By Vignesh Subramani, Interim Managing Executive of SME Business at Absa Business Banking
South Africa heads into 2026 on firmer economic footing than in recent years, with a steadier macro backdrop and modest growth prospects beginning to take shape. That should be positive for the country’s 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.
It comes as a welcome breather for a sector that accounts for the bulk of formalised businesses and employment in the country, and which has spent the years since the pandemic contending with persistent headwinds and rising cost pressures that have steadily squeezed its room to grow.
January arrives with:
- fuel costs at their lowest in almost four years,
- more than 200 days without load shedding,
- The Rand trading below 17 to the dollar for the first time since 2023,
- interest rates at their lowest since 2024.
If those conditions hold, or even stabilise around current levels, they will ease operating pressure materially and make it more attractive for businesses to consider funding and expansion again, two areas that have been among the most persistent constraints for small businesses.
According to the Small Business Growth Index (SBGI), South Africa’s first real-time barometer tracking the conditions shaping small business performance, only 38% of businesses surveyed in 2025 believed they could survive for more than a year under cost pressures without external support.
These pressures were concentrated around
- input costs,
- energy reliability,
- the broader economic environment,
Many respondents pointing to the need for government action that reduces administrative friction and provides relief from energy-related costs. Additionally, more than two thirds (70.5%) expected to require additional financing within six months, largely to fund working capital, capital equipment, marketing, or 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.
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. 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.
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,
- the way businesses make and receive payments,
- Technology is also becoming more consequential inside the business,
- Tasks that were previously manual are now being digitised through AI-powered chat assistants, cloud-based financial reporting, diary management, and employee management tools.
- concerns around infrastructure have not eased,
- stronger relationships with financial institutions are arguably among the most decisive factors this year.
For many small businesses, 2026 is less about acceleration and more about judgement. Building a working relationship with a financial partner, one that supports informed decision-making, may prove to be one of the most practical advantages available in the year ahead.
The post What SA’s Small Businesses Can Expect in 2026 appeared first on The Home Of Great South African News.
By Vignesh Subramani, Interim Managing Executive of SME Business at Absa Business Banking South Africa heads into 2026 on firmer economic footing than in recent years, with a steadier macro backdrop and modest growth prospects beginning to take shape. That should be positive for the country’s small business sector, which picked up some momentum
The post What SA’s Small Businesses Can Expect in 2026 appeared first on The Home Of Great South African News. Read More
