Unemployment remained one of South Africa’s key challenges going forward, and entrepreneurship could play a significant role in reaching the target of five-million new jobs by 2020, said financial services group Absa CE for retail and business banking Bobby Malabie on Friday.

With about 50% of the country’s youth unemployed and 15-million people on social welfare supported by 7-million taxpayers, the situation was unsustainable, he said, as Absa launched its Small and Medium-sized Businesses (SME) Index.

Malabie also pointed out that the consolidation of businesses through mergers and partnerships and a number of businesses folding owing to high operating costs and other economic pressures made it difficult for SMEs to employ more people.

The number of employers fell by 5 000 in the second quarter of this year, Absa commented, adding that the number of self-employed citizens also dropped from 1.28-million at the start of 2008, to 1.24-million in the second quarter. However, this was a year-on-year increase from 1.23-million in the second quarter of 2011.

The new Absa SME Index, which extrapolated data sourced from Statistics South Africa’s economic indicators, found that about 270 000 of the more than 1.9-million businesses employed five or more employees. Only 10% employed more than 50 employees.

The index, Malabie said, aimed to provide relevant information on the state and development of SMEs and the challenges of employment in South Africa.

“The Absa SME Index will provide valuable information that allows SMEs to make better and informed decisions with access to solid and reliable information that will help them to grow their businesses,” he said.

It would also enable policymakers to make policy decisions aimed at SME development, reducing high unemployment levels and creating jobs.

Economist Mike Schussler, who worked on the index, added that the index provided a quick overview on how SMEs were fairing.
 

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