Rudolf Britz | Chief Actuary | Momentum Insure | mail me |
The 2026 National Budget Speech was delivered by Finance Minister Enoch Godongwana on 25 February. He delivered the 2026 budget speech against a backdrop of complex fiscal trade-offs.
South Africa continues to face high debt-servicing costs. As a result, the government’s capacity to act as the primary buffer against economic shocks has become more constrained. Therefore, the 2026 budget speech highlights the growing importance of shared responsibility across the broader economy.
Support for SMEs
This year’s Budget Speech focused on fiscal consolidation and steady structural reform. An improved fiscal position enabled the National Treasury to increase the compulsory VAT registration threshold for small businesses from R1 million to R2 million. This adjustment improves cash flow. It also reduces administrative burdens and compliance costs. In addition, it encourages growth without early regulatory friction for businesses earning less than R2 million.
The government also increased the capital gains tax exemption for the sale of a small business by older individuals from R1.8 million to R2.7 million. As a result, individuals over 55 who sell their businesses receive a retirement planning boost. The first R2.7 million of the capital gain now qualifies as tax-free. Furthermore, this benefit applies to small businesses worth up to R15 million instead of the previous R10 million.
The VAT registration threshold was last amended in 2009. The capital gains tax exemption was last amended in 2012. Both changes support entrepreneurship and economic growth without increasing public spending. In this way, the 2026 budget speech attempts to stimulate growth while maintaining fiscal discipline.
Fiscal constraints mean that economic resilience can no longer rely solely on the public sector. Instead, resilience must become a shared imperative. Businesses, particularly Small and Medium Enterprises (SMEs), must act as shock absorbers. The 2026 budget speech signals meaningful support for small businesses through adjustments to long-standing thresholds. The government has made its position clear. It wants small businesses to succeed. Now small businesses must stand up and be counted.
SMEs as an economic shock absorber
Analysts often describe SMEs as the backbone of the South African economy, and the data support this view. These enterprises create the vast majority of jobs. They also provide income to millions of households. When a small business thrives, it delivers more than a service. It strengthens community security. It also creates a pathway toward upward mobility.
However, in a tight fiscal environment, the state has limited resources to provide direct relief during crises. Consequently, when an SME closes because of an uninsured loss, the effects ripple outward. Communities lose income. Social safety nets face greater strain. The fiscus absorbs additional pressure. In this context, the 2026 budget speech underscores why SMEs must enhance their own resilience.
The rising cost of disruption
The modern risk landscape has become increasingly complex. Today, business owners face multiple interconnected disruptions that threaten survival.
These risks include:
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Extreme weather
Climate-driven events such as floods and wildfires have become recurring operational risks rather than rare events.
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Infrastructure stress
Although energy stability has improved, ageing municipal water systems and logistical bottlenecks continue to strain supply chains.
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Crime and cyber threats
Theft and civil unrest remain persistent concerns. At the same time, rapid digitalisation has created new opportunities for cybercriminals to launch cyber-attacks.
For a large corporation, one or more of these events may cause a temporary dip in quarterly earnings. For an SME, a single fire or the theft of essential equipment can force permanent closure.
Insurance as a strategic asset
In a difficult operating environment, business owners may feel tempted to treat insurance premiums as discretionary expenses. They may attempt to trim these costs to preserve cash flow. However, this approach creates significant risk.
Appropriate insurance and business continuity planning now form core components of proactive risk management. They no longer function as optional safeguards. Insurance absorbed part of the financial impact during recent systemic shocks. Nevertheless, the protection gap between insured and uninsured businesses continues to widen.
Business resilience requires more than holding an insurance policy. Owners must work with financial advisers to identify vulnerabilities. Together, they must design plans that ensure the business can continue paying employees and serving customers under adverse conditions. Insurers and business owners both carry responsibility. They must reduce risk through stronger safety protocols, improved digital security, and reliable infrastructure backups.
Investing in resilience
As the government narrows the deficit and stabilises the macro-economy, the micro-economy holds a critical opportunity. Local shops, manufacturers and service providers can strengthen their operational foundations. They can also position themselves for sustainable growth.
When businesses invest in resilience, they protect more than their bottom line. They safeguard employee livelihoods. They reinforce community stability. They also strengthen long-term confidence in the South African economy.
In a shifting risk environment, SME owners must confront a decisive question. They must ask whether they can afford to invest in risk mitigation. More importantly, they must ask whether they can afford the cost of being unprepared.
