Digital bank TymeBank says various international and local factors are affecting South African small- and medium-sized enterprises (SMEs) in both positive and negative ways.

Ahead of more economic indicators being released in August, TymeBank business banking group executive Miguel da Silva notes the incoming 30% US import tariffs on about $10-billion of South Africa’s exports on August 7 will be the single-most detrimental factor impacting economic growth for SMEs in South Africa.

For example, in Lesotho, layoffs have already occurred in Maseru despite the country having negotiated its way down from a 50% US import tariff to 15%.

On a positive note, China announced plans to eliminate all tariffs on imports from 53 African countries, which expressly positions the country as Africa’s preferred trading partner – this bodes well for local SMEs looking to diversify supply or strengthen market share in this region.

Locally, South African Reserve Bank governor Lesetja Kganyago announced a 25-basis point lowering of the interest rate and the central bank, along with other stakeholders, is considering revising its inflation target to 3%, down from between 3% and 6%.

Statistics South Africa is due to release consumer price inflation data later in August, which will give SMEs some guidance in terms of input cost planning in this tightening market.

In the meantime, Purchasing Managers Index data published by ratings agency S&P Global South Africa showed an improvement to the headline figure to 50.8 in May, marking the first growth since November 2024 and indicating the fastest business activity expansion in four years.

The Bureau for Economic Research’s quarterly business confidence survey, which will next be published early in September, will influence business planning for the last quarter of the year.

Da Silva further says there is some room for optimism following the Government of National Unity having managed to pass the 2025 National Budget with the National Council of Provinces and with all coalition partners having approved the Appropriation Bill that allowed the Budget process to be concluded. He says tough conditions promoted pragmatic alignment among political leaders, which could impact SMEs positively.

He cites some more positive government sentiment in saying that Deputy President Paul Mashatile’s address during the Global SME Ministerial Meeting on July 24 recognised the importance of the African Continental Free Trade Area to support the entrepreneurial landscape for SMEs; however, Da Silva is concerned about no concrete evidence that government is supporting these businesses in this regard, apart from the R100-billion Transformation Fund which is currently being reviewed by the Department of Trade, Industry and Competition.