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3 impacts the upcoming elections will have on SMEs

3 impacts the upcoming elections will have on SME

The national and municipal elections are around the corner and, as always, are a testament to the democratic transition that South Africa has been through.

It’s not clear what the outcome will be and what the future holds for South Africa as the country takes to the polls on May 8th. What we do know though is that the elections will have an impact, be it positive or negative, on the economy. And that this will have a ripple effect on individuals as well as local businesses.

According to a recent survey conducted by Business Partners around the up-coming elections, 40% of SMEs are expecting the elections to have a positive impact, 35% are uncertain and 25% believe the market will be impacted negatively.

The survey also goes on to show that SME business owners believe that the greatest challenge they expect to face in the next 6 months is cash flow, something that is negatively impacted by a volatile environment with fluctuating operating costs.

Here are a few commonly cited reasons why the up-coming elections are causing business owners anxiety:


  • Customer confidence

Customer confidence can take a knock around election time. Based on previous general elections you can expect customer confidence to drop off as we get closer to the 8th of May. Most people pull back on spending and delay their buying decisions until after it’s over. It can take a month or two for the dust to settle and things to fully recover and go back to normal – depending on the results.


  • Currency fluctuation

The uncertainty leading up to the elections has an impact on the value of the Rand. This can lead to increasing; prices of goods sourced from overseas, petrol prices and inflation. The particular struggle for SMEs is that they can’t fix their prices, as can larger businesses, without taking too much off their margin.


  • Marketing plans

Events like national elections have the media’s full attention for weeks, if not months, both before and after the day is over. This means less airtime, advertising space and overall marketing opportunities for SMEs as the media channels become saturated and prohibitively expensive. As a result SMEs are forced to delay, or drop altogether, vital marketing activities.

The knock on effect of these, and other, trends is often reduced revenue and lower profits – putting SMEs across industries under pressure. On top of this the usual winter seasonality means the next few months can be slower than usual for a range of industries.  Financial support can come in handy with all the on-goings about to take place.

With all this uncertainty, preparation is key. This is why Lulalend is the trusted alternative lender for; Working capital finance, inventory or equipment purchases and bridging finance. We’re here to help, especially if and when new business opportunities come knocking. Get the funding you need, when you need it!

Although you don’t have control over the election and its impact on the economy, one thing you can control is your business finance options. Let Lulalend help you grow and succeed. Find out more about our quick, easy application process so that we can help you when you need it most.


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