About the study

SBP’s SME Growth Index is a multi-year research project geared towards establishing a solid, evidence-based understanding of South Africa’s SMEs.

The largest, most comprehensive study of the SME community ever undertaken in South Africa, and one of a few of its kind worldwide.

Now in its third year the SME Growth Index tracks the experiences of a panel of 500 established small firms in the manufacturing, business services and tourism sectors.  The data that has been assembled over the course of the study provides an unparalleled resource for understanding the lived dynamics of South Africa’s SMEs.  Rather than start-ups or survivalist enterprises, it is focused on established firms.  It is in this cohort of the business community that we can best hope for firm growth and the developmental benefits it will bring.

The 2013 SME Growth Index, is the latest installment of a larger narrative, built up over the three years since the annual SME Growth Index was launched.  The focus is on firm growth, on interrogating the differences between firms on differing growth trajectories, and identifying the factors propelling firm growth.

The report links these findings to an assessment of South Africa’s competitiveness.  Studying firm dynamics and performance reveals insights into the dynamics of the economy at large.  By understanding both the burdens and efficiencies that firms engage within South Africa’s economy, we can begin to understand what promotes and undermines South Africa’s competitiveness.  More critically, we can act to improve it.

The SME Growth Index is intended to support informed evidence-rich debate on the state of South Africa’s SME economy, and what can be done to encourage it.  If the NDP’s ambitions are to e realised, this is a debate that urgently needs to get underway.

SBP’s SME Growth Index provides an innovative approach to understanding how and why small firms grow, or fail.  It provides government and policy makers with much needed empirical evidence that helps differentiate the internal and external factors that influence whether a small business is a survivalist with limited prospects for growth and employment creation, or able to create jobs and livelihoods for a broad range of individuals.  This information is critical in informing government’s economic and SME support strategy as well as job creation goals.

In brief, the purpose of SBP’s SME Growth Index is to support evidence-based policy for the SME sector in South Africa.  Its goal is to support policy and practical interventions that will best ensure an enabling regulatory and operating environment for sustainable SME job creation growth.

The project’s overall objectives are therefore to:

Establish a credible set of comparative analytical data at particular points in time to assess the impact of changes in the operating and regulatory environment impacting on SMEs in South Africa;

  • Identify patterns in SME firm growth;
  • Analyse the types of internal and external variables that differentiate between firms that are creating jobs and improving turnover, and those that are not and why;
  • Provide government and government agencies with empirical evidence-based data to help differentiate factors that support – or impede – small firm growth

One core feature of the Index is its longitudinal design.  The Index tracks 500 firms employing between 10 to 49 employees over a number of years, helping us to understand how better to support SMEs at various growth stages in their life cycle and what type of support strategies and interventions are needed to trigger performance and growth, job creation, competitiveness and approaches to innovation.

The second core feature is the focus on the individual firm, and collection of firm-level data in a country that has few, if any, reliable statistics available of the sector.  SMEs are diverse, and have different needs.  Some aim to simply survive, others are run by people with specialised skills and entrepreneurial flair and have the potential to grow exponentially.  Some are growing rapidly.