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In this episode of No Ordinary Wednesday, Dhiren Mansingh, Investec’s Head of Business Transactional Banking, discusses the mid-market landscape, how these businesses are holding the line in tough times and how they’re positioning for growth.


South Africa’s often underappreciated mid-market sector remains a bulwark in driving the country’s economy and continues to play a key role in mitigating some of the country's infrastructure and energy difficulties. And while resilience is an overtraded word in South Africa, it is this attitude that is helping the sector grow.

What are mid-market businesses?

The mid-market sector in South Africa, Investec’s Head of Business Transactional Banking Dhiren Mansingh says, is broad and diverse, encompassing unlisted corporates with turnovers between R30 million and R1.5 billion, and employing staff numbers ranging from 50 to hundreds. These companies span across various industries and are often family-owned businesses.

“The mid-market, if I combine this together with SMEs (small medium enterprises), make up a significant portion of all formalised businesses in the country. I'm talking 70% and more of formalised businesses. They're also significant employers in the economy and material contributors to the GDP. So, they are indeed the engine room of the economy,” says Mansingh.

“These are special people in South Africa. They really understand their businesses very well.  They are entrepreneurs, they are resilient, they are able to be flexible and pivot their businesses as things change.”

Macro challenges

With economic growth in the country slower than anticipated, driven mainly by challenges in infrastructure, electricity and logistics – businesses are feeling the pinch. The South African economy only grew by 0.6% in 2023 is expected to improve slightly in 2024 to 1%.

Business confidence in the country remains depressed, falling in the first quarter of 2024.


Dhiren Mansingh, Investec’s Head of Business Transactional Banking
Dhiren Mansingh, Investec Head of Business Transactional Banking

“Mid-market businesses are worried about quite a few things. Concerns about infrastructure, energy availability, politics, service delivery by municipalities, red tape and the regulatory environment that makes it difficult to operate businesses."


Investment is always subdued in the run up to elections anywhere in the world, he points out, saying that businesses are adopting a wait-and-see approach until the 29th of May. Going forward, Mansingh believes that the mid-market will start to invest in critical skills, which have been sorely lacking due to emigration of skilled professionals, amongst other things.

High interest rates and sticky inflation

Interest rates in South Africa currently at a 14-year high of 8.25% driven by sticky inflation – at 5.1%  –  that the South African Reserve Bank is trying to reign back to their target midpoint of 4.5%. And although expectations of a rate cut later in the year are high, the central bank remains cautious stating at the last Monetary Policy Committee (MPC) meeting in January 2024 that risks to the inflation trajectory remain high. This means financial headaches for mid-market companies, will continue for some time.

“The majority of the mid-market is invariably exposed to market dynamics of interest rates, foreign exchange, commodities, and the volatility of this invariably then affects their businesses as well,” explains Mansingh.

“How inflation will affect businesses, and particularly the mid-market, is that it increases input costs, it increases labour costs and as a result puts constraints on their businesses and on their cash flows,” says Mansingh.

The negative impact of a high interest rate environment and high inflation on consumers directly affects business: “Generally high inflation is targeted with higher interest rates and that increases servicing costs which consequently makes it more difficult to access funding,” says Mansingh. “Higher interest rates reduce disposable income to consumers which then further reduces demand across sectors and affects this mid-market space.”

Solutions available to mitigate uncertainty

Many businesses are considering a hedging policy to mitigate some of these risks, says Mansingh who believes that it is prudent to “shock test” various aspects of your business.

“So, you shock interest rates, you shock currency, shock commodities, and then you determine how that affects your business and your cash flows going forward. And then based on that, you look at what hedging solutions can be incorporated into your business to mitigate those shocks. 

Hedging can assist companies in providing some sort of certainty so that they can concentrate on the core of their business without worrying as much about the volatility to these underlying variables.”

The mix of equity versus debt in a company’s capital structure is also key to overcoming challenges. “There needs to be a healthy mix, which allows a company to sustain higher interest rates should interest rates increase as well.”

Green shoots

Despite all the doom and gloom, Mansingh points out that the amount of loadshedding is reducing: “Loadshedding is 60% less now versus this time last year, and actually 80% less if you take into account stage four and above,” an achievement that is in part thanks to the mid-market adopting renewable energy sources.

Logistics bottlenecks are also clearing. “There's a 45% reduction in vessels anchored outside the port of Durban, and a 36% reduction in the waiting time to anchor for container vessels.”

In closing, Mansingh explains how Investec is invested in the success of the mid-market who have weathered storms like Covid-19 and the KZN riots and floods. “The combination of resilience, entrepreneurship, and being optimistic is what makes them very successful and able to navigate these very difficult times.”


*Listen to the podcast for more insights on how mid-market businesses can adapt and deal with volatility.
Podcast key moments

00:00 – Introduction

01:05 – What type of companies make up the mid-market segment?

01:50 – How important is the mid-market sector to the South African economy?

02:45 – How are these mid-market companies navigating challenges in the South African economy?

04:23 – What are mid-market businesses worried about?

05:47 – What has been the impact of high inflation and high interest rates environment for the mid-market sector?

07:11 – How are mid-market businesses navigating uncertainties?

08:26 – How should mid-market businesses protect themselves against currency volatility?

10:18 – Where are mid-market companies investing?

Listen to other episodes of No Ordinary Wednesday with Jeremy Maggs.


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