Small firms power SA's quiet economic comeback

Economic recovery rarely announces itself in headline numbers first. It shows up in quieter places: a restaurant owner on Vilakazi Street ordering more stock, a funeral parlour in Mthatha hiring another staff member, a logistics operator in Tembisa adding a vehicle to its fleet. These decisions put money into circulation in communities long before gross domestic product figures or confidence indices register any change.

That is the central argument made by Ghana Msibi, CEO of FNB Business, in a sponsored article published by Moneyweb. His focus is not the boardrooms of Sandton alone, but the local economies where most South Africans live, work, trade and spend, and what the choices of business owners there reveal about the economy they depend on.

Ask any of these owners how business is going, Msibi writes, and the answers tend to centre on rising costs, infrastructure challenges and customers spending more cautiously. Yet many of the same owners are also buying equipment, adopting payment technologies, expanding premises, adding vehicles, taking on staff or finding new ways to reach customers. For the public, these decisions matter directly. They determine whether jobs are created, whether services remain available in a community, and whether local suppliers and service providers see work come through their doors.

Financial results, Msibi argues, allow these decisions to be observed at scale. FNB’s latest results show community economy advances increasing by 25%, a figure he presents as evidence that businesses continue to access capital despite weak growth, infrastructure constraints and shifting consumer demand. The more important question, in his view, is what that capital enables. For some businesses it supports working capital and stock levels; for others it funds equipment, technology or additional capacity. Access to finance allows businesses to act sooner than they could if they had to accumulate the full amount in cash first.

The value of that capital, he stresses, lies in the productive activity it unlocks. It becomes stock on shelves, equipment in workshops, vehicles on the road and capacity to serve customers. For the communities around those businesses, the effects ripple outward. A restaurant expanding on Vilakazi Street, Msibi notes, may place more orders with suppliers, generate additional work for local service providers and add a staff member to the payroll. The value created does not stop at the restaurant’s door; it moves through the local economy.

Meanwhile, a significant portion of the article is devoted to the idea that South Africa’s economic potential will not be realised only in established commercial centres. Msibi describes a community economy made up of interconnected local ecosystems where households, stokvels, entrepreneurs, suppliers and businesses earn, save, transact, borrow and trade together. These ecosystems include restaurants, spaza shops, funeral parlours, taverns and local logistics operators. Each community, he argues, has its own industries, customers and routes to market, and cannot be treated as a single, uniform segment.

Capability, not just capital, is the second pillar of his argument. Capital can create an opportunity to grow, but capability determines whether that growth can be sustained. An early-stage entrepreneur may need help formalising the business, keeping reliable financial records or managing cash flow. A more established SME may need access to larger supply chains, export markets, digital systems or partnerships that support growth at scale. Finance without the ability to use it effectively leaves underlying constraints unresolved; a capable business without capital may be unable to act on a viable opportunity. Sustainable growth, Msibi writes, requires both.

He also cautions against reading every loan as a sign of expansion. Capital may be used to protect working capital, maintain operations or respond to an immediate need. Nor is this a story of easy optimism. Businesses continue to face weak growth, infrastructure constraints and pressure on consumers. What matters, he argues, is that businesses keep making choices about stock, equipment, technology, staffing and capacity, and that those choices create activity across employees, suppliers, customers and communities.

His conclusion is directed as much at policymakers as at business owners. South Africa cannot support small and medium-sized enterprises through fragmented interventions, he writes. Banks, policymakers and business-support organisations need to build connected pathways around how businesses start, trade and grow, spanning payments, working capital, technology, market access and practical support as parts of a single journey.

The results, Msibi concludes, do not suggest that economic recovery is complete. They show where it is already under way, one business decision at a time. For the communities those businesses serve, that may be the most relevant signal of all.

Ghana Msibi is CEO of FNB Business. The article was brought to you by FNB. Moneyweb does not endorse any product or service being advertised in sponsored articles on its platform.