Most of South Africa’s small and medium-sized enterprises (SMEs) plan to raise prices in the coming months as operating costs rise, while only a minority believe they can survive the next year without external support, according to the latest small business growth index.
The survey of more than 2,000 SMEs finds that 67% intend to increase prices by up to 10% over the next six months, mainly to offset higher transport, utility and input costs. Only 38% said they could remain viable for more than 12 months under present conditions without additional assistance, the report shows.
The index, jointly produced by Absa’s business banking division, the South African Chamber of Commerce and Industry (Sacci) and the Bureau of Market Research at the University of South Africa, shows the overall score improved slightly to 51.5 points in the second half of 2025 from 50.08 points previously. However, the reading still places the sector within the “vulnerable zone”, short of the threshold for sustained recovery.
“This sector is at a critical inflection point,” said interim managing executive for SME business at Absa Vignesh Subramani. “The balance between short-term relief, medium-term competitiveness and long-term reform will determine whether small businesses can transition into a resilient and inclusive growth engine.”
Trading conditions are mixed. The report shows 33% of SMEs report growth, 24% trade with difficulty and 9% are at risk of closure, pointing to ongoing pressure on cashflow and business stability. Despite this, more than half of businesses expect moderate to strong growth over the next 12 months with ambitions to expand locally, nationally, online and, to a smaller extent, into exports.
Rising operating costs remain the main constraint. According to the report, many SMEs are passing these costs on to consumers, which could weaken demand and prolong inflationary pressures. Without targeted cost relief — such as energy support, logistics improvements, and lower interest rates — many SMEs are expected to remain vulnerable in the 2026 financial year.
“Businesses consistently expressed the need for stronger government intervention, from easier access to affordable finance and grants to meaningful reductions in red tape, VAT relief, and energy-cost support,” said Sacci CEO Alan Mukoki. “These priorities reflect longstanding advocacy for fiscal reform, infrastructure stability, policy certainty and a regulatory environment that enables rather than constrains growth,” he said.
The index proposes a phased policy response to shore up struggling small businesses. In the short term, it calls for urgent liquidity relief through stronger working-capital support, stricter enforcement of 30-day payment terms and incentives to improve energy resilience.
Over the next 18 months, the focus should shift to boosting competitiveness via digital adoption, financial inclusion and targeted skills development, backed by wider use of blended finance and stronger SME–fintech partnerships.
Over the longer term, the report says sustainable recovery will hinge on structural reforms to cut red tape, improve procurement, diversify exports and integrate SMEs more firmly into the national growth strategy.
It also highlights the need for greater support for start-ups in rural and township economies, calling for better institutional co-ordination, data-driven policymaking and improved access to finance and markets.
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