South African SMEs face systemic hurdles and leadership succession risks

Small and medium-sized enterprises (SMEs) in South Africa are facing critical structural and demographic challenges that threaten their long-term sustainability and economic contribution.

A study from the University of Limpopo regarding SMEs in Mankweng Township indicates that while these businesses drive local growth, job creation, and skill development, they are hindered by systemic issues. Key obstacles include limited access to capital, weak marketing capabilities, leadership gaps, inconsistent electricity supply, and insufficient access to modern technology.

On a national scale, South Africa’s SME sector—comprising approximately 2.67 million businesses—faces a demographic risk due to an aging entrepreneur population. With a significant portion of owners aged between 45 and 64, experts are urging businesses to prioritize succession planning and leadership transitions. Failure to formalize processes and document institutional knowledge could lead to the loss of economic capital, especially given that 90% of small businesses fail within their first decade.