SME Growth Index for South Africa

Research firm SBP has launched the SME Growth Index in a move which promises to shed some light about the health of the SME sector in South Africa.

SBP said in South Africa it is estimated that 73 percent of workers are employed by firms with less than 50 employees.  Small firms make a critical contribution to the country’s GDP, and government’s tax base.  Despite their importance to the economy, very little is known about what differentiates the small businesses that scrapes by year to year with no real prospects of growth, from the firms that achieve high performance.  Yet this information is critical to inform government’s broader macro-economic strategy and job creation goals.

SBP added that it is committed to producing high-quality; outcomes based analysis that bridges the gap between theory, observation and practice.  “Our ground-breaking new SME Growth Index will, for the first time, provide evidence based longitudinal data to monitor the performance of small firms and identify the factors impeding firm growth and employment creation”.

The SME Growth Index will monitor the characteristics, performance, and resilience of a representative sample of 500 growth-orientated small firms, over a period of three years initially, in order to identify the internal characteristics and external factors associated with successful businesses growth.  It takes as its starting point that small firms change over time.  Moment in time data is of limited utility.  Longitudinal monitoring – revisiting the same firms over a period of time will provide a dynamic picture that captures the subtle impact of changing market conditions, regulatory frameworks and innovation, and allow the understanding of how business decisions have played out.

Furthermore, while focusing on factors impacting on small business performance, growth and job creation, the survey will also surface important policy implications for the business sector as a whole.

The cohort will consist of well established small firms, employing up to 49 people.  The focus is on sectors offering growth potential for small firms, specifically in the business services sector, and manufacturing.  The SME Growth Index will be the first of its kind in South Africa, and indeed one of the very few such indices worldwide.

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