The South African Reserve Bank’s decision to keep the repo rate unchanged at a record low of 3.5% and prime lending rate at 7% eases pressure on the ailing economy and debt burden for businesses and consumers.
This will help to support SMEs who continue to struggle financially due to the persistent impact of COVID-19, while trying to recover as quickly as possible. For those sectors that have been hardest hit, keeping rates on hold will go a long way to help them stay afloat.
This further provides an incentive for SMEs to consider options as they attempt to return to normal levels of operations or explore alternative opportunities.
While it remains impossible to predict how the COVID-19 pandemic will play out in 2021, businesses should use this time to re-evaluate their strategies, recovery plans and cash flow requirements.