Jeremy Lang, Managing Director of Business Partners Limited

South African small and medium enterprises (SMEs) entered 2026 on a more cautious footing as rising fuel prices, driven by global geopolitical tensions, continue to place increasing pressure on business operations.

This was reflected in declining confidence levels, with SME confidence in the South African economy being conducive to business growth falling by 6 percentage points to 63%, while confidence in their own business growth declined by 4 percentage points to 77%.

This is according to the latest SME Confidence Index by Business Partners Limited, which shows a broad decline in confidence across most indicators compared to both the previous quarter and the same period last year^[1].

These findings suggest a clear shift among SMEs away from growth and expansion towards short-term survival, cost management and operational resilience.

Jeremy Lang, Managing Director at Business Partners Limited, says the findings reflect a business community navigating significant external pressures. “Rising fuel costs and global uncertainty are undoubtedly constraining growth ambitions, but local SMEs remain focused on building the resilience needed to sustain their businesses and position themselves for future opportunities.”

He notes, however, that these latest findings highlight the extent to which South African SMEs remain exposed to global economic shocks. “This year, we’ve seen international geopolitical developments increasingly shaping the cost structures, profitability and day-to-day operational realities of small businesses across the country.”

When asked whether recent fuel price increases had impacted their business operations, more than 90% of SMEs reported some level of operational pressure. “Fuel costs influence far more than transport expenses alone,” says Lang. “For many SMEs, rising fuel prices affect every part of the value chain, from procurement and logistics to customer deliveries and day-to-day operations.”

Businesses prepare for further volatility

When asked whether they had taken steps during Q1 2026 to prepare for increased operating costs linked to rising fuel prices, 22.8% of respondents said they had taken significant action, while 47.4% reported implementing minor adjustments.

“This suggests that nearly 70% of SMEs are no longer waiting for economic pressures to fully materialise before responding,” 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 reveal the extent to which businesses are being forced to rethink their operations. Nearly half of respondents (45.9%) reported adjusting the pricing of their products or services, making it the most common response. A further 38.7% said they had reduced operational expenses, while 29.6% reviewed or adjusted their supply chain and logistics arrangements. In addition, 25% secured stock earlier to delay the impact of future cost increases.

“These findings highlight the difficult balancing act facing SMEs,” Lang explains. “Businesses need to protect profitability and absorb rising input costs, but excessive price increases risk placing additional strain on already financially pressured consumers. This can ultimately weaken demand and limit growth opportunities.”

Support mechanisms remain important

While confidence has dropped across most indicators, SMEs continue to place significant importance on the 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 2 percentage points year-on-year. Access to SME-specific information, resources and support also remained highly valued at 84%. The importance of mentorship increased to 85%, while social media as a marketing tool rose 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 softened, the willingness of businesses to proactively respond to uncertainty demonstrates the resilience that continues to define South Africa's SME sector,” he concludes.

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