Absa SME Index shows an improvement in self-employment levels


AbsaSMEindex.jpgThe Absa SME Index rose by 1.4 index points in the last quarter of 2012, up from its low of 92 reached in Q2 2012.  Self-employment grew by 1.1% over the last quarter and 2% over the last year in South Africa.

The index presents data extrapolated from Statistics South Africa’s information on various economic indicators that are issued regularly. It aims to provide valuable information on the current state of Small and Medium-size Enterprises (SMEs) in the country, including challenges to employment in South Africa.

According to the Index, South Africa showed an improving trend in the last quarter of 2012, attributed to a growth in self employment, which is estimated to be 1.2-million business people.

Focusing on franchising, the average private sector company employs about 13 people (incl. employer), while the average franchise employs 17.2 people (incl. employer).

Furthermore, franchises appear to remain in business longer than non-franchised businesses, which operate for less than five years on average. While the indicators in question do not provide definite information on the length of time franchises stay in business, the fact that many franchises are sold to new owners indicates a longer survival rate for franchises.

According to economist Mike Schussler, who compiles the Absa SME Index in partnership with Absa, some smaller, negative effects of the global economic down turn still linger and self-employment, despite growing, is still 2.5% below its recent highs.

The reality is that SMEs do not have an economist desk, they do not have a currency expert and they require access to solid and reliable information that will help them grow their businesses.

Through the SME Index, Absa aims to provide valuable information that will enable SMEs to make informed decisions; policy makers to draft relevant legislation; and inspire aspiring entrepreneurs to take the leap.

Absa is committed to the growth and prosperity of the South African economy and recognises the vital role that the franchise industry plays in creating wealth and employment opportunities. We believe in partnering with our franchise customers and to this end have established a dynamic team focused specifically on the franchise industry. Our aim is to gain an intimate understanding of the franchise industry and to use this knowledge to deliver competitive products and innovative solutions.

Read the a full report of the third publication of the Absa SME Index here.

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