From interest rate hikes to a decrease in SME business confidence, South Africa has started 2022 with a bang. With the last repo rate increase being in November 2021, the Monetary Policy Committee (MPC) will meet on January 27th to discuss another increase in the coming months. Bloomberg experts suggest the hike will be 75 basis points, increasing the repo rate from 3.75% to 4.5% by the end of 2022, with an interest rate increase estimated to occur every quarter this year. This decision comes in light of rising global inflation, as well as predictions that South Africa’s consumer inflation surged during the December period by 0.2 percentage points, from 5.5% in November to an estimated 5.7%.
In other news, the SME business confidence index for the third quarter of 2021 was released by Business Partners and indicates only 33% of small businesses in South Africa are confident they will grow in the next 12 months. This is a sharp decrease from 61% SME confidence in the second quarter of 2021, and according to Rayna Dolphin, the executive director of Business Partners Limited, the two main challenges of the SMME sector are unstable economic conditions and cash flow issues. This is where the COBRA Initiative comes in.
The COBRA Initiative consists of a consortium of enterprises that are united to use business as a force for good by assisting small and big businesses to thrive in this challenging economy. Within this shared value ecosystem, extensive business legal services, small business accounting, technology and business-turnaround expertise and related local business support and consulting services are made available to assist small businesses in financial consulting, legal, and operational distress.
There’s a lot of uncertainty surrounding us, but don’t give up hope and keep pushing, and if you find you need a helping hand, please reach out to the COBRA Initiative for business services and financial support.
By: Ashwara Pillay