Half of SA’s small businesses at risk of closure, new study finds
Sector shows signs of strain
The inaugural Small Business Growth Index (SBGI) shows that over 50% of small businesses are either contracting, trading with difficulty or at risk of closure. Just one in four businesses reported any growth.
Key cost pressures cited include transport, utilities and raw materials, with prices rising by 60.9%, 56.9% and 52.9% respectively. In response, more than three-quarters of businesses say they plan to raise prices by an average of 6% to 10% in the months ahead.
Survey methodology and findings
The SBGI, launched in February 2025 by Absa Business Banking and the South African Chamber of Commerce and Industry (SACCI), was developed in partnership with the Bureau of Market Research (BMR) at Unisa.
It is based on a survey of over 1,600 small businesses across all nine provinces, and compiles indicators such as operating conditions, debt levels, cash flow, skills gaps and growth expectations into a single index.
The current score of 51.08 reflects a sector in a “vulnerable” zone, caught between early recovery and mounting cost pressures.
Resilience tested, but investment continues
While more than half of respondents do not expect to survive another year under current conditions, around 80% still intend to invest in areas such as working capital, fixed assets and marketing.
The findings suggest a cautious but persistent drive among businesses to remain competitive despite constrained operating environments.
Study calls for urgent structural support
The report highlights the need for urgent and systemic support from both public and private sectors. Suggested interventions include expanding grant-based funding, creating more accessible hybrid financing models, improving financial literacy through national campaigns, and widening access to equity and alternative funding through accredited intermediaries.
In parallel, the SBGI initiative has launched a Small Business Ambassador Programme to equip entrepreneurs with market intelligence and create space for them to contribute to future policy dialogue.