We’ve all seen the numbers:

· More than 90% of businesses in South Africa are SMMEs
· SMMEs contribute to 40% of the country’s GDP
· 60% of the workforce are employed by SMMEs
· 75% of new job opportunities are created by SMMEs

And yet… our SMMEs are still consistently locked out of funding opportunities. A lack of formal financial records, high perceived risk by lenders or poor credit histories prevent SMMEs from accessing essential funding that can drive and grow successful and scalable businesses.

However, while it may take years for the statistics to change, we are seeing a positive shift in the narrative as services are being tailor-made for the SMME market. More than ever, business and government are intentionally backing this sector, not just for the sake of small business growth or their own profit margins, but because there is a deep understanding that the success of our country relies on it.

According to the latest Finfind Access to Finance Report, the number of active SMME funders in South Africa has increased by 121% over the last five years, citing an additional 180 new firms with over 600 products for SMME funding. Services span across new offerings within traditional banks, fintech innovators like Sourcefin, private lenders, DFIs, blended finance, and public-private partnerships.

We’ve seen an intentional increase around marketing communications and advertising for alternative funders, showing that this is a sector that is deeply worth investing in, with many new entrants into the market over the past year. The media narrative around SMMEs is also evolving, with dedicated supplements and publications giving louder voice to those too often left unheard.

But as more products and services become available, we need to maintain a mindful collective of shared success. The need is great and the opportunities are many, and it is only with a focus on co-creation that we can truly make a dent in the R350-billion funding gap.

We’ve been so encouraged to see this play out at recent events over the past few months, where a number of organisations and people have backed initiatives to drive financial inclusion, mentorship, access to finance and the collective narrative for SMMEs.

Finfind, and some other institutions, are making a tangible impact by providing much-needed data on SMME access to financing, which is now translating into an effect on policy and business solutions. That being said, despite the best effort of organisations

like Finfind, data fragmentation is still a barrier. While improvements exist, many funders still lack reliable credit and performance data on informal or micro-SMMEs. Cross-sector data sharing, public sector data sharing or open banking could play a role in making credit decisioning easier, unlocking access to funds quicker.

Similarly, digital payment products are capturing SMME credit and transaction data of informal business owners – a huge component of SMMEs. Government is making changes to regulations, creating an environment for more efficient and resource-driven public-private partnerships and commercial banks are paving a way to address SMME needs through dedicated divisions, ESD finance solutions and partnerships with alternative funders.

At Sourcefin, we deeply value the role of small businesses in driving South Africa’s economy forward. We know that we can’t service every need and have selected to specialise in purchase order (PO) funding and invoice discounting. This is where we believe we can make the most impact right now, enabling growth through open-minded, innovative, tech-driven funding solutions and ongoing support of SMMEs along their business journey.

In the face of South Africa’s complex SMME landscape, it is encouraging to see the amount of collaboration over competition in the marketplace. A tangible shift is underway, one where public and private sectors are stepping into complementary roles, and where collective impact matters. It is up to each of us to constantly seek forward-focused solutions towards a shared goal. That of a thriving economy, meaningful employment, and a country realising its full potential.