Navigating the Fiscal Landscape: What SMEs and NGOs Need to Know

As highlighted in a recent PwC report, South Africa is facing a projected fiscal revenue shortfall of R18 billion. This poses significant financial and operational challenges for SMEs and NGOs, making it essential to prepare and adapt to shifting economic conditions. Understanding these implications and taking proactive steps will be critical to ensuring financial stability and long-term sustainability.

Why This Matters to SMEs and NGOs

The revenue shortfall signals that government tax collections are below expectations, leading to potential economic shifts. The key drivers include:

• Slower economic growth reduces corporate and personal tax contributions.
• Declining consumer spending affecting VAT collections.
• Reduced government funding and grants impacting NGOs and publicly funded projects.
• Stricter tax enforcement and compliance measures affecting businesses of all sizes.

How SMEs Will Be Affected and What to Do

For small and medium enterprises, the impact of the shortfall could mean:

1. Higher Taxes & Compliance Scrutiny – Expect increased efforts by SARS to tighten tax compliance. SMEs should ensure accurate financial reporting and explore tax efficiency strategies to avoid penalties.
2. Lower Government Spending on Contracts & Tenders – If you rely on government contracts, expect delays or budget reductions. Diversify your client base to reduce reliance on state funding.
3. Higher Operating Costs & Interest Rates – Inflationary pressures and potential interest rate hikes may increase loan repayments and supplier costs. Strengthen cash flow management and negotiate better credit terms with suppliers.
4. Tighter Access to Business Loans – Banks may tighten lending criteria. Improve your financial position by reducing debt and demonstrating business stability to secure funding if needed.

How NGOs Will Be Affected and What to Do

For non-profit organizations, the revenue shortfall could lead to:

1. Reduced Government Grants & Donor Fatigue – Expect possible funding cuts for social programs and grants. Strengthen alternative fundraising strategies, including private sector partnerships and digital crowdfunding.
2. Delays in Project Funding & Payments – NGOs relying on state funds may experience delays. Build financial reserves and diversify funding streams to cushion against disruptions.
3. Increased Demand for Services with Limited Resources – Economic stress may increase demand for NGO services while reducing available resources. Focus on efficiency, collaboration, and innovative service delivery models to maximize impact.

Proactive Steps for Financial Stability

Both SMEs and NGOs can take strategic steps to navigate these economic challenges:

• Strengthen Financial Planning – Regularly review budgets, improve cash flow forecasting, and cut non-essential costs.
• Optimize Tax Strategies – Work with tax professionals to identify tax-saving opportunities and ensure compliance.
• Diversify Revenue Streams – SMEs should explore new markets, while NGOs should seek corporate sponsorships and donor diversification.
• Enhance Fundraising & Grant Applications – NGOs should refine proposals and leverage digital fundraising campaigns to attract donors.
• Improve Operational Efficiency – Automate processes and adopt cost-saving measures to increase resilience.

How Jerahuni Accounting & Advisory Consultancy Can Help

At Jerahuni Accounting & Advisory Consultancy, we provide expert financial guidance tailored to SMEs and NGOs. Our services include: ✅ Tax Advisory & Compliance Support

✅ Cash Flow & Financial Planning

✅ Business Growth Strategies

✅ NGO Financial Management & Grant Consulting  

Let’s Build Resilience Together! Contact us today for a consultation.

📞 +2768 589 7848

📧 info@jaac.co.za

🌍 visit our website today for the range of our service offerings. 

Stay ahead. Stay prepared. Let's turn challenges into opportunities!

Paddington Jerahuni
Founder & Principal Consultant
Jerahuni Accounting & Advisory Consultancy