Stronger relationships with financial institutions are arguably among the most decisive factors this year.
South Africa enters 2026 on a firmer economic footing than in recent years, with a steadier macro backdrop and modest growth prospects beginning to take shape.
Vignesh Subramani, interim managing executive of SME Business at Absa Business Banking, says the country’s current landscape should be positive for the small business sector, which picked up some momentum in the second half of last year off a low base.
“Even as sentiment improves and confidence returns in a measured, cautiously optimistic way rather than with outright bullishness,” he says.
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Do small businesses need government to survive?
Referring to the Small Business Growth Index (SBGI), Subramani says only 38% of businesses surveyed in 2025 believed they could survive for more than a year under cost pressures without external support.
The SBGI is a real-time barometer tracking the conditions shaping small business performance. The findings are compiled by the South African Chamber of Commerce and Industry (SACCI) and the Bureau of Market Research (BMR), and published by Absa.
He adds that many respondents to the Index highlighted the need for government action to reduce administrative friction and provide relief from energy-related costs.
Most small businesses need financing
Subramani says the Index also showed that 70.5% of respondents reported they require additional financing within six months, largely to fund working capital, capital equipment, marketing, or to refinance existing debt.
“In practice, at least 40% were relying primarily on self-funding, with others turning to family and friends or informal and private lending,” he adds.
“Taken together, this resolves into a composite SBGI reading that points to fragile stability as the sector enters 2026. The Index shows that around 59% of small businesses anticipate moderate to strong growth over the next 12 months.”
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Growth among the sector
He says growth intentions are largely domestic, with 92% planning to expand locally and 72% nationally, while a smaller but notable share is looking outward, with 45% intending to export and 67% aiming to grow their online presence.
Subramani highlights that the extent to which those intentions translate into action will be determined by how conducive the operating environment proves to be, and by how quickly small businesses are able to adapt to it.
“There is no one-size-fits-all approach, but some common principles are starting to take shape.
“Market access will be vital, with greater emphasis on the channels through which customers are reached. Many businesses are meeting customers where they already transact, whether by extending physical operations online or by using digital marketplaces to sell products and services.”
Technology inside businesses
Subramani notes that technology is also becoming more consequential inside the business, with efficiency becoming a defining factor in competitiveness.
Tasks that were previously manual are now being digitised through AI-powered chat assistants, cloud-based financial reporting, diary management, and employee management tools.
“These tools are more accessible than ever and are worth serious consideration,” he says. “For larger businesses within the SME segment, this brings a parallel requirement: more deliberate investment in cybersecurity, particularly as digital tools are adopted more broadly across operations.”
Concerns around infrastructure
He adds that business owners have made it clear that concerns around infrastructure have not eased, despite the extended period without load shedding. Water security, in particular, has become the dominant worry.
“Many businesses are already investing in backup and storage solutions in anticipation of future constraints, and this is becoming an important consideration for operations that depend on reliable water supply,” says Subramani.
“The SBGI suggests that most businesses are unlikely to move forward aggressively this year.
“Improving indicators have not translated into a rush to commit capital, and caution still shapes much of the decision-making process.
“Speed of access to funding still matters, particularly when opportunities emerge, but there is growing awareness of the risks that come with accepting finance on unfavourable terms. In some cases, that trade-off may be justified. In others, it can place unnecessary strain on the business at precisely the wrong moment.”
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