Still no delight for small firms

Johannesburg - There is still no light at the end of the tunnel for small - and medium-sized enterprises, according to the SMME [small, medium and micro enterprises] Business Confidence Index for 2010, released on Friday.

The index, by the Africagrowth Institute, showed a drop in confidence from 52.43% during the first quarter of 2010 to 50.79% in the second quarter of 2010 representing a decline of 3.13%.

The institute's president, Professor Nicholas Biekpe said there was, however, some good news.

"The confidence level for the trade sector increased significantly from 34.94% during the first quarter of 2010 to 41.33% in the second quarter of 2010, representing a rise of 18.29%."

This was to be expected as the country witnessed a significant increase in imports in the form of sportswear and other World Cup related goods.

However, the situation for the industrial and services sectors was "very grim."

In the industrial sector, the confidence index decreased from 45.17%, in the first quarter of 2010, to 41.17% in the second quarter, representing a dip of 8.85%.

The index for the services sector declined from 53.05%, in the first quarter of 2010, to 48.74% in the second quarter, representing a drop of 8.13%.

"The decline in business confidence in the services sector is very worrying as this sector is supposed to be one of the main beneficiaries of the 2010 FIFA World Cup," Biekpe said.

Also the current strength of the rand was not helping the services sector, especially the hospitality industry, as overseas visitors found South Africa "very expensive", Biekpe said.

Most businesses surveyed cited a number of inhibiting factors impacting negatively on their businesses.

These included the strong rand, high operating costs, high government taxes and regulations, limited access to bank credit, insufficient demand and high employee costs.

"Unlike big business, small businesses tend to exhibit unusually large swings in business confidence which is a reflection of their vulnerability," Biekpe said.

  - Sapa

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