Many SMEs are now pessimistic about the remainder of the year.
The latest SME Confidence Index revealed the extent to which small businesses remain exposed to global economic shocks. Picture: iStock
South Africa’s small and medium enterprises (SMEs) entered 2026 on a positive note, but things quickly changed after the outbreak of the Middle East conflict.
Due to the damage caused by the conflict, many SMEs are now pessimistic about the rest of the year.
A drop in confidence levels was revealed in the latest SME Confidence Index from Business Partners Limited, showing a broad decline across most indicators compared to both the previous quarter and the same period last year.
SMEs navigating external pressures
Jeremy Lang, Managing Director at Business Partners Limited, says the findings reflect a business community navigating significant external pressures.
“Rising fuel costs and global uncertainty are undoubtedly constraining growth ambitions, but local SMEs remain focused on building the resilience needed to sustain their businesses and position themselves for future opportunities.”
He notes, however, that these latest findings highlight the extent to which SMEs remain exposed to global economic shocks.
“This year, we’ve seen international geopolitical developments increasingly shaping the cost structures, profitability and day-to-day operational realities of small businesses across the country.”
Fuel increases hurt many SMEs
Most respondents in the Confidence Index said the fuel price increase had “some level of operational pressure” on their businesses.
“Fuel costs influence far more than transport expenses alone,” says Lang. “For many SMEs, rising fuel prices affect every part of the value chain, from procurement and logistics to customer deliveries and day-to-day operations.”
When asked whether they had taken steps during the first quarter of 2026 to prepare for increased operating costs linked to rising fuel prices, 22.8% of respondents said they had taken significant action, while 47.4% reported implementing minor adjustments.
“This suggests that nearly 70% of SMEs are no longer waiting for economic pressures to fully materialise before responding,” says Lang.
“Instead, they are actively building greater operational resilience into their businesses and adjusting strategies to manage future shocks.”
Business forced to rethink operations
He noted that the measures adopted by SMEs reveal the extent to which businesses are being forced to rethink their operations. Nearly half of the respondents (45.9%) reported adjusting the pricing of their products or services, making it the most common response.
A further 38.7% said they had reduced operational expenses, while 29.6% reviewed or adjusted their supply chain and logistics arrangements. In addition, 25% secured stock earlier to delay the impact of future cost increases.
“These findings highlight the difficult balancing act facing SMEs,” adds Lang.
“Businesses need to protect profitability and absorb rising input costs, but excessive price increases risk placing additional strain on already financially pressured consumers. This can ultimately weaken demand and limit growth opportunities.”
