Business growth in the mid-market corporate sector

There is significant growth potential in the mid-market business segment in South Africa, a sector that can create a lot of jobs in the country. Business owners have had to navigate a number of challenges such as a lack of power from Eskom, transportation challenges and skills challenges. Despite that, the entrepreneurial nature of South African business owners has continued to shine. South Africa has a strong, resilient private sector, and new growth opportunities are emerging in many areas.

The rand has weakened by 70% to the US dollar in 10 years. That’s meant imported goods and services are getting more and more expensive, and importers feel the pinch directly as their input costs rise. 

In addition to currency weakness, business owners also need to consider and plan for the rand’s volatility, as that can impact how you price your products, what your operating costs will be, and even whether you enter a market or not. 

This is why it’s important to partner with experts to help you understand what could influence the rand, and how that may impact your specific market, so you can budget and forecast more effectively.

Loadshedding has had a devastating impact on businesses in South Africa through loss of production, damage to equipment and goods, as well as increased spend towards overtime pay as companies seek to catch up to production targets. In addition, business owners have had to set aside large sums of capital to invest in alternative sources of energy, as uninterrupted power is a commercial necessity.

The South African economy loses approximately R1 billion each day because of the failures at our Transnet ports and rail infrastructure. In having to turn to truck or air freight, business owners are faced with increased logistics and supply side cost pressure.

Apart from issues in energy and logistics, some of the other key challenges of doing business in South Africa are the need for money to fund growth, as well as the skills shortage in certain sectors.

Regarding funding, businesses need to consider their capital structure and not over-leverage their companies (taking on too much debt). It’s important to work with your financial partner in developing a highly tailored financial solution. 

The skills challenge is evident across many sectors, including manufacturing, healthcare and, to some extent, IT, but the biggest skills gaps are in accounting and engineering. South African business don’t just have to compete with emigration, but also contemporary pressures such as the desire for flexible hours, as well as the ability of South Africans to work for international companies from home; earning a foreign currency.

Government recognises the volume and quality of infrastructure delivery needs to improve, and they have identified partnerships with the private sector to make it happen. The South African government’s commitment to expedite private sector involvement in infrastructure development presents a wide number of opportunities for businesses involved in the delivery of infrastructure

There is considerable activity in the mid-market business segment in a number of sectors. Good growth sectors in South Africa include the energy sector, sustainable water solutions, digital infrastructure and IT, as well as automotive, business process outsourcing and tourism, as well as the agricultural sector.