Half of South Africa's Small Businesses Face Likely Collapse Within the Next Year Without Immediate Aid, According to a Fresh Study
Supporting South Africa's Small Businesses: The Small Business Growth Index Proposes Urgent Interventions
The Small Business Growth Index (SBGI), launched in February 2025, is providing a much-needed barometer for small business performance in South Africa. The latest index score of 51.08 places the country's small business environment in the "vulnerable" zone, with more than half (55.3%) of respondents indicating they may not survive longer than a year under current conditions.
The SBGI, a collaboration between Absa Business Banking, the South African Chamber of Commerce and Industry (SACCI), the Bureau of Market Research (BMR) at Unisa, and the Small Business Ambassador Programme, is offering a comprehensive approach to addressing the challenges facing small businesses.
The focus of these solutions is fourfold:
- Expand grant-based funding mechanisms: The report calls for streamlined and accountable micro-grant channels, particularly aimed at early-stage, township, and rural-based businesses.
- Increase access to fit-for-purpose finance: Hybrid finance products combining low-interest, revenue-contingent, medium to long-term loans with embedded training and mentorship are proposed to increase access to suitable finance.
- Strengthen financial literacy and awareness: A national SME finance readiness campaign will provide workshops, toolkits, and digital tools to demystify financing and improve loan readiness.
- Facilitate broader access to equity and alternative capital sources: Accredited SME intermediaries will help businesses access venture capital, crowdfunding, and invoice financing.
The Small Business Ambassador Programme, available at sacci.org.za/small-business-growth-index/, offers market intelligence, practical guidance, and opportunities for policy dialogue.
Despite the strain, roughly 80% of businesses signalled their intent to invest, particularly in marketing, fixed assets, and working capital. However, cost pressures continue to mount, with transport, utilities, and raw materials emerging as the most volatile inputs. In response, more than 75% of businesses plan to raise prices by an average of between 6% - 10% in the months ahead due to these cost pressures.
The approach emphasizes combining financial support with capacity building and ecosystem development to help small businesses not only survive but thrive. Absa, the Bank of the Entrepreneur, is committed to collaboration to create a supportive ecosystem for small businesses. The report underscores the need for urgent, tailored, and accessible financing solutions to bridge the gap between demand and supply.
[1] SBGI Report, 2025 [2] Absa Business Banking, 2025 [3] Small Business Ambassador Programme, 2025 [4] Bureau of Market Research (BMR) at Unisa, 2025
- The Small Business Growth Index (SBGI), a collaboration between Absa Business Banking, the South African Chamber of Commerce and Industry (SACCI), the Bureau of Market Research (BMR) at Unisa, and the Small Business Ambassador Programme, proposes expanding grant-based funding mechanisms, particularly for early-stage, township, and rural-based businesses.
- The report from Absa Business Banking, 2025, also suggests increasing access to fit-for-purpose finance by proposing hybrid finance products that combine low-interest, revenue-contingent, medium to long-term loans with embedded training and mentorship.
- In addition, the Small Business Ambassador Programme (available at sacci.org.za/small-business-growth-index/) is working towards strengthening financial literacy and awareness among small-business owners by providing workshops, toolkits, and digital tools to improve loan readiness.
- The Bureau of Market Research (BMR) at Unisa, 2025, is advocating for facilitating broader access to equity and alternative capital sources, such as venture capital, crowdfunding, and invoice financing, by partnering with accredited SME intermediaries. The approach emphasizes combining financial support with capacity building and ecosystem development to help small businesses not only survive but thrive.
