Today’s decision by the SARB Monetary Policy Committee to cut the repo rate, delivers much-needed relief that South Africa’s small and medium-sized businesses have been waiting for.
For far too long, the punitive cost of borrowing has stifled investment and squeezed cash flow, says SME services provider Lula.
“A decrease in the repo rate immediately improves the operating environment for entrepreneurs: it lowers the cost of servicing existing debt and makes new working capital investment more affordable and, therefore, accessible. Importantly, there’s a significant psychological benefit in that it also gives these small businesses the confidence to start investing again,” says Lula’s Chief Risk Officer Garth Rossiter.
“Critically, this move should also help alleviate the severe pressure on consumer disposable income, translating into improved sales and revenue for businesses across the board. Welcome relief in the run up to the festive season. This is a positive signal that allows business owners to shift their focus from mere survival back to growth and hiring,” says Rossiter.
