South Africa’s business confidence is the highest it has been in 13 years. This is a sentiment reading, not a liquidity one, and for a small business the difference is everything.
South Africa entered 2026 on a wave of optimism. The SACCI Business Confidence Index measured 134.3 in September, 10.9 points higher than a year earlier, and has averaged 129.3 over the first nine months of 2026 against 119.0 over the same period in 2025. That follows a full-year 2025 average of 121.7, the highest annual average since 2013. Sentiment has held at these levels despite inflation rising to 4.5% in September, a rand that has weakened through October and a repo rate that, after two hikes this year, now sits a quarter of a percentage point above its level a year ago.
However, even SACCI was careful in the framing of its optimism, noting that the elevated reading was not as a result of broad improvements in the business climate and that a gap has opened between perception and actual economic performance. The index slipped only slightly in September, on renewed uncertainty over the crude oil price, and remains at historically elevated levels.
This distinction matters for the small to medium enterprise (SME) because while a confidence index is a leading indicator of what a business expects to happen, it is not an indicator of liquidity. And for the SME, liquidity is not one measure among many, it’s the one that determines whether it will be trading in six months.
Credit providers examine a completely different set of questions, and liquidity is one of the most critical. Are customers paying? Are they paying on time? Can the SME pay its own suppliers? Is revenue trending up or down, or is it flat? Layered on top of these considerations is the appetite for credit and what’s driving it. The answers to these questions describe the business as it actually is, while sentiment only measures expectations of a year not yet lived.
The gap between these two is visible right now in how small businesses are absorbing the year’s largest external shock – the war in Iran and the months-long closure of the Strait of Hormuz earlier this year. This has brought about what economists have described as the largest physical supply disruption in the history of the global oil market and for fuel importing economies, it is a sudden tax on income.
That shock also hasn’t landed evenly but rather by input exposure. Companies reliant on oil and petrol such as logistics operators and manufacturers, have been hit hard by the closure. Plastics manufacturers have, for example, watched raw material costs rise substantially, effectively overnight. Companies outside that exposure, particularly in professional and industrial services dealing in expertise rather than physical goods, have been far less affected. The corporate environment absorbs these shocks more efficiently with held cash reserves and diversified customer bases. They run treasury functions and have the pricing power to pass on the costs, but the SME doesn’t have these buffers with a single input cost increase moving straight through to the balance sheet. There is limited buffer between the shock and the cash flow.
So, two types of small business sit inside the same optimistic national number. One is fighting an input cost shock and needs working capital to hold its cash cycle together, the other is growing quickly and needs capital to fund its growth. Both need funding.
While the confidence index isn’t wrong, it’s answering a question small businesses can’t necessarily afford to be judged on. The practical response is to manage to liquidity rather than sentiment: know your cash conversion cycle, stress-test margins against input-cost shocks, and arrange funding capacity before the squeeze arrives rather than during it. Converting sentiment into survival also requires funders who can see what is happening inside a business in real time and act on it, giving businesses the ability to absorb shocks and fund growth.
