Visibility and Trust Key to SME Growth in South Africa

Small- and medium-sized enterprises are the backbone of South Africa's economy, contributing about 34% of the country's GDP, accounting for around 60% of employment, and representing more than 90% of formal businesses. Despite their importance, many entrepreneurs struggle to access finance, with a lack of visibility being a major challenge. Visibility refers to the collection of signals that help the market understand who a business is, how it operates, and whether it can be trusted.

The lack of visibility, also known as the invisibility tax, is a hidden cost that many businesses pay when there is insufficient evidence available to demonstrate their credibility, performance, and growth potential. This can lead to delayed opportunities, increased risk, and higher costs of capital. Even strong businesses can be overlooked when external stakeholders do not have enough information to assess them with confidence. According to Lee Naik, CEO and regional president of TransUnion Africa, visibility is not the same as publicity, but rather a fundamental aspect of a business's ability to demonstrate its trustworthiness.

Naik explains that visibility includes accurate business registration information, financial records, payment behaviour, supplier relationships, transaction history, and a demonstrated ability to meet financial commitments consistently over time. These signals help transform assumptions into informed decisions, creating trust, which is one of the most valuable economic assets a business can possess. Trust determines not only whether an opportunity is secured but also how quickly it is secured and at what cost.

Data has become a powerful enabler of inclusion and growth, helping to create a richer and more complete picture of business performance. Technology and responsible data practices are enabling businesses to build visibility through a range of indicators that reflect real-world behaviour and operational performance. This creates opportunities to recognise viable businesses that may not have extensive traditional credit histories but have demonstrated resilience, consistency, and commercial potential.

Progress in creating a more inclusive and resilient economy is collective, with lenders, policymakers, corporates, and industry bodies needing to work together to create pathways that make participation more accessible and opportunity more attainable. TransUnion has partnered with the National Small Business Chamber to share a commitment to creating space for more businesses to participate, grow, and contribute to South Africa's future prosperity.

The goal is not simply to help more businesses access credit but to pursue sustainable growth, resilience, and economic participation. Credit is a bridge that enables a business to seize opportunities, invest in growth, enter new markets, create jobs, or expand capacity. South Africa's future growth depends on the ability to recognise potential where it already exists, and SMEs are critical to achieving this goal.

Ultimately, visibility and trust are essential for SME growth in South Africa. By creating a more inclusive and resilient economy, businesses can demonstrate their readiness and earn trust, leading to increased economic participation and growth.

Key points

• Visibility and trust are crucial for SME growth in South Africa.
• Lack of visibility is a major challenge for SMEs accessing finance.
• Data and technology can help create a more complete picture of business performance.