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Tyme Bank warns SMEs to prepare for a cautious approach from the Reserve Bank in the coming months, with the possibility of fewer rate cuts than initially hoped for in 2025.
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Finance Minister Enoch Godongwana is set to deliver another budget speech on 21 May 2025, following the reversal of the VAT hike.
In this speech, the minister is expected to outline how the Treasury intends to make up the roughly R75 billion it had hoped to raise from the VAT increase.
However, Miguel da Silva, group executive for business banking at TymeBank, said that this confusion, which resulted from uncertainty about whether the VAT hike would take place, has had a negative impact on small and medium-sized enterprises (SMEs).
Da Silva looks at the real costs and implications of an unpredictable political landscape for SMEs.
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Speaking of uncertainty, South African SMEs, like their counterparts across the globe, are waiting to see how the international-trade cards lie after US President Donald Trump upended the table on 2 April.
He said the recently released trade data for March showed South Africa’s balance of trade at roughly R24 billion, somewhat lower than the consensus estimate of R35 billion.
“Of course, that does not consider the spiralling effects of the so-called Liberation Day in the US. With most tariffs currently paused, trade delegations are trying to simultaneously mend relationships with the US and establish new markets that are not subject to the same volatility.”
Da Silva is of the view that there will be pain for certain sectors in particular—the reinstatement of Trump’s 30% tariff on SA would fall during the peak of citrus season, and if Trump’s intention is truly to revive US manufacturing, it doesn’t bode well for SA’s automotive sector.
The Department of Small Business Development has found R500 million to launch the Spaza Shop Support Fund (SSSF).
Government aims to help the township and rural retail sectors become more formalised and financially inclusive, and to realise the potential of spaza shops to serve as a market for locally manufactured goods.
“The former means that individual spaza shops will get up to R50 000 through a combination of training support and a blended loan, and the latter that the SSSF will facilitate a group-buying system, helping shops to access bulk markets,” he said.
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The South African Chamber of Commerce and Industry (SACCI) released its composite Business Confidence Index (BCI) recently, highlighting a positive trend over the past 12 months.
Da Silva says the BCI climbed from a low of 107.8 in May 2024 (while all eyes were on the elections) to a record level of 125.8 in February 2025.
“SACCI gauges the improvements to be due to increased tourism and exports, and lower inflation (and the absence of load shedding certainly played a role).
“SACCI also noted that a weaker rand and poor earnings for JSE-listed companies continued to have a depressive effect.
“That said, rising business confidence reflects a relative calm amongst the business community, despite mounting uncertainties.”
He added that South Africa’s headline inflation fell to a four-year low of 2.7% in March, down from 3.2% in February and below economists’ forecasts. Despite this positive news, the Reserve Bank’s opportunity to cut interest rates appears to be narrowing throughout 2025.
“The Bank’s Monetary Policy Committee have made it clear that they are not only watching local inflation but also keeping a close eye on global events, even hinting at possible rate hikes if global uncertainty increases and impacts the rand further.
“Adding to this complexity, the Bank appears to believe that South Africa’s low economic growth stems not primarily from high interest rates, but from structural economic constraints.
“This suggests that more aggressive rate cuts would do little to boost growth without significant economic reforms.”
He warns SMEs to prepare for a cautious approach from the Reserve Bank in the coming months, with the possibility of fewer rate cuts than initially hoped for in 2025.
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