Tag: EconomicGrowth

South Africa's biggest Small, Medium and Enterprise (SME) financing challenge may not be a shortage of capital. Instead, too many good businesses may remain invisible to the institutions that could fund them. Consider a growing logistics company in Limpopo, a wholesaler in KwaZulu-Natal or a township-based manufacturer expanding into national supply chains. These businesses may generate consistent revenue and employ dozens of people. Yet traditional credit indicators alone may make them difficult to assess.

The prospect of South Africa losing its benefits under the African Growth and Opportunity Act (AGOA) understandably raises concerns. Preferential access matters, particularly where exporters operate on tight margins. However, businesses should not respond to headlines alone. Instead, they should understand their exposure, preserve viable customer relationships and accelerate expansion into other markets.

For as long as African states have borrowed on international markets, a handful of analysts sitting thousands of kilometres away have had an outsized say in what that money costs. With the official launch of the Africa Credit Rating Agency (AfCRA) in Mauritius on 7 October 2026, the African Union (AU) has gone beyond claiming a seat at the proverbial table. Instead, it has built its own table.

This year's medium-term budget was delivered against a more difficult economic backdrop than February's national budget. Higher fuel prices and renewed global inflation pressures have squeezed household budgets and clouded the growth outlook. Yet resilient tax collections have provided some support for the public finances.

South Africa places considerable weight on Micro, Small, and Medium Enterprises (MSMEs) as engines of employment and growth. However, their access to capital still falls short of the role we expect them to play. Consequently, development finance has become an important part of efforts to close this gap. Every Rand channelled into development finance carries an expectation of tangible economic outcomes.

During my time working at South African Breweries (SAB), I watched young graduates arrive on the factory floor holding hard-earned chemistry degrees. They possessed brilliant theoretical minds. They understood molecular bonds and complex reactions on paper. Yet, when a critical machine on the production line broke down, those degrees often could not get the line moving again.

Small and Medium Enterprises (SMEs) cannot grow without access to funding, and South Africa needs its SMEs to grow. What needs to change in the middle? The frame for South Africa’s economic growth in 2026 is one of modest recovery. The National Treasury’s 2026 Budget Review projects real Gross Domestic Product (GDP) growth of around 1.6%. The World Bank echoes these figures, at 1.4%, and expects growth to increase to 1.5% by 2027.

Small and Medium Enterprises (SMEs) are undeniably the lifeblood of South Africa's economy. They represent 91% of businesses in the formal sector and employ roughly 60% of the country's workforce. Yet, the entrepreneurial landscape remains notoriously harsh. More than 70% of South African SMEs fail between their first and fifth years.

Small and Media Enterprises (SMEs) are regularly rejected for funding, even when their businesses are profitable, because the system was not designed with their business reality in mind. SMEs contribute around 40% of the country's gross domestic product (GDP) and 60% of employment. Yet they face the SME funding gap, which is estimated at R350 billion. There is no shortage of funding in the system.

We know where the jobs are, and we know our young people are eager to work. So why aren’t we connecting the dots? South Africa has 200,000 agricultural jobs waiting to be filled. We also have a thriving Business Process Outsourcing (BPO) sector. This sector includes call centres, customer service, data processing and back-office administration. It can absorb entry-level workers at scale.