Operational gridlock, not a lack of capital, is now the defining obstacle for South Africa’s mid-sized businesses. That is the assessment of Mike Naidoo, CEO of FNB Commercial Enterprise Banking, who argues that the constraint holding back growth in the sector has shifted fundamentally. Fragmented systems, manual processes, cash-flow delays and infrastructure pressures are slowing the ability of growing firms to scale, even when customer demand and available funding are not the problem.
The strain cuts across multiple sectors. In wholesale and retail trade, particularly in fast-moving consumer goods, the pressure is acute. Manufacturing faces similar difficulties because of the extended gaps between production, invoicing and payment. These long cycles leave firms cash-constrained even when order books are full, pulling management attention away from expansion and toward the mechanics of keeping operations running day to day.
Naidoo described the core issue as “friction” that accumulates when businesses operate across broad supply chains without integrated systems. Disconnected workflows and manual processes create delays, duplicated work and limited visibility into payments and invoices. The result is that capital gets locked inside the operating cycle, delaying reinvestment and stalling growth plans before they get started.
The challenge shows up in concrete, everyday ways. A manufacturer may produce goods, invoice a customer and still wait weeks or months before cash arrives. During that lag, the business must fund operations out of pocket, even if sales are strong. In FMCG supply chains, distributors and manufacturers stay focused on production and execution but struggle to scale because working capital remains tied up in the payment cycle.
Meanwhile, Naidoo argued that traditional banking solutions are no longer sufficient to address this reality. For years, commercial lenders have positioned themselves around lending, payments, trade facilities and transactional banking. But shifts in trade dynamics, infrastructure bottlenecks and technology disruption have forced a rethink. Banks can no longer simply provide balance-sheet support; they must help businesses reduce friction across their value chains so management can focus on selling, producing and expanding.
One practical pathway involves linking banking solutions directly into enterprise resource planning (ERP) systems. When banks gain visibility over invoices through ERP integration, they can provide embedded finance directly into business operations. This approach allows a bank to support not only one client but multiple participants across a value chain. Suppliers and downstream distributors can benefit from improved funding flows, while businesses unlock faster working-capital access.
By embedding funding solutions into invoicing systems, banks can free up capital earlier in the operating cycle. Invoice-level information gives lenders greater confidence and visibility, allowing them to structure finance around actual trading activity rather than relying solely on traditional lending models. That flexibility can help businesses expand distribution, improve working-capital turnover and reduce pressure on their balance sheets.
Naidoo was clear that banks cannot solve these challenges alone. Commercial lenders bring regulated product breadth, established customer relationships and funding capacity, but fintech firms can provide the technical capabilities needed to address operational pain points more precisely. The most effective support will combine capital, technology partnerships and ecosystem-based solutions that help businesses navigate complexity more effectively.
For South Africa’s mid-market firms, the implication is direct. The next phase of growth may depend less on whether funding exists and more on whether businesses can simplify operations, improve supply-chain visibility and shorten the cash conversion cycle. Energy security concerns, higher resource costs and fragmented operating systems are consuming management attention that could otherwise go toward core commercial activity. Businesses that can partner with lenders offering integrated solutions, rather than standalone financial products, are likely to be those that successfully navigate an increasingly demanding operating environment. Whether South Africa’s banking sector can move fast enough to meet that need at scale remains the open question.