South African small and medium enterprises (SMEs) reported a broad-based decline in confidence during the third quarter of 2025, despite a series of positive macroeconomic developments and strong optimism around the G20 Summit. This is according to the latest Business Partners Limited SME Confidence Index, which shows weakening sentiment across almost all performance indicators compared to both the previous quarter (Q2 2025) and the same period last year (Q3 2024).
“Several encouraging economic signals emerged during the quarter: South Africa recorded 0,5% GDP growth, inflation expectations settled to a record low, and interest rates hit their lowest levels since 2022. Yet these improvements have not translated into stronger business sentiment,” says Jeremy Lang, Managing Director at Business Partners Limited.
SMEs’ confidence levels that their businesses will grow over the next 12 months declined to 79%, down 2 percentage points (pp) quarter-on-quarter and year-on-year. Similarly, confidence that the South African economy will be conducive to business growth dropped to 64%, down 2pp from Q2 and 4pp compared to Q3 2024.
Confidence in the ease of access to finance saw one of the sharper declines, falling to 61% – 6pp lower than the previous quarter and 2pp down year-on-year. Confidence in labour laws being conducive to business growth decreased to 58% (down 2pp quarter-on-quarter and 3pp year-on-year), while confidence in finding suitably skilled staff fell to 69% (down 2pp quarter-on-quarter and 1pp year-on-year). Confidence in private sector support also weakened to 54%, down 2pp both quarter-on-quarter and year-on-year.
The only indicator to record an improvement was confidence that government is doing enough to foster SME development, which edged up to 49%. Although this remains below the neutral 50% threshold, it represents a 1pp increase both quarter-on-quarter and year-on-year.
The most significant deterioration was recorded in SMEs’ expectations that clients will pay within stipulated timeframes. At 68%, this indicator declined by 4pp quarter-on-quarter and year-on-year. This drop aligns directly with the two most pressing challenges SMEs anticipate over the next six months: cash flow constraints and broader economic conditions. Crime remains the third most cited challenge.
“When payment certainty weakens, it has an immediate impact on cash flow, planning and overall resilience,” Lang explains. “Late payments compound existing pressures and reinforce a sense of short-term financial strain, even in a stabilising macroeconomic environment.”
Hosting the G20 Summit emerged as the strongest positive driver of sentiment in the third quarter of last year. An overwhelming 83% of surveyed SME owners indicated that the outcomes of the summit are expected to have a positive impact on SME growth and the broader economic climate. When asked which outcomes would be most beneficial for their businesses, 30,3% cited stronger international trade and market access opportunities, 30,1% pointed to commitments toward improved SME financing and support, and 28,1% highlighted increased global investment confidence in South Africa.
However, the overall decline in confidence – despite this optimism – points to a disconnect between long-term opportunity and immediate business conditions.
“The G20 Summit is widely viewed as a catalyst for future economic gains and global positioning,” says Lang. “But SMEs are making decisions based on current cash flow realities, and customer demand and payment behaviour. While global engagement creates opportunity, it does not automatically ease the short-term pressures facing businesses on the ground.”
In terms of importance indicators, SMEs continue to place strong emphasis on access to SME-specific information and support, which increased 1pp to 85% both quarter-on-quarter and year-on-year. The importance placed on social media as a marketing tool rose to 88%, up 1pp quarter-on-quarter and 4pp year-on-year. The importance of mentorship stood at 84%, while the importance of access to finance declined 3pp quarter-on-quarter to 82%.
The Q3 2025 SME Confidence Index therefore presents a nuanced picture. While South Africa’s broader economic indicators show gradual improvement and global engagement is viewed positively, SMEs remain cautious about their near-term growth prospects.
“SMEs and entrepreneurs are inherently resilient and adaptable, but confidence ultimately hinges on whether improvements in the broader economy translate into tangible relief at a business level,” Lang concludes. “Sustained growth will require not only positive macroeconomic signals, but also meaningful improvements in liquidity, demand and operational certainty for small businesses.”