compared to the same period in 2016.

This depressed outlook is linked to the current political and economic volatility and uncertainty, says Bierman. “The biggest knock to confidence in the second quarter was the official recognition that South Africa had entered a technical recession. In response, many large financial institutions scaled back their credit extension, as the full impact of the recession was assessed. Many SMEs realised that, in a time of financial distress, there were fewer options available to access a source of capital and this contributed to the decline of 9 percentage points in SMEs’ confidence levels that their ability to access finance would improve in the next 12 months. The outcome of the ANC policy conference that took place in June seemingly did not renew or inspire any SME confidence either.”

He adds, “The latest SME Index highlights the impact of these events, and those preceding it, such as the Cabinet reshuffle at the end of March 2017, and emphasizes some of the difficulties that SMEs have had to endure over the last couple of quarters.”

SME indicators of distress, in particular the number of liquidations, are increasing. “We have noticed a sharp increase in credit risk amongst our clients,” says Bierman. He points to the Business Partners Limited 2016/2017 financial results which reported that net credit losses had almost doubled during the financial year, highlighting the level of distress amongst SMEs.

Bierman stresses that SMEs are critical engines for growth and job creation, and, as conditions are expected to get worse before they get better, SMEs need to prepare for the challenges ahead. “If business owners are to steer their companies through this almost perfect economic storm, and possibly emerge stronger, they need to set a clear course and actively stick to the plan.

“Now, more than ever, business owners need to anticipate the future by forecasting and quantifying the cash flow implications for multiple scenarios. Should the country face further economic strain, business owners should attempt to secure access to funding as a ‘financial cushion’ or shock absorber before they urgently require it.

Bierman also advises SMEs to critically evaluate the timing of possible expansion. “A bad set of economic circumstances might in some cases be the ideal time to invest so that when the economy turns, the business is ready to take advantage of opportunities ahead of its competitors.”

Business owners should also not underestimate the value of an independent opinion by seeking technical assistance or guidance from mentors to identify the best option to overcome expected difficulties.

“We have been visiting business owners in our portfolio who are showing early signs of distress, to understand the key challenges that are affecting them. Often, it is a case of financial management or specific challenges around receiving payment from debtors that is causing distress, and together, we are then able to assist in mobilising or finding solutions to these issues.”

Fintech Firm Electrum Selected For Gartner Innovation Programme

Electrum, a fintech company which specialises in payments technology, has been selected to participate in the Gartner Aspiring Innovators Programme. The aim of this prestigious programme is to highlight innovative providers of enterprise technology to attendees of the Gartner Symposium/ITxpo Africa 2017, which is being held in Cape Town from 18 to 21 September 2017. The audience includes over 1 000 CIOs and senior IT executives from Africa and around the world who are actively looking for new partners and solutions.

Dave Glass, Managing Director of Electrum, says, “We’re thrilled to be participating in the programme. The selection by Gartner demonstrates the interest and demand for our next-generation payments technology, which is secure, highly scalable, supports omni-channel and runs in the cloud.”

Three of South Africa’s largest retailers and SA’s fastest growing retail bank already use Electrum. The company enables digital transformation at banks and retailers by providing payments APIs that support digital products and payment types across customer-facing channels including mobile, online, point-of-sale devices, ATMs and self-service kiosks.

Electrum’s cloud-based payments platform currently processes over a billion transactions per annum. The platform is used to process and switch a range of financial transactions including pre-paid products, gift cards and bill payments. It also supports new and emerging payment types such as QR codes, digital wallets and cryptocurrencies.

Now in its third year, the Gartner Symposium/Itxpo Africa puts the spotlight on interesting African startup technology companies with something exceptional to offer enterprise organisations. If you’d like to meet with the Electrum team at the symposium, you can visit the stand on the exhibition floor at the Cape Town International Convention Centre.

Cinetpay Named Cote D’ivoire’s Best Startup At Seedstars Abidjan

On September 8th during Seedstars Abidjan, Cinetpay won the Côte d’Ivoire round of Seedstars World and will represent the country at the Seedstars Summit in Switzerland to compete for up to USD 1 million in equity investment and other prizes.

The local winner,  Cinetpay  was selected the best startup in Côte d’Ivoire for its mobile money payment gateway that enables e-merchants and merchants to accept mobile money and card payments, online or offline. As part of the prize, Cinetpay will be participating at Seedstars Summit, taking place in Switzerland in April 2018, a weeklong training program with the opportunity to meet the other 75 winners, as well as investors and mentors from around the world.

Traditionally, the final day of the Summit will be dedicated to pitching in front of an audience of 1000 attendees, with the possibility of winning up to the USD 1 million equity investment and other prizes.

With the use of drones, WeFly Agri, enables farmers to get updated information on the state of their crops and fields with analytics to help them make better decisions came second and Educas, an education platform that allows anyone to learn independently and access additional support resources, grabbed the last spot in the top 3.

In addition,  Aynid,  a search engine for products made and sold by Africans, won the public vote. The other startups invited to pitch were Agatha, Grainotheque, Young Power, Educas Consulting and Ischool.

The ten startups pitched in front of a prestigious jury: Parfait Ouattara from Taxijet, Cyriac Gbogou from OVillage, Ismael Cisse from Sirius Capital for Africa, Issa Sidibe from Comoe Capital and Claudia Makadristo from Seedstars World.