Small businesses are particularly exposed to high fuel prices because fuel costs affect transport, deliveries, commuting, supplier pricing and broader inflation across the economy.
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South Africa’s record petrol price is adding fresh pressure to already strained small businesses, raising concerns about operating costs, cash flow and employment.
According to a statement issued by Simply Financial Services, two consecutive fuel price increases of a cumulative 32% have pushed inland 95 unleaded petrol to R26.52 per litre, and among the steepest consecutive increases in 50 years.
According to Simply Financial Services chief executive Anthony Miller, the increases were forcing businesses to reassess costs and financial risks, and one solution was to consider group risk cover.
However, the broader issue is the vulnerability of South Africa’s small, medium and micro enterprise sector to not having staff who are able to contribute to the businesses’ growth. “For employers taking stock of their costs and commitments, ensuring staff cover is in place is one of the most effective ways to manage risk in the current climate,” Miller said.
Miller explained that this would ensure that unexpected illness or injury does not compound the financial pressure already bearing down on businesses and their people.
SMMEs are widely regarded as the backbone of South Africa’s economy. According to industry and banking sector estimates, they account for more than 98% of formal businesses, employ between 50% and 60% of the workforce and contribute up to 40% of gross domestic product.
The sector also plays a major role in employment creation, township and rural economic activity, competition and innovation. Simply Financial Services cited estimates that South Africa’s SMEs employ between 10 million and 14 million people.
The company warned that many smaller employers were operating under increasingly tight margins as fuel, transport and operational costs rose.
According to the statement, conventional employee risk cover products were historically designed for large corporates with dedicated human resources teams and stable staffing structures, leaving many smaller businesses without affordable protection mechanisms.
“The result is that a significant portion of the estimated 10 to 14 million people employed in South Africa's SME sector have no employer-provided financial protection if illness or injury prevents them from working,” the statement said.
Simply Financial Services said the operational consequences for small businesses could also be severe when key employees are unable to work.
“When that happens, income stops. For employees without savings or other cover, the consequences are immediate. For employers who depend on key individuals, the operational impact can be equally serious,” the company said.
The pressure comes as many businesses continue battling weak economic growth, high logistics costs, electricity instability and subdued consumer spending.
Small businesses are particularly exposed because fuel costs affect transport, deliveries, commuting, supplier pricing and broader inflation across the economy.
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