Online Reporter
More than half South Africa’s small businesses don’t expect to survive for more than a year, a survey backed by lender Absa Group found.
Some 53 percent of the 1 600 entities canvassed for the inaugural Small Business Growth Index said they were contracting, trading with difficulty or at risk of closure, with costs of some of inputs such as transport and raw materials climbing as much as 61 percent.
Just one in four of the firms reported that they were growing, while 55 percent said they may not survive longer than a year.
Less than 12 percent anticipated remaining in business for more than two years without support to improve their access to working capital and markets. Just one in 11 was able to expand headcount.
Absa Business Banking partnered with the South African Chamber of Commerce and Industry in February to introduce the Small Business Growth Index, with the survey conducted by the University of South Africa’s Bureau of Market Research. The latest index score of 51.08 places South Africa’s small-business environment in the “vulnerable” zone.
The report calls for grant-based funding to be provided to early-stage, township and rural businesses, and for small firms to be given increased access to cheaper funding and training.
“Policymakers should respond with urgent, tailored and accessible financing solutions that bridge the gap between demand and supply,” said Alan Mukoki, SACCI’s chief executive officer. “The focus must be on relieving immediate cash-flow stress, enhancing finance literacy and empowering businesses to invest in growth and resilience.” — Bloomberg
Peter Tanyanyiwa