South Africa’s Small Business Sector: Insights from the Absa Small Business Growth Index 2025
Strategic intelligence for strengthening South Africa’s SME ecosystem
South Africa’s small and medium enterprises (SMEs) are vital to economic growth and employment, yet many SMEs are operating under growing strain. Despite accounting for around 91% of formal businesses, 60% of employment and 34% of GDP, rising costs, cash-flow pressures and constrained access to finance continue to limit growth. For business owners themselves, as well as policymakers, financiers and support organisations, understanding these pressures is essential to strengthening the SME ecosystem and enabling more sustainable growth. To better understand the determinants of SME growth and development, Absa Business Banking, in partnership with the South African Chamber of Commerce and Industry (SACCI) and the Bureau of Market Research (BMR), developed the Small Business Growth Index (SBGI). This pioneering bi-annual index provides a data-driven view of the health, challenges and growth outlook of SMEs across South Africa.
The 2025 SBGI highlights several key trends shaping the small business landscape:
- Only a minority of SMEs report sustained growth, with many still focused on survival rather than expansion.
- A significant number of small businesses indicate they would struggle to survive beyond 12 months without improved conditions or support.
- Rising input, transport and utility costs continue to place strain on already thin profit margins.
- Access to funding remains a major obstacle, limiting the ability of businesses to invest and scale.
- Skills shortages, particularly in digital and financial management are holding back productivity and competitiveness.
Despite these challenges, the index also reveals cautious optimism. Many SMEs are exploring digital tools, new markets and efficiency improvements as pathways to future growth, signalling resilience and adaptability even in tough economic conditions. The Absa Small Business Growth Index goes beyond research to provide a strategic insights framework for business owners, policymakers and support organisations seeking to strengthen South Africa’s SME ecosystem.
👉 Explore the full Absa 2025 SBGI and its insights here: https://www.absa.co.za/business/absa-small-business-growth-index-2025/