Mike SchusslerJohannesburg – The number of employers within the small and medium enterprise (SME) sector has risen by six percent year-on-year, according to the latest Absa SME Index.

The index rose to its highest level in four years, though self-employment showed a slight decrease from the first quarter of 2013, Absa said in a statement on Thursday.

“The index showed two consecutive quarters of growth in the number of employers.”

The index rose to 96.1 points in the second quarter of 2013, up 7.3 percent from its lowest point in April 2010, but it was still not close to the record of 101.4 points in the first quarter of 2009.

While employer numbers increased six percent year-on-year, the increase over the last quarter was 1.5 percent.

Economists.co.za chief economist Mike Schüssler, who compiles the index in partnership with Absa, said this positive trend was unexpected, given the low annual GDP growth of three percent.

“It does seem that entrepreneurial activity is continuing and small firms are at least still being formed, despite a sluggish growth environment,” he said.

“Much of the growth seems to be driven by smaller companies, as the average number of employees remained steady at 11.5 people per firm (excluding self-employed).”

Absa head of enterprise development for business banking Sisa Ntshona said this was not only good news for job creation but also for economic health.

“Two consecutive quarters of growth in the number of employers is a positive sign of continuing entrepreneurial activity in our economy,” he said.

The index showed there were 737,000 employers in South Africa during the second quarter of 2013.

“The weaker rand could be a contributing factor, leading to the establishment of more firms who are now in a better position to produce goods more cheaply,” said Ntshona.

Self-employment declined slightly from the four year high of the first quarter, with an estimated 1.25 million self-employed business people in the country in the second term of 2013.

Schüssler said micro businesses were not getting the benefit from the growth that the economy was slowly generating.

However, self-employment had risen by 4.5 percent since its lowest point in the second quarter of 2010, showing that most of the negative effects of the recession had abated.

The index also indicated that women accounted for 45 percent of all people in employment in South Africa, while 36 percent of all entrepreneurs were women.

Nthona said: “In South Africa women show more resilience when it comes to entrepreneurship as many start from a very small base without much in the form of capital.”

Of all self-employed entrepreneurs in South Africa, 46 percent were women.

He said given that poverty and unemployment were the leading problems facing the youth today, the development of women as entrepreneurs could help tackle the problem. – Sapa