Fetola Research Highlights Financial Readiness Gap Among SA Small Businesses

Fetola Research Highlights Financial Readiness Gap Among SA Small Businesses. South African small businesses are generating sales and profits, but many lack the financial systems needed to demonstrate their readiness for growth, according to new research by MSME development specialist Fetola.

Fetola’s MSME Bankability Gap Report analysed financial verification data from 177 growth-oriented businesses across all nine provinces and multiple sectors. The businesses underwent Fetola’s Financial Verification process between April and July 2025.

The research found that 86.6% of the businesses assessed had sustainable sales, while 76.8% were profitable. However, only 34.7% had credible management reports and 13.3% had a 12-month budget.

Fetola refers to the difference between being commercially active and being able to demonstrate financial readiness to lenders, investors and commercial partners as the MSME “bankability gap”.

Catherine Wijnberg, CEO of Fetola, said the findings indicate that capital is not necessarily the only constraint affecting MSME growth.

The research also identified a connection between financial planning and business stability. Half of the businesses assessed were experiencing cash-flow pressure despite more than three-quarters being profitable.

Among businesses with a 12-month budget, 90.9% were assessed as financially stable over the following six months. This compared with 65.3% of businesses that did not have such a budget.

Grant Prince, head of impact investing at Fetola, said the findings challenge the assumption that increasing capital flows into the MSME sector would automatically address the barriers facing small businesses.

Fetola said improving access to finance should therefore be accompanied by support that enables businesses to strengthen financial records, management accounts, budgeting, cash-flow forecasting and internal controls.

The organisation said these measures can help businesses demonstrate their financial position and readiness to lenders, investors and commercial partners.

The report’s findings are based on businesses assessed through Fetola’s Financial Verification process, providing data on the financial practices and conditions of established MSMEs seeking growth.