South Africa’s Reserve Bank has made headlines by aiming to anchor inflation closer to 3%,down from the current 3–6% range.
Governor Lesetja Kganyago explained that permanently lower inflation can bring cheaper borrowing, reduce government debt costs, and create a more stable economy.
On paper, this is good news. For township entrepreneurs, however, the story is more complicated.
Lower inflation is a benefit that lies ahead, but to reach it, the Bank must keep interest rates high for longer. Loans remain expensive, customers spend cautiously, and banks are selective in who they lend to.
For small, township-based businesses like spaza shops, hair salons, butcheries, corner retailers and small catering or manufacturing outfits, this period is what I call the “survival window”.
Why this matters
Large corporations can ride out periods of high interest rates with reserves and access to cheaper credit.
Township businesses usually run month to month, often relying on small overdrafts or informal credit.
A shortfall in sales or spike in input costs can quickly push them into financial trouble.
Consider the daily reality: spaza shops must field rising stock prices, butcheries deal with meat and cold chain costs, salons keep hair products in stock, and small manufacturers pay for raw materials.
Customers cut back on spending because household costs are higher — food, fuel, debt, transport.
This means restocking inventories, taking on new credit and expanding operations “as usual” is no longer safe.
The perfect storm
Many township businesses are still recovering from the economic shocks of the past few years.
Load-shedding forced debts for generators and diesel ate already-slim profits. Payments from government or corporate clients are often delayed, tying up cashflow.
With customers spending less,the business is squeezed from both sides.
Layering prolonged high interest rates on top of this environment risks turning a fragile recovery into a wave of closures.
Why cushioning support is critical now
Supporting SMMEs in this window is not charity. It is non-negotiable for the economy to pick up and survive these tough times.
These businesses employ thousands of local workers, provide essential services, and keep money circulating in communities.
If they fail, the long-term benefits of lower interest rates that Kganyago envisages will arrive in an economy weakened by fewer entrepreneurs and less job creation.
Practical support measures could include:
*Affordable credit from local intermediaries, Sefda, the small business department and IDC backed by government guarantees;
*Faster payment cycles from state and corporate clients, so small suppliers receive money in 15–30 days instead of 90;
*Temporary tax relief, like turnover tax reductions or PAYE holidays, to free up working capital;
*Emergency grants for small enterprises at high risk of closure; and
*Sector-specific support, recognising that spaza shops, butcheries, salons, retailers and small manufacturers each face unique pressures.
What SMEs can do
*Plan as if borrowing will stay expensive. Budget for higher interest rates over the next 12–18 months;
*Treat loans and overdrafts as a scarce resource, and only take on new debt when absolutely necessary;
*Tighten cashflow. Track every rand coming in and going out. Collect debts promptly and delay non-essential spending. Every small saving can make the difference between staying afloat and falling behind;
*Secure funding early. Don’t wait until credit becomes impossible to access. Apply for loans or grants as soon as opportunities arise, even if you don’t need the full amount immediately;
*Being prepared gives you a safety net during tough months. Diversify income streams. Rely on multiple products, clients and services to spread risk. If one source of income slows down, others can help keep the engine running;
*Stay alert and actively seek development finance, supplier programs, and relief schemes. These initiatives are designed to support SMMEs and can provide essential working capital or technical support; and
*Be ready to act quickly when new support measures are announced. Information and timing are critical — the businesses that survive and grow will be the ones that respond promptly to opportunities.
The bigger picture
Governor Kganyago’s ambition to reach 3% inflation is perfectly valid; a permanently lower inflation rate will indeed create long-term stability and growth.
But the journey there matters just as much as the destination.
Without co-ordinated support for township SMMEs, the economy — already facing so many blizzards from so many sides — is at further risk of shedding jobs, closing businesses and weakening communities.
What a cruel irony if the very outcome of the debt stabilisation policy undermines the goals it is meant to support.
Township businesses are not just shops and salons; they are the engines of local economies. Together, they are the heartbeat of the nation.
Surviving this period is essential not just for entrepreneurs, but for the communities they serve.
With careful planning, disciplined cashflow management, and timely support from government and corporates, township SMMEs can endure this high-interest period and emerge stronger, ready to benefit from the stability promised by lower inflation.
Buzani is a business consultant and youth empowerment advocate.
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