Latest news with #MigueldaSilva
IOL News
2 days ago
- Business
- IOL News
Small businesses brace for Trump tariffs, rising costs and funding hurdles
South African small and medium-sized enterprises (SMEs) are facing mounting pressure from global and local headwinds, including looming US tariffs, rising fuel and electricity prices, and uneven access to funding. As of 1 August, a 30% import tariff on all South African exports to the US will come into effect, a move that could particularly impact SME exporters. Although only about 8% of South African exports go to the US – largely minerals and metals, which may be exempt – key sectors like citrus farming and automotive manufacturing are at risk, said Izak Odendaal, Investment Strategist at Old Mutual Wealth. 'This is bad news for many South African SMEs who currently export to the US, particularly those involved in the agricultural, automotive, and mining sectors,' said Miguel da Silva, Group Executive of Business Banking at TymeBank. 'The tariff increases will also have repercussions for the broader economy, with commentators saying the move could lead to thousands of job losses across the affected sectors.' The tariff order, signed by US President Donald Trump on July 7, follows a suspension of his April 2 'Liberation Day' tariffs, which he placed on pause following an extremely negative market reaction in America. 'The only difference seems to be rounding, so that South Africa gets 30% instead of 34%,' said Odendaal of the new tariffs when compared to the April announcement.
The Citizen
2 days ago
- Business
- The Citizen
Can SMEs survive Trump tariffs? Here is what small businesses can expect from July
There is still hope that the government trade negotiation teams will be able to strike a deal before the 30% tariffs come into effect. It is about to be a bumpy road for small and medium enterprises (SMEs) in South Africa from July due to the 30% United States (US) import tariffs, hikes in electricity and petrol prices and the uncertainty surrounding the interest rate announcement coming on 30 July 2025. Miguel da Silva, group executive for Business Banking at TymeBank, says it is essential for SMEs to prepare for the impact of a 30% US import tariff, which is set to take effect on 1 August 2025. The impact of tariffs on SMEs Da Silva adds that the tariff hike is bad news for businesses that currently export to the US, especially those involved in the agricultural, automotive, and mining sectors. 'The tariff increases will also have repercussions for the broader economy, with commentators saying the move could lead to thousands of job losses across the affected sectors.' He says there is still hope that the government trade negotiation teams will be able to strike a deal before the 30% tariffs come into effect. In the meantime, President Cyril Ramaphosa has called on South African companies to accelerate their search for alternative markets in order to promote better resilience in both global supply chains and the South African economy. ALSO READ: SMEs need to brace for reduced orders due to a 30% US tariff New export markets for SMEs Da Silva says exporters have been seeking out new markets, taking advantage of trade agreements such as the African Continental Free Trade Area (AfCFTA) to strengthen intra-African commerce and lessen reliance on the US. 'The Brics+ bloc also presents an opportunity for local exporters to tap into major markets like China, Southeast Asia, Saudi Arabia, and the UAE. 'Already, China has announced a decision to eliminate all tariffs on imports from the 53 African countries, including South Africa, which is welcome news for SMEs looking for new markets.' Electricity and petrol price increases He highlighted that electricity and petrol price increases add to SMEs' woes, but on the bright side, inflation appears to be under control. 'The US tariff blow comes at a time when South African SMEs are already facing margin squeeze because of additional cost pressures from energy price hikes and fuel price increases, all of which threaten not only their short-term profitability but also their long-term sustainability and competitiveness.' According to the Bureau of Economic Research's (BER) latest survey, inflation expectations have fallen to their lowest in four years. 'Respondents expect inflation to be below 4% this year, echoing the view of Reserve Bank governor Lesetja Kganyago.' ALSO READ: Mid-year financial check for SMEs: Tips to prepare for the next six months Unemployment remains a concern He has noted that there is modest growth and mixed expectations around interest rates, while unemployment remains a concern. 'GDP data for Q2 2025typically arrives on 25 July. The recent modest growth of 0.4% quarter-on-quarter suggests continued economic challenges, making this release vital for demand forecasting and timing market expansion. 'Expectations about the outcome of the 31 July South African Reserve Bank's (SARB) Monetary Policy Committee (MPC) meeting, scheduled for 31 July 2025, are mixed.' Interest rates to hold Da Silva highlighted that most analysts believe interest rates will remain unchanged, while a few still see a possibility of a 25-basis-point cut. 'We hope the SARB decides to put growth above inflation control this time. In principle, lower interest rates mean more disposable income for consumers, which should ultimately result in increased spending and demand for goods and services from SMEs.' He emphasised that there is an increased collaboration between the private sector, government, and financial institutions to foster funding and investment opportunities for SMEs. 'This may include government initiatives, revamped credit guarantee schemes, and partnerships with fintech companies.' NOW READ: Here is how SMEs can take advantage of the G20 and B20 summits
IOL News
2 days ago
- Business
- IOL News
South African SMEs brace for impact as Trump tariffs loom
With the looming threat of US tariffs on South African exports, SMEs face an uncertain future. Explore the ripple effects of these economic changes and how businesses are adapting to survive in the July 2025 TymeBank SME Outlook. Image: Supplied South African small and medium enterprises (SMEs) stand at a critical crossroads, grappling with the looming spectre of a 30% import tariff on most goods entering the United States. This decision, signed into effect by President Donald Trump, will come into play on 1 August 2025, raising alarm bells for several sectors, particularly agriculture, automotive, and mining, industries heavily reliant on exports to the US market. The consequences of these tariffs threaten to reverberate throughout the broader economy, with experts warning of potential job losses in the thousands. Miguel da Silva, Group Executive of Business Banking at TymeBank, pointed to the tariff implications as not just an isolated issue but rather a reflection of the shifting geopolitical landscape that South Africa must navigate. 'As a nation, we have to rethink our trade strategies in light of these developments,' da Silva said. In response to these challenges, President Cyril Ramaphosa has urged South African companies to expedite their search for alternative export markets, highlighting the urgent need to bolster resilience in global supply chains and support the local economy. Video Player is loading. Play Video Play Unmute Current Time 0:00 / Duration -:- Loaded : 0% Stream Type LIVE Seek to live, currently behind live LIVE Remaining Time - 0:00 This is a modal window. Beginning of dialog window. Escape will cancel and close the window. Text Color White Black Red Green Blue Yellow Magenta Cyan Transparency Opaque Semi-Transparent Background Color Black White Red Green Blue Yellow Magenta Cyan Transparency Opaque Semi-Transparent Transparent Window Color Black White Red Green Blue Yellow Magenta Cyan Transparency Transparent Semi-Transparent Opaque Font Size 50% 75% 100% 125% 150% 175% 200% 300% 400% Text Edge Style None Raised Depressed Uniform Dropshadow Font Family Proportional Sans-Serif Monospace Sans-Serif Proportional Serif Monospace Serif Casual Script Small Caps Reset restore all settings to the default values Done Close Modal Dialog End of dialog window. Advertisement Next Stay Close ✕ Some exporters have already begun seeking new opportunities, turning towards the African Continental Free Trade Area (AfCFTA) to boost intra-African commerce. This strategic pivot could lessen dependence on the US market amid increasingly unfriendly trade conditions. The BRICS+ bloc also provides fertile ground for growth, granting access to substantial markets such as China, Southeast Asia, Saudi Arabia, and the UAE. Encouragingly, China recently announced it would eliminate all tariffs on imports from 53 African nations, including South Africa, presenting a timely opportunity for local SMEs to expand their footprint. However, as exporters look towards new horizons, they must also confront domestic obstacles. Energy and petrol price hikes have compounded the financial challenges for SMEs already facing margin pressures. These increases put further strain on already thin profit margins, raising concerns about the long-term sustainability of many businesses. Yet, on a positive note, inflation expectations are reportedly at their lowest in four years, with predictions of rates falling below 4% this year, a significant consideration for businesses with an eye on cost control. The economic landscape remains complex, with mixed expectations surrounding interest rates ahead of the South African Reserve Bank (SARB) Monetary Policy Committee meeting scheduled for 31 July 2025. While the prevailing sentiment points towards maintaining the current interest rate, some analysts speculate on a modest cut. A reduction could inject disposable income into consumers' pockets, providing a much-needed boost for SMEs struggling with stagnant demand. Despite the headwinds, the outlook for funding appears more optimistic. There is an emerging expectation of stronger collaboration between the private sector, government, and financial institutions aimed at creating more avenues for SME financing. Initiatives such as revamped credit guarantee schemes and partnerships with fintech companies are anticipated to ease access to funds for smaller enterprises. However, challenges remain, particularly for those with limited operational histories or lower turnover rates. As South Africa prepares to face a transformed export landscape shaped by new tariffs and economic pressures, SMEs find themselves in a precarious position. With strategic pivots and adaptive measures, these businesses may yet navigate through turbulent times, emerging more resilient in the face of uncertainty. BUSINESS REPORT
Daily Maverick
09-06-2025
- Business
- Daily Maverick
South Africa's SMMEs are flying blind in a changing global order
Small businesses are yet again expected to absorb the shocks of stalling growth, economic policy and diplomacy. Small businesses are expected to keep the lights on, even as South Africa stumbles through an increasingly volatile global and domestic economic environment. While a 25 basis point rate cut at month end offered some respite, it's hardly the lifeline small, medium and micro enterprises (SMMEs) need, said Miguel da Silva, executive of business banking at TymeBank in the bank's SMME forecast for June. 'Some diminishing pressure on the cost of credit' followed the South African Reserve Bank's cut, Da Silva said. Yet, he said 'the economy needs every bit of help it can get'. VAT relief with a fuel levy sting The National Treasury's decision to hold VAT steady at 15% provided some short-term relief to cash-strapped SMMEs. But the olive branch came with a thorn. As of 4 June, petrol and diesel prices jumped by 16c and 15c per litre respectively. 'With many small businesses already operating on razor-thin margins, this 16c increase will likely be passed on to consumers, potentially dampening demand in an already constrained market,' Da Silva said. This adaptation to the Budget showcases the government's strained fiscal position. In a podcast discussion on Budget 3.0, Stanlib chief economist Kevin Lings pointed out that until South Africa lifts GDP growth above 3%, pressure on public finances will persist. 'The negative revenue impact from backtracking on the VAT increases proposed in the previous version of the Budget, as well as the weaker economic growth trajectory, is counteracted… by a combination of revenue and spending adjustments,' explained Dr Elna Moolman, Standard Bank Group head of South African macroeconomic research. 'The expenditure changes are dominated by scaling back some of the new spending proposed in the previous versions of the Budget, while the revenue adjustments include both the reversal of some of the tax relief previously proposed… and unspecified future tax hikes.' The Budget foreshadows a pivot to removing the regulatory burden on businesses. Though, as Da Silva noted, no specific SME-support programmes, funding initiatives or targeted relief measures have emerged. Q1 data highlights on the scale of struggle The economic scoreboard from Q1 depicts an economy in stagnation: GDP grew by just 0.1% in Q1 2025, with agriculture (+15.8%) the only area showing growth. The National Treasury revised 2025 growth expectations downward from 1.6%, from 1.8%. Official unemployment rose to 32.9%, from 31.9%, which translates to a decrease of 54,000 in the labour force. Youth unemployment increased to 46.1% from 44.6% in the first quarter of 2024. While the SME SA Funding Summit 2025 on Thursday, 12 June is expected to explore access to finance, Da Silva stressed that a functioning, reliable environment matters more. How does this affect you? No real relief for entrepreneurs: if you're running a small business, don't hold your breath for targeted funding or tax breaks. Government promises of support remain vague. Price volatility on imports and exports: If Agoa collapses or BRICS moves away from the dollar, expect price changes in imported goods and export delays. Policy fog = business risk: If you're a customer, supplier or entrepreneur, inconsistent policy and mixed messages from government and diplomats create risk, which translates into cautious spending, higher borrowing costs and business hesitancy. Agoa and the diplomatic see-saw South Africa's trade diplomacy with the US remains complicated, but functional for now. Trade Minister Parks Tau and Agriculture Minister John Steenhuisen delivered a new framework to US Trade Representative Jamieson Greer on 19 May, laying out a new bilateral trade proposal. 'We met and had a very cordial and constructive meeting with Ambassador Greer… We had a very open and frank exchange about how we can ensure mutually beneficial trade between South Africa and the United States of America,' said Steenhuisen. He further noted that 'the importance of both markets for each other, and obviously a lot of emphasis from the American side [on] wanting to rebalance some of the trade… and from our side, wanting to retain market access'. With Agoa set to expire in September 2025, a renewal is looking uncertain. Da Silva said that 'the complex challenge of either finding alternative markets or restructuring their operations' looms large for SMME suppliers in US markets. 'While the US is not our largest trading partner, it is an important one, with 8% of our exports destined for its shores,' said Maarten Ackerman, chief economist at Citadel. 'Of that 8%, a third is excluded from tariffs, but citrus exporters are likely to be hardest hit.' BRICS Summit brings new questions Then there's the BRICS Summit in Brazil in early July, where stakeholders are expected to discuss mechanisms to alleviate dependency on the dollar. 'For SMEs, particularly those in export-oriented sectors, this diplomatic tightrope walk translates into very real business planning challenges,' Da Silva explained. Navigating dual allegiances between BRICS and the West 'requires SMEs to develop strategies that can withstand diplomatic volatility while capitalising on emerging opportunities', Da Silva said. DM
The Citizen
05-06-2025
- Business
- The Citizen
Political events happening in June expected to affect South African SMEs
'The fuel levy increases will compound existing cost pressures for SMEs, particularly those in logistics, manufacturing, and retail sectors that rely heavily on transportation.' June will provide some relief for Small and medium enterprises (SMEs) following the South African Reserve Bank's (SARB) Monetary Policy Committee's (MPC) decision to cut interest rates by 25 basis points. Another relief is that inflation is largely stable, and the exchange rate is trending favourably, giving the MPC some room for monetary easing. The economy needs every bit of help it can get, and this cut will no doubt be reflected in business confidence. Miguel da Silva, group executive for business banking at TymeBank noted how upcoming events will impact South Africa's position in a rapidly evolving global landscape and the effect of this reconfiguration on SMEs. ALSO READ: Reserve Bank cuts repo rate thanks to lower inflation, stronger rand Budget treads tricky course without cutting expenditure 'The national budget outlined a programme of continued expenditure propped up by less contentious funding mechanisms than previously tabled,' said Da Silva. After much debate, the Value Added Tax (VAT) rate will remain at 15%, providing certainty for SME pricing and cash flow planning following the proposed increase's withdrawal. To make up the shortfall, the general fuel levy has increased by 16 cents per litre for petrol and by 15 cents per litre for diesel. 'The fuel levy increases will compound existing cost pressures for SMEs, particularly those in logistics, manufacturing, and retail sectors that rely heavily on transportation.' With many small businesses already operating on razor-thin margins, this 16-cent increase represents an additional burden that will likely be passed on to consumers, potentially dampening demand in an already constrained market. ALSO READ: GDP grew marginally in first quarter – agriculture helped keep economy afloat First quarter GDP figures 'The Minister also revised his predictions for our economic growth to 1.4% in 2025, down from 1.9%. With the official unemployment rate now at 32.9%, the disconnect between our economic ambitions and the harsh reality that only 16.8 million South Africans are in active employment highlights the urgent need for policy innovation,' he added. Da Silva said what seems clear is that under these constrained market conditions, there is no way for established businesses to incorporate the millions of South Africans seeking employment. There is far greater potential for entrepreneurs to create new jobs, and a focus on small business support and development must be prioritised. 'SME funding will remain an important area of discussion and entrepreneurs; funders and public-sector representatives will meet to discuss the state of small business funding in South Africa at the SME SA Funding Summit 2025 on 12 June – but even more important is the creation of an environment which is conducive to entrepreneurship: less red tape and dependable infrastructure.' ALSO READ: Tariffs and Agoa: How Parks Tau summarised US-SA trade talks Agoa forum in DRC The relationship between SA and the US remains fraught, but at least there is dialogue. 'Apart from the Presidential meeting in the Oval Office, trade, industry and competition minister Parks Tau and agriculture minister John Steenhuisen have submitted a new trade framework to US trade representative Jamieson Greer. 'There are key areas where US investment might help us unlock value at home, and which might appeal to the deal-centric nature of the US administration. Developing a domestic source of natural gas would bolster SA's regional competitiveness and energy security, and we remain a key source of scarce minerals,' he added. The annual conference on the African Growth and Opportunity Act (Agoa) between trade ministers of Agoa-eligible countries and the US is scheduled to take place in the Democratic Republic of the Congo (DRC) in June. This will be an important indicator of what the US will do when Agoa expires in September 2025, though it seems unlikely at this stage that SA's Agoa benefits will be extended. While the overall impact of losing Agoa would not be immense for SA, some sectors – particularly the automotive and agricultural sectors – would be significantly affected. Both sectors have extensive value chains, and SME suppliers are rapidly adjusting their operations. 'The potential loss of Agoa benefits creates particular uncertainty for SME suppliers in the automotive value chain, many of whom have built their business models around preferential access to US markets. 'These companies now face the complex challenge of either finding alternative markets or restructuring their operations to remain competitive under standard trade terms.' ALSO READ: Analysts say Trump's bid to weaken Brics will fail as US influence declines Brics summit in Brazil Da Silva added that the Brics Summit, scheduled to take place in Brazil in early July, will again put SA in the US crosshairs, as provocative issues (such as an alternative to the dollar as the world's reserve currency) will be raised and debated by Brics countries. 'The timing could not be more delicate. For SMEs, particularly those in export-oriented sectors, this diplomatic tightrope walk translates into very real business planning challenges. 'Where do allegiances lie in a rapidly shifting global order? This geopolitical balancing act requires SMEs to develop strategies that can withstand diplomatic volatility while capitalising on emerging opportunities within both Western and Brics markets.' NOW READ: Political uncertainties that will impact SMEs in the coming months
