As South Africa’s economy shows signs of recovery and growth, small and medium-sized enterprises are poised to experience a boost from the economic uptick – especially those that can harness the top business trends in South Africa set to emerge in 2025.
SMEs that fail to adapt to a growing and changing economic landscape risk facing:
- Reduced market competitiveness and loss in market share as customers move to forward-thinking businesses.
- Inefficient operations and higher costs due to manual processes and outdated systems.
- Limited access to capital and growth opportunities as lenders shy away from SMEs that don’t show future potential.
We share the five key business trends in South Africa to look out for in 2025 that will impact SMEs – from e-commerce going mainstream and digital transformation to new financial service models for growing businesses.
Read on to find out how to bring success to your South African SME in 2025.
Don’t let a lack of funding keep you from growing your SME. Learn more about Lula’s funding solutions and how you can access up to R5 million in funding within as little as 24 hours.
5 Business Trends in South Africa to Watch For in 2025
The economic climate of recent years has been tough on South African business owners. With only 33% of SMEs reporting to have access to credit, many small businesses are hampered in their resilience against unforeseen challenges and in growth potential in the long term.
“2024 has been a year of continued headwinds for SME owners in South Africa – high interest rates, inflation, and heightened uncertainty around election time and the formation of a new government have all left their mark,” Thomas McKinnon, Chief Growth Officer at Lula comments on last year’s economy.
The good news is that, with the Bureau of Economic Research’s projections indicating potential economic growth of 2.2% in 2025 and S&P’s recent positive outlook change for South Africa, SME owners might see economic growth double compared to 2024.
While this is good news for small businesses struggling to make ends meet, SME owners must stay ahead of emerging trends to capitalise on opportunities in the new economic landscape.
Here are the five business trends in South Africa that SME owners should be acting on in 2025:
1. Flexibility is king: New financial service models for SMEs
While many banks won’t take time to actively manage small business accounts, technological innovations in banking now offer alternative solutions to SMEs. Financial services are increasingly extending their services from traditional banking to digital tools that allow for smart cash flow management.
“Banks and fintechs are naturally diving into things like cash flow management tools and leaning into AI-driven insights to make cash flow management smarter than ever,” McKinnon observes.
Why it’s important
These financial tools help business owners flexibly grow their business in a way that traditional banking does not allow.
McKinnon advises SME owners: “More than just cash flow insights tools, we’re seeing a rise in flexible services that can adapt to the ebbs and flows of SME growth in reality – from office spaces that scale with business size to more flexible logistics providers and marketplace aggregators that simplify operations.” In other words, McKinnon concludes, “It’s making real-world cash flow management easier than ever before”.
How to prepare
Evaluate your business processes to identify areas that could benefit from flexible financial tools. Is seasonal demand affecting your cash reserves? Are upfront payments not coming in?
Look for a financial service provider that can help you manage your cash flow and operations efficiently, and that offers scalable solutions to help your SME grow.
2. Funding gets personal: More financing options, better fits
Data is bringing transparency to business and finances. Thanks to increased access to transaction data, payments data, and data overall, lenders now have a better view of a business’s financial health – and can tailor financing options to match.
It’s not just banks who are using data to tailor financing options. “Banks are no longer the only game in town, and alternative funders and embedded finance options with payments businesses are proliferating,” McKinnon says. He sees that government and NGO initiatives are also stepping up to support micro and women-owned businesses with guarantee schemes, creating a broader safety net.
Why it’s important
With tailored financing offered by more players in the lending market, getting approved for funding will become easier for the 67% of SMEs that traditionally haven’t had access to credit.
Access to appropriate funding can be a make-or-break factor for small businesses looking to grow or navigate challenging economic periods.
How to prepare
First, familiarise yourself with alternative types of business funding like capital facilities or capital advances. Which funding solutions fit your SMEs needs best?
To better plan and prepare for your funding needs, look into your cash flow and make a cash flow projection to prepare for challenges in 2025.
Finally, it’s important to maintain detailed financial records and ensure you are meeting your current debt repayments and obligations, to improve your chances of securing fast funding when the need arises.
3. Mobile first: Digital commerce booms and goes mobile
The digital shift is not just something tech CEOs like to mention; it’s happening at breakneck speed. The digital economy is projected to account for 15-20% of South Africa’s GDP by 2025, doubling in size from 8–10% in 2020.
Driving this shift is increased internet penetration, growing from 68% in 2023 to over 75% by 2025. But internet usage alone doesn’t fully account for the boom in the digital economy. E-commerce is expected to rapidly grow at a 21.4% compound annual growth rate (CAGR) through 2030.
Within the online retail space, 77% of South Africans do their shopping on mobile phones, while 54% make their purchases on laptops.
Why it’s important
“Digital commerce is more than just a trend, it’s actually creating new opportunities and markets for SME owners,” McKinnon comments on the rise of the digital economy. He adds that high mobile penetration is fueling mobile commerce, allowing businesses to “reach customers on their phones – wherever they are.”
Through high mobile penetration, e-commerce now has the potential to extend a business’s reach beyond local borders. The increasing adoption of online shopping platforms means that even small businesses can reach beyond their local community and compete on a national or even international scale.
How to prepare
Bring your business to the digital era and invest in a user-friendly e-commerce website. Ensure your website and online services are fully optimised for mobile devices. Consider partnering with tech-savvy businesses or joining online marketplaces to increase your online presence.
4. Just a swipe away: Payments are getting smoother
As consumers move toward digital commerce, so do payments. In June of 2024, the South African Reserve Bank (SARB) published a road map towards a cashless economy and is transforming the nation’s digital payments landscape to get there by 2035.
The South African payments landscape is evolving to meet not just digital consumers’ demands but those of both digital and bricks-and-mortar businesses. While cash is still widely used by SMEs, 58% of SMEs already use digital transactions.
Why it’s important
“B2B options, consumer payment innovation, and contactless solutions are helping SMEs reach more customers while simplifying their checkout processes,” says McKinnon.
More than just simplifying the checkout process, offering digital payment services as an option to both B2B and B2C customers is crucial for South African SMEs to break into the growing e-commerce market.
How to prepare
Adopt mobile and digital payment solutions, like implementing mobile wallet and QR code payments or offering EFT services like Ozow and Payfast for e-commerce transactions. Bricks-and-mortar shops should look into contactless payments and affordable, digital payment terminals.
5. In the cloud: Investments in digital infrastructure and tech
The digital transformation of South Africa’s economy doesn’t end with e-commerce and the payments landscape. Digital transformation will play a pivotal role in the country’s future, with projections indicating it could contribute almost 20% to the GDP by 2028 and create 300,000 jobs.
Today, massive investments hold up tomorrow’s promise. South African telecom companies have invested $11.45 billion (R200 billion) in the past five years to establish fibre optic networks and data centres, improving connectivity and supporting the shift toward a digital economy.
The public cloud services market is expected to grow at a CAGR of 25% until 2025, the ITA predicts. Similarly, the number of Internet of Things (IoT) connections is anticipated to increase to 43 million by 2025 from 17 million in 2020.
Why it’s important
Digital technologies like the IoT, artificial intelligence (AI), and cloud computing have the power to transform traditional sectors and SMEs making use of these and other emerging technologies.
Think of real-time monitoring and data collection of production processes, improving efficiency and customer experience, and automating routine tasks. All of these improvements through technology give your SME an edge and could allow you to compete with other, often bigger businesses.
In fact, 73% of African SMEs that have adopted technological solutions increased their competitiveness, while 87% said it accelerated business growth.
How to prepare
You can prepare your SME by first assessing your current digital capabilities. What technologies and digital skills exist within your business? Address any digital skills gap that you might encounter and develop a roadmap for adopting technologies that can help you reach your business goals.
Perhaps you’d like to start with cloud computing. 81.3 of the 400 SMEs surveyed by Ecofin mention cloud computing as the most important tool in enhancing competitiveness – even more so than e-commerce tools.
Cloud services offer a low-cost entry point to advanced technologies that were formerly only available to large enterprises.
Preparing for 2025: get your financing in order
Looking ahead to next year, it’s clear that digitalisation is the big driver behind the business trends in South Africa set to transform SMEs in 2025. The trends we’ve explored can bring big opportunities to small business owners.
To capitalise on these top five business trends in South Africa, it’s crucial to have your finances in order. Digital transformation requires investment in new technologies, whether it’s e-commerce solutions or AI-driven tools. Besides, cash flow management is more important than ever in a rapidly growing digital economy.
Don’t let a lack of funding hold your SME back from embracing these transformative trends and achieving growth in 2025. Take the first step towards financial readiness by exploring your funding options.
Build a business that is ready for the future using Lula’s flexible business funding.You can access up to R5 million in funding within as little as 24 hours. Start the fast-track application process to see if you qualify.
