South Africa’s biggest employer is in serious trouble

Only four in 10 small businesses in South Africa believe they can survive more than a year under current pressures without external help, little changed from the first half of 2025, a survey backed by lender Absa found.

About 38% of respondents in the biannual study said their enterprises would make it past 12 months, compared with 40% in the inaugural survey released in August, the latest Small Business Growth Index released Tuesday showed.

The overall gauge was little changed at 51.5 from 51.08, which puts the overall small-business environment in the “vulnerable” zone. 

“While operational continuity has strengthened, post-pandemic effects, liquidity challenges, cost pressures and structural constraints persist,” according to the survey conducted by the University of South Africa’s Bureau of Market Research for Absa’s business-banking unit and the nation’s chamber of commerce and industry.

More than 40% remain in distress or experience strain, highlighting the need for liquidity relief, energy stability, and market-access interventions, according to the report that covered 2,134 firms.

Small businesses — those with fewer than 50 employees — account for the majority of enterprises in the continent’s most industrialized economy.

About 3 million of these firms employ about 13.4 million people, according to the Banking Association of South Africa, which cites data from a 2024 study by Finscope. 

The most acute constraint remains financial and liquidity-related, cited by more than a quarter of respondents, with many dealing with late or inconsistent client payments, dependence on overdrafts to pay suppliers and payroll, and inadequate access to capital.

Inflation and weak consumer demand have further eroded working capital buffers, pushing many of these entities into a “hand-to-mouth” operational cycle, the report said. 

Macroeconomic uncertainty, crime, corruption and the decay in energy, water and transport infrastructure remain top perceived external risks.

Only 24% of small businesses operate in the “confidence” or “growth” range.

The report suggests interventions such as simplifying funding processes with one-stop digital application portals and performance-linked grant schemes, as well as creating a national ease-of-doing-business task force to monitor and report on bureaucratic bottlenecks, as ways to improve the environment.