Small and medium-sized enterprises (SMEs) in South Africa are being urged to strengthen their financial planning as the country braces for a potential fuel price increase in April, a development that could place additional strain on already tight business margins.
According to Garth Rossiter, Chief Risk Officer at Lula, the impact of rising fuel prices extends far beyond transport and logistics companies.
“Fuel price increases don’t only affect logistics companies,” Rossiter said. “They ripple across the entire economy because almost every product or input needs to be transported at some stage. That means businesses across sectors will eventually feel the impact.”
Recent volatility in global oil markets, coupled with a weaker rand, has heightened expectations that fuel prices could increase sharply in the coming months. Diesel prices are particularly critical for the agricultural and transport sectors, as trucks and commercial fleets rely heavily on the fuel to move goods across the country.
If diesel prices rise significantly, transport costs are likely to climb rapidly, placing immediate pressure on SMEs that depend on suppliers and distribution networks.
Rossiter said smaller businesses are particularly vulnerable because they typically lack the pricing flexibility of larger corporations.
“When fuel prices rise, large companies may be able to absorb the cost or renegotiate contracts. Small businesses often do not have that flexibility,” he explained. “They pay the price at the pump immediately, but they cannot always increase their prices overnight. That means their margins compress.”
The result is often a temporary cash-flow gap. While operational costs rise almost instantly, it can take time for businesses to adjust pricing or recover those expenses through revenue.
Rossiter noted that liquidity is often the deciding factor in whether a small business survives economic shocks.
“Liquidity is what often determines whether a small business weathers a shock or not,” he said. “Businesses are effectively funding their customers in the short term while costs rise ahead of income. Without proper planning, that gap can put real pressure on cash flow.”
Fuel price increases can also contribute to broader inflation. As suppliers face higher transportation costs, those increases filter through supply chains and affect the prices of raw materials, retail goods and services.
This ultimately reduces consumer purchasing power, another challenge for SMEs that rely heavily on consistent customer spending.
However, Rossiter stressed that while global market shifts are unpredictable, preparation remains within the control of business owners.
“The most resilient businesses are the ones that plan and understand how external shocks might affect them,” he said. “Even if you do not operate trucks or transport goods yourself, your suppliers do. That means higher fuel prices will eventually reach your business.”
He encouraged SME owners to focus on proactive financial planning, including forecasting potential increases in input costs, monitoring supplier price movements and ensuring access to flexible funding options if necessary.
“Business owners don’t have a crystal ball, but they can prepare for different scenarios,” Rossiter said. “Planning for the possibility of higher costs allows businesses to protect their margins and make measured decisions rather than reacting under pressure.”
Rossiter also cautioned businesses against making long-term financial commitments in response to what may ultimately be short-term disruptions.
“In uncertain environments, flexibility matters,” he said. “The goal is to ensure you have options available if conditions tighten, while avoiding decisions that could lock the business into unnecessary long-term obligations.”
Meanwhile, the pressure from rising fuel costs is already being felt in the aviation sector. South African low-cost airline FlySafair has indicated that ticket prices are increasing as geopolitical tensions in the Middle East drive global fuel price volatility.
The airline said escalating tensions in the region have pushed up jet fuel costs, forcing carriers to adjust fares in order to maintain operations.
With fuel remaining one of the largest operating expenses for both airlines and transport-dependent businesses, experts warn that continued global instability could have ripple effects across multiple sectors of the South African economy.
