South African SMEs reported a broad-based decline in confidence in the third quarter of 2025, despite positive macroeconomic signals and strong optimism around the G20 Summit.
This is according to the latest SME Confidence Index from Business Partners Limited, which shows weakening sentiment across almost all performance indicators compared to both Q2 2025 and Q3 2024.
During the quarter, South Africa recorded 0.5% GDP growth, inflation expectations settled at a record low, and interest rates reached their lowest levels since 2022. However, these improvements did not translate into stronger business sentiment.
Confidence among SMEs that their businesses will grow over the next 12 months declined to 79%, down two percentage points quarter-on-quarter and year-on-year. Confidence that the South African economy will be conducive to business growth dropped to 64%, down two percentage points from Q2 and four percentage points compared to Q3 2024.
Access to finance recorded one of the sharpest declines, falling to 61%, six percentage points lower than the previous quarter and two points down year-on-year. Confidence in labour laws being conducive to growth decreased to 58%, while confidence in finding suitably skilled staff fell to 69%. Confidence in the private sector support weakened to 54%.
The only indicator to improve was confidence that the government is doing enough to foster SME development, which edged up to 49%, a one percentage point increase quarter-on-quarter and year-on-year, although still below the neutral 50% threshold.
The most significant deterioration was in expectations that clients will pay within stipulated timeframes. At 68%, this measure declined by four percentage points quarter-on-quarter and year-on-year. SMEs identified cash flow constraints and broader economic conditions as the most pressing challenges over the next six months, with crime ranking third.
An overwhelming 83% of surveyed SME owners said the outcomes of the G20 Summit are expected to have a positive impact on SME growth and the broader economy. When asked which outcomes would benefit their businesses most, 30.3% cited stronger international trade and market access, 30.1% pointed to improved SME financing and support, and 28.1% highlighted increased global investment confidence in South Africa.
However, the overall decline in confidence suggests a disconnect between long-term opportunity and immediate trading conditions.
On importance indicators, access to SME-specific information and support increased to 85%. The importance placed on social media as a marketing tool rose to 88%, while mentorship stood at 84%. The importance of access to finance declined three percentage points quarter-on-quarter to 82%.
The Q3 2025 Index points to a stabilising macroeconomic backdrop, but continued caution among SMEs, with near-term growth prospects closely tied to cash flow stability, demand and payment certainty.
