Old Mutual warns geopolitical tensions are tightening conditions for SME funding

Johannesburg - Global geopolitical tensions are beginning to surface in South Africa's SME funding landscape, as rising operating costs quietly erode cash flows and increase pressure on business sustainability.

According to Ndumiso Zulu, CEO of the Old Mutual Group Social Investments, global instability is no longer an abstract risk for small and medium‑sized enterprises - it is increasingly reflected in the financials of businesses seeking funding. "From a funding perspective, we are seeing the effects of global volatility showing up very clearly in SME cash flows. Rising fuel, energy and input costs are reducing margins, which in turn affects how businesses are assessed for funding," Zulu says.

South Africa's exposure to global economic and geopolitical shocks, particularly in energy markets, has led to recent fuel price increases that ripple across logistics, manufacturing, retail and service‑based SMEs. While the temporary R3 per litre reduction in the general fuel levy (1 April to 5 May 2026) offers short‑term relief, Zulu cautions that the underlying pressures remain.

"Short‑term interventions help, but they do not change the structural reality many SMEs face. When operating costs rise faster than revenue, the risk profile of a business changes and that matters when businesses approach funders for growth capital or working‑capital support," he explains. Zulu notes that many SMEs remain fundamentally sound businesses but are increasingly vulnerable to what he describes as an "unseen tax" - a gradual erosion of profitability driven by external shocks.

"The unseen tax of geopolitical instability doesn't always show up immediately. Often it only becomes visible when a business is under pressure and needs funding support. By then, margins are thinner and financial buffers have already been used," he adds. From Old Mutual's engagement with SME clients, increasing cost pressure has translated into more cautious expansion plans, tighter liquidity and rising demand for short‑term funding solutions.

What funders are looking for right now

Zulu says SMEs can improve their funding readiness by focusing on fundamentals that demonstrate resilience:

Clear cash‑flow visibility

Businesses with up‑to‑date cash‑flow forecasts are better positioned to engage funders during uncertain periods.

Working‑capital buffers

Even modest reserves signal financial discipline and an ability to absorb short‑term shocks.

Measured growth plans

In a high‑cost environment, sustainable and well‑tested growth strategies carry more weight than aggressive expansion funded by debt.

Early engagement with funders

SMEs that engage proactively - before distress becomes visible - typically have more funding options available.

"The most successful businesses are those that plan early and engage funders as partners, not as a last resort," Zulu says. "Funding decisions today are increasingly about resilience, not just growth."

From reacting to planning

With no clear end in sight to global geopolitical uncertainty, Zulu warns that SMEs cannot afford to take a wait‑and‑see approach. "The risk is not only what businesses are facing now, but how prepared they are for what comes next. SMEs that adapt early, protect cash flow and make informed funding decisions are far better placed to weather prolonged uncertainty."

He adds that the real cost of inaction may only become evident later. "The unseen tax is already impacting SMEs. The question is whether business owners recognise it early enough to respond strategically."