Unexpected Growth in SA’s SME Index

Unexpected Growth in SA’s SME Index


While GDP growth may have been slow over the past year, the number of business owners (employers and self-employed) has been growing.

This is according to the Absa SME index, which measures the number of SMEs active in the economy every quarter, has shown an increase for the first time in a year. At 93,2, the index is at its highest level since the last quarter of 2011 when the index was just above 94.

Employers reflected in the index grew to 709 000 from 695 000 in the second quarter which is a 2% improvement in one quarter. The self-employed grew by only 1000 from 1 238 000 to 1 239 000 (basically 0%) indicating perhaps that the strikes had a bigger effect on micro businesses than small and medium employers.

Perhaps this also indicates that employers are more robust than many think and are able to grow in difficult situations.

Confidence still low

In comparison, confidence amongst business owners is still below the average and may stay there for a few more quarters as business owners may want to see how wildcat strike action is handled by the authorities.

According to Absa, one must remember that it’s a well-known fact that the economy has a delayed reaction on employment and very likely a delayed reaction from entrepreneurs as they probably plan their business well ahead of emerging facts.

The wildcat strike season in 2012 will therefore impact a little later and it may well be that the slower growth in the third quarter 2012 will make itself felt in some slower growth of employers in the next few quarters.

However, it would of course be tragic that the breakdown of law and order in some small parts of certain sectors could actually have a negative impact on employer creation just when the country needs employment growth.

The provincial landscape

A brief overview of business owners as a percentage of the total adults who make up the labour force per province shows that Gauteng has the highest percentage of business owners followed by Limpopo and then Mpumalanga.

Gauteng business ownership is 38% higher than the average for South Africa, providing a major reason why Gauteng is the wealthiest province in South Africa. Mpumalanga and Limpopo also have a very high penetration of business owners in their provinces. Northern Cape has less than 30% the ratio of business owners that Gauteng has and about 40% that South Africa has.

Surprisingly both KwaZulu-Natal and Western Cape have a lower business ownership rate than the country average as these two provinces are the second and third largest economies in South Africa.

Alison Job
Alison Job holds a BA English, Communications and has extensive experience in writing that spans news broadcasting, public relations and corporate and consumer publishing. Find her at Google+.
  • The number of Business owners has been growing, it is good but at the same time GDP should grow. It indicates growing in employment, it becomes bearable to the Owner.