What SA’s SME landscape looks like

An Absa SME Index reveals that, while business owners tend to be older than 24 years old in South Africa, a typical age of a business owner is nearly double the number at 42.

Absa notes that in a country that has 50% unemployment rate amongst the youth, South Africa’s young entrepreneurs make up 20% of all employers and 32% of the self-employed.

This is an indication that youth entrepreneurship is one alternative in addressing youth unemployment, the bank suggests.

The latest statistics from the Absa SME Index, have been extrapolated from Statistics South Africa’s information on various economic indicators that are issued regularly.

Sisa Ntshona, Absa’s head of enterprise development, business banking Africa says that poverty and unemployment are the leading challenges facing the youth today.

“While South Africa’s unemployment rate is among the highest in the world, sitting at just over 25%, half of these are the youth.

“The general lack of entrepreneurial culture in our country is one of the many contributing factors of youth unemployment, which attribute poses a huge concern for the country’s future, Ntshona said.

According to the Absa SME Index, the number of employers reached 726,000 in the 1st quarter of this year. This is an increase of 47,000 since the low of 679,000 in the April 2010 quarter.

There are 567,000 business owners under the age of 35, of which 72% are self-employed.  But only about 143,000 out of the 726,000 employers are under the age of 35.

Economist Mike Schussler who works on the Absa SME Index in partnership with Absa says there are 1.25 million South African business owners aged between 35 and 60, however, only about 60% of them are self-employed and nearly 40% are employers.

“Eighteen percent of all business owners in this age group employ between 2 and 4 people.  This category remains the biggest of all employers and the most important for employment in South Africa with about 502,000 of all employers aged between 35 and 60,” the economist said.

“This age group makes up 69% of all employers, indicating that employers tend to be about a decade or so older than self-employers.”

Schussler said that the average age of business owners still remains at 42 years, with the average age of self-employed at about 39, while the typical employer’s age is at about 50 years.

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What SA’s SME landscape looks like