South African small and medium enterprises (SMEs) enter 2026 with a more cautious stance, as rising fuel prices, driven by global geopolitical tensions, continue to exert increasing pressure on business operations.
This was reflected in a decline in confidence levels, with SMEs' confidence in a South African economy conducive to business growth falling six percentage points to 63%, while confidence in their own business growth fell four percentage points to 77%.
This is according to the latest SME Confidence Index from Business Partners Ltd, which shows a widespread decline in confidence across most indicators compared to the previous quarter and the same period last year.
These findings suggest a clear shift among SMEs away from growth and expansion towards short-term survival, cost management and operational flexibility.
Jeremy Lang, managing director of Business Partners Ltd, says the findings reflect the business community dealing with significant external pressures. “Rising fuel costs and global uncertainty are undoubtedly hampering growth ambitions, but local SMEs are focused on building the resilience needed to sustain their businesses and position themselves for future opportunities.”
However, he noted that these latest findings highlight the extent to which South African SMEs are exposed to global economic shocks. “This year, we have seen international geopolitical developments increasingly shape the cost structures, profitability and day-to-day operational realities of small businesses across the country.”
When asked whether the recent increase in fuel prices had affected their business operations, more than 90% of SMEs reported some level of operational pressure. “Fuel costs impact far more than transportation expenses alone,” says Lang. “For many SMEs, rising fuel prices impact every part of the value chain, from procurement and logistics to customer delivery and day-to-day operations.”
Businesses prepare for further volatility
When asked if they had taken steps through Q1 2026 to prepare for increased operating costs associated with rising fuel prices, 22.8% of respondents said they had taken significant actions, while 47.4% reported implementing minor adjustments.
“This shows that almost 70% of SMEs are no longer waiting for economic pressures to completely subside before reacting,” says Lang. “Instead, they are actively building greater operational resilience into their businesses and adjusting strategies to manage future shocks.”
The measures adopted by SMEs show 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 this the most common response. Another 38.7% said they have reduced operating expenses, while 29.6% have reviewed or adjusted their supply chain and logistics arrangements. Additionally, 25% reserved stock in advance to delay the impact of future cost increases.
“These findings highlight the difficult balancing act facing SMEs,” explains Lang. “Businesses need to protect profitability and absorb rising input costs, but excessive pricing raises the risk of placing additional pressure on already financially stressed consumers. This could ultimately weaken demand and limit growth opportunities.”
Support systems remain important
While confidence has fallen across most indicators, SMEs are placing significant importance on key enablers of business growth.
Access to finance remains one of the most important factors for business sustainability, with an importance rating of 84%, up two percentage points year-on-year. Access to SME-specific information, resources and support was also highly valued at 84%. The importance of mentorship increased to 85%, while the importance of social media as a marketing tool increased to 87%.
“The latest results paint a picture of a sector that remains resilient, but increasingly cautious,” says Lang. “SMEs are adapting to a more challenging operating environment by planning ahead, managing costs more carefully and strengthening their operational foundations. While confidence has moderated, the willingness of businesses to proactively respond to uncertainty reflects the resilience that continues to define South Africa's SME sector,” he concluded.
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