180 businesses in South Africa on the brink of shutting down
New data shows that around 180 small and medium-sized businesses are on the brink of closing their doors in South Africa.
This is according to the latest Small Business Growth Index, released by Absa Business Banking, the South African Chamber of Commerce and Industry (SACCI), and Unisa’s Bureau of Market Research.
The index surveyed more than 2,000 SMEs across the country and found a sector under severe strain, even as some businesses continue to push for growth.
The rising cost of doing business is the biggest pressure point. Transport, electricity and general input costs have climbed rapidly.
As a result, 67% of SMEs said that they will need to raise prices by up to 10% in the next six months just to cope.
Many fear this will push customers away, weaken demand further and keep inflation sticky.
At the same time, only 38% of the surveyed businesses believe they can survive longer than 12 months under current conditions without extra support.
The index itself improved slightly, increasing to 51.5 points from 50.08 in the previous reading.
However, this still places the sector in what the researchers describe as the “vulnerable zone”, meaning small businesses remain far from a stable recovery.
The survey shows mixed trading conditions across the SME landscape. About a third of businesses reported growth, while nearly a quarter said they were struggling.
The most alarming finding is that 9% (around 180 businesses) are now considered at risk of closing their doors due to cashflow problems and ongoing instability.
Despite this, more than half of SMEs still expect some level of growth over the next year. Many hope to expand locally or nationally, grow their online presence or, in some cases, move into exports.
The results suggest that many entrepreneurs remain hopeful, but need the right conditions to turn that optimism into reality.
The report stressed that without targeted cost relief—especially in energy, logistics and financing—the SME sector will remain under pressure well into 2026.
Interventions are needed to support small businesses
SACCI CEO Alan Mukoki said businesses are repeatedly calling for stronger government intervention, including better access to affordable finance, grants, reductions in red tape, VAT relief and support with energy costs.
These requests reflect long-standing concerns about policy uncertainty, unreliable infrastructure and a regulatory environment that often makes running a business harder rather than easier.
To stabilise the sector, the index recommended a phased approach. In the immediate term, it calls for measures such as working-capital support, stricter enforcement of 30-day payment terms and incentives that help businesses reduce energy costs.
Over the next 18 months, the priority should shift to boosting competitiveness by promoting digital tools, making financial services more accessible and expanding skills development.
The index also highlighted the potential of blended finance and stronger partnerships with fintech companies to improve access to funding and make operations more efficient.
Over the long term, it argued that real recovery will depend on structural reforms that simplify regulation, improve public procurement, diversify exports and integrate SMEs more effectively into the country’s economic plans.
The report also highlighted the challenges facing township and rural businesses, which make up a major but often overlooked part of South Africa’s economy.
These businesses face even greater obstacles in complying with regulations and accessing finance.
Many rely on manual systems, deal primarily in cash and struggle with infrastructure limitations.
Hiten Keshave, CEO of Unconventional CA, said that “two things remain fundamentally broken in the South African SME economy: the cost of doing business and the governance environment small firms are expected to operate in”.
He warned that outdated compliance systems—around five years behind global standards—prevent many small businesses from qualifying for loans, investment and relief programmes.
Keshave argued that if South Africa wants township and rural businesses to enter the mainstream economy, compliance and funding must be made much simpler and far more affordable.
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