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Small Enterprise Development
- Janet Wilhelm
Janet Wilhelm
The State of Small Business in South Africa, a special edition of the Real Economy Bulletin, summarises the available information on the number of small businesses, in total and by industry and province; their contribution to the GDP and employment; ownership by race, gender and age; and access to skills and infrastructure. For the formal sector, it also reviews the available data on the sector’s investment and profitability. The analysis is primarily based on household surveys and financial data through 2024.
Key findings
- The available (limited) data suggest that formal small businesses contributed 19% of GDP and 33% of employment in 2023. The informal sector generated just under 5% of GDP but provided 17% of employment, mostly in the form of own-account workers, who operated microenterprises with no other employees.
- Formal small employers have seen a decline in both numbers and employment since the 2020 COVID-19 downturn. In contrast, formal own-account workers and informal businesses have more than recovered. Value added by formal small business reportedly dropped 7% in 2023, presumably largely due to loadshedding and slow overall economic growth.
- Small business in South Africa has long lagged far behind other upper middle income countries. Only around 6% of all working-aged adults are employers or own-account workers in South Africa, compared to 20% in other upper middle income countries outside of China, and 27% in China.
- The largest sectors for small formal business are commercial services and trade, followed by manufacturing. In the informal sector, trade is far more important, followed by community services and construction. The latter includes own-account artisans such as plumbers and electricians
- Whites owned 38% of small formal businesses in 2024, although they comprised only 7% of the working-aged population. Fifteen years ago, whites owned 57%. African women owned only 13% of small formal businesses in 2024, although they made up 41% of the working-aged population
- The median age of formal business owners is 47, ten years more than for waged employees. One in ten white business owners is at retirement age
- The median income for formal employers in 2024 was R15 000 a month, compared to R10 000 for the self employed. It was R4800 for waged workers in small formal business,and in large businesses it was R6000. Median incomes in the informal sector ranged from R5000 for employers to R2000 for waged workers and only R1200 for own-account workers.
- In the lowest-income 60% of households, only 8% said earnings from a business formed their most important income source. In the richest 10% of households, 17% said most of their income came from a business.
- Small formal businesses owned around 20% of private formal-sector assets in 2023. In contrast, most indicators suggest informal businesses had almost no assets at all.
- In 2024, Gauteng, the Western Cape and KwaZulu-Natal accounted for 74% of formal small business, compared to 58% of the working-aged population and a similar share in informal businesses. The number of formal employers has grown steadily only in the Western Cape. The provincial spread of informal business is proportional to the population.
- Waged workers in small formal business were half as likely to be union members as those in larger companies, with virtually no union members in the informal sector. Smaller formal businesses were substantially less likely than larger ones to provide retirement or medical funds, or to meet requirements in the Basic Conditions of Employment Act.
- In 2024, 22% of formal own-account business owners had graduated university, up from 17% in 2009. For formal employers, the share had risen from 13% to 17%. In contrast, only 5% of waged workers in small formal businesses had a degree in 2024. Under 5% of informal business owners had a degree, and only 30% had at least matric, compared to 55% of their formal counterparts.
- According to Statistics South Africa, 50% of informal businesses operated in their own homes in 2023. Over 30% worked outside (at an open market, taxi rank or sidewalk), 11% in someone else’s home, and only 5% in a non-residential building. For business owners in the poorest 60% of households, around 90% had electricity at home but only 60% had running water. Just 14% had a computer, although 80% had a smartphone.
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Export Tracker Q3 2024
From Q3 2014 to Q3 2024 South Africa's imports and exports both trended upwards, with growth in exports outpacing growth in imports. In Q3 2024, exports are 22% higher than they were in Q3 2014, while imports are 3% higher. In addition, the quarterly average for exports (R459 billion in constant 2024 rand) was higher than it was for imports, at R428 billion. South Africa went from subsequent quarters with a negative trade balance, at the start of the timeframe, to subsequent quarters with a positive trade balance, at the end of the timeframe.
Import Tracker Q4 2024
The Real Economy Bulletin - Fourth Quarter 2024
Main Bulletin: The Real Economy Bulletin - Fourth Quarter 2024
In this edition
GDP growth: The non-agricultural GDP grew by 0.2% in the last quarter of 2024. Every sector shrank, however, except business services, trade and agriculture. The slowdown in the past two years is associated with a sharp fall in world mining prices, affecting South Africa’s main exports. Surprising growth in agricultural value add pushed total GDP growth up to 0.6% for the quarter and for 2024 as a whole. Within manufacturing, results varied substantially by industry. Read more.
Employment: Total employment increased by 2.1% in the year to the fourth quarter of 2024, much faster than GDP growth. Unusually large gains were reported for informal employment in particular. The official employment survey also found that manufacturing employment expanded more than 10% during the year, although it remains lower than before the 2020 COVID-19 downturn. Read more.
Infrastructure: Grid electricity dropped sharply in the final quarter of 2024. Although loadshedding returned in early 2025, it remained far lower than in 2023. That outcome likely reflected both continued growth in off-grid energy, mostly solar, combined with shrinking effective demand as Eskom tariff increases accelerated. Rail freight tonnage remained almost unchanged in the two years to December 2024, while road freight fell over 10%, reflecting slow economic growth. Read more.
International trade: In the last quarter of 2024, exports increased slightly, but they remained lower than a year earlier. Outside of gold and chromium, most of mining saw lower prices in the past year. Imports fell more sharply than exports, largely as a result of lower petroleum prices. In manufacturing, exports shrank, with lower mining prices cutting the value of metals exports. Auto and machinery sales also fell for the year as a whole, although auto saw some recovery in the final quarter of 2024. Imports of machinery and autos declined, presumably as a consequence of slow GDP growth and persistent high interest rates. Read more.
Investment and profitability: A 6% fall in public-sector investment drove a 1% drop in total investment in the fourth quarter of 2024. Private investment, however, increased by 1% from the third to the fourth quarter of the year, although it remained well below pre-pandemic levels. The investment rate dropped to 14.1% at the end of 2024, a level last seen in mid-2022 as the economy recovered from the pandemic downturn. Read more.
Foreign direct investment projects: The TIPS Foreign Direct Investment Tracker monitors FDI projects quarterly, using published investment information. In the fourth quarter of 2024, it added 27 projects, mostly in the electricity sector. Of the new projects, 21 announced the value of the investment, totalling R56.7 billion. The Tracker also updated information on 16 pre-existing projects. Read more.
Briefing Note 1: South Africa and the G20 Presidency - by Faizel Ismail and Saul Levin. South Africa has assumed the Presidency of the G20. President Cyril Ramaphosa has made it clear that he will stand for the interests of the African continent as a priority in South Africa’s G20 leadership. He will strive to build the solidarity of the Global South. In addition he will to build convergence with the G20’s richer Northern economies and powers, based on the principles of multilateralism, equity, social justice, respect for diversity and development. President Ramaphosa will be conscious of the fact that this is the first G20 to be held on African soil, and the first G20 for the African Union and for the African continent to be full participants. Read the Briefing Note online: South Africa and the G20 Presidency.
Briefing Note 2: Options for localising steel inputs from the infrastructure build programme - by Neva Makgetla. The government has sought a rigorous redirection of its spending towards physical public infrastructure projects. It aims to both improve services for business and to stimulate local input manufacturers, especially in the steel value chain. Yet the last major build programme, 10 years ago, fell short on both counts. Moreover, localisation policies now face a radically changed legal environment. To help understand the evolving context for localisation. a new report by TIPS assesses the impact of localisation policies in the last major build programme; the new legal framework; and the costs, benefits and risks of leading options to support industrialisation through local procurement. This briefing note summarises findings on the new legal environment. Read the Briefing Note online: Options for localising steel inputs for the infrastructure build programme.
The Real Economy Bulletin Provincial Review 2024
The TIPS Provincial Review 2024 analyses key economic and policy developments in the provinces. It comprises an overview report that summarises how the national economic geography is changing in terms of GDP, population, employment, formal business location, and infrastructure. For each province, a separate publication describes developments and major new projects in more depth. This review analyses provincial trends primarily up to 2023, the latest available estimates as of early 2025
Overview Report
The Real Economy Bulletin Provincial Review 2024
Provincial Reports
Eastern Cape: The Eastern Cape is the fourth most populous province in South Africa but has a slow population growth rate. The province’s contribution to the national GDP has been declining since 2011. Manufacturing is the largest real economic sector, followed by construction, with relatively small mining activity. Not only does the province have the highest level of unemployment in the country, its labour absorption rate has fallen over the past decade. Read more.
Free State: The Free State province in South Africa has a slow-growing population and is the second-lowest contributor to the national output after Northern Cape, with its contribution to GDP remaining flat over the past decade. The lacklustre contribution to GDP and the growth rate is often attributed to the waning mining sector in the province. Mining is the largest real economic sector in the Free State, followed by manufacturing and agriculture. The province experienced a strong rebound in 2021, despite this, it is still among the least-performing provinces. Read more.
Gauteng: Gauteng is the most populous province in South Africa, with a rapidly growing population due to a large influx of internal migrants. It is also the largest economy in the country, although its growth has been declining over the years, with significant drops during economic crises. The real economy in Gauteng is dominated by the manufacturing sector, followed by construction, mining, and agriculture. Employment in the real economy has not reached pre-pandemic levels, although manufacturing remains the largest employer among real sectors. Overall, Gauteng enjoys better service provision than other provinces. Read more.
KwaZulu-Natal: KwaZulu-Natal is the second most populous province in South Africa and has the second-largest economy in the country. The province’s real economy is dominated by the manufacturing sector, particularly the food and beverage, petroleum and metals industries. The province also has a significant agricultural sector and a smaller construction industry. The COVID-19 pandemic has had a significant impact on KwaZulu-Natal's economy, with employment in the real economy declining but recovering from 2022. Read more.
Limpopo: Limpopo has the highest share of the population living in former homelands. Despite a declining growth rate since 2011, Limpopo’s contribution to national GDP has remained stable. Among real economic sectors, mining is the most significant contributor to the province’s GDP, while agriculture and manufacturing are almost equal. The metals and food and beverage industries dominate the manufacturing sector. Construction overtook agriculture as the largest employer among the real economic sectors in 2023. Read more.
Mpumalanga: Mpumalanga’s population has grown significantly and half the province’s residents live in non-urban areas. The real economy is mainly driven by the mining industry, followed by manufacturing. The largest manufacturing industries are petroleum, metals, food and beverages. The COVID-19 pandemic devastated employment in Mpumalanga. The province has a lower labour absorption rate than the national average. Read more.
North West: The North West province has the third lowest population in South Africa, and nearly half of the population lives in non-urban areas. The economy is primarily driven by the mining industry, and rising commodity prices in 2021 led to significant growth in provincial output. Manufacturing contributes far less to provincial output, and the sector is dominated by food and beverages, and metals. The province has a high level of unemployment compared to the national average. Read more.
Northern Cape: The Northern Cape is the least populated province in South Africa, and most of the province’s population lives in urban areas. The Northern Cape contributes the least to national output, and growth has plateaued over the years. In 2021, however, the commodity boom boosted provincial growth. Among the real economic sectors, mining plays a dominant role in the province. Agriculture, manufacturing, and construction also have a presence. Employment levels are lower than in the rest of the country. Read more.
Western Cape: The Western Cape is South Africa’s fourth most populous province, with almost the entire population living in urban areas and a small minority on farms. The province is the third largest economy in the country. Real economic sectors in the province are dominated by manufacturing, followed by agriculture and construction. The manufacturing sector is dominated by food and beverages, and metals. The level of joblessness in the province is low compared to the national average. The Western Cape has a high level of service provision as most of the population lives in urban areas. Read more.
The Real Economy Bulletin - Third Quarter 2024
Main Bulletin: The Real Economy Bulletin - Third Quarter 2024
In this edition
GDP growth: The GDP shrank by 0.35% in the third quarter of 2024. The main driver was a reported 29% drop in agricultural production, mostly due to the drought. The rest of the economy expanded 0.4%. In manufacturing, the auto industry faced headwinds as international car exports contracted. Read more.
Employment: In the year to the third quarter of 2024, formal employment was virtually unchanged. In contrast, informal employment reportedly climbed by 7%, with a surge in informal construction jobs. As a result, the Quarterly Labour Force Survey found an increase in total employment of 200 000 for the period, or 1.2%, to almost 17 million jobs. Manufacturing gained 120 000 jobs over the year, climbing to 1.6 million, but remained well below pre-pandemic levels. Read more.
Infrastructure: In volume terms, services provided by the national electricity grid, rail and ports all increased modestly in the past quarter. Eskom is now back to levels of supply last seen in 2020, and has not loadshed in more than six months. Financing further improvements remains a point of contention. In this context, Eskom has applied for a 36% increase in tariffs in 2025, which would push its revenues up to 6% of the GDP. Read more.
International trade: South Africa had a merchandise trade surplus in the third quarter of 2024, continuing an almost unbroken trend since the COVID-19 downturn. Export revenues were hit by a 3.5% increase in the exchange rate relative to the nominal dollar, as well as a slump in auto sales and lower prices for some major mining commodities. The stronger currency moderated the cost of imports, however, including petrol. Read more.
Investment and profitability: Investment continued to decline in the third quarter of 2024. It was almost 3% lower than in the third quarter of 2023, and 7% below its post-pandemic peak in the second quarter of that year. Private investment fell 1.7% in the past quarter, while public investment gained 5%. Still, public investment remains a third lower than at its peak in the mid-2010s. In terms of return on assets, mining and construction declined in the second quarter of 2024, but manufacturing remained stable. Read more.
Foreign direct investment projects: The TIPS Foreign Direct Investment Tracker monitors FDI projects quarterly, using published investment information. This quarter 16 projects were added to the Tracker. Only six of these reported the value of the investment, totalling R17.3 billion. Investment was registered across four sectors, mining, manufacturing, electricity and services. Monitoring further updated 16 pre-existing projects. Read more.
Briefing Note 1: Insights fom the TIPS regional tracker: How commodity dependence harms continental SADC - by Danae Govender and Liako Mofo. TIPS is introducing a new Regional Tracker, which will provide a regular analysis of economic performance and industrialisation in continental SADC. It provides key data on economic growth, inequality, trade flows, infrastructure development, and investment. This briefing note highlights findings on economic growth, export composition, and inequality in continental SADC. Read the Briefing Note online: Insights fom the TIPS Regional Tracker.
Briefing Note 2: Green hydrogen projects and just transition tools - by Muhammed Patel. A just transition is critical for South Africa as it seeks to decarbonise and move away from coal dependence. In this context, the development of a domestic green hydrogen value chain has been gaining attention. It may offer opportunities to absorb workers from coal and other affected value chains, create jobs, and build a sustainable energy future. To take advantage of these opportunities, however, stakeholders in South Africa need to understand how green hydrogen projects are unfolding, how they integrate just transition principles, and the barriers they face at the project level. Read the Briefing Note online: Green hydrogen projects and just transition tools.
The medical devices sector in South Africa is characterised by its complexity and diversity, involving numerous products, companies, and rapid innovation cycles. This sector, despite not being a major employment generator, plays a crucial role in healthcare delivery and offers significant growth potential through both local manufacturing and international investments. Currently, the sector contributes substantially to South Africa's trade deficit, due to high import levels driven by disease.
The development of a comprehensive Masterplan for this sector aims to address the trade deficit, encourage localisation, and boost export revenues. This Masterplan is informed by a detailed value chain analysis based on the 2022 Medical Devices Landscape study by the South African Medical Research Council and trade data from Trade & Industrial Policy Strategies. The analysis identifies key challenges and opportunities within the sector, highlighting the need for strategic interventions to foster growth.
This research comprises the main report and six annexures.
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Main Report: Draft of the South African Medical Devices Masterplan – Value Chain 2024
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Annexure 1: Trade in medical devices
Annexure 2: Methodology of HS Codes for medical devices
Annexure 3: Working group workshop on quick win interventions
Annexure 4A: Case study - Turkey
Annexure 4B: Case study - Development of medical devices value chain in Costa Rica
Annexure 5: Manufacturing financial data
The central question of this paper and policy brief is: what is the future of the South African petrochemicals and plastics, ammonia, fertiliser, explosives and other chemical value chains of the Secunda petrochemical complex in the light of Sasol’s stated greenhouse gas emission reduction plans and other assessed business constraints? Given the risks that a declining Secunda output pose to the South African economy, this paper identifies several possible economic development substitutes, roughly compared against policy objectives, as possible targets for further detailed quantitative and financial analysis. The policy brief draws on the information in the main report.
This research was supported by the African Climate Foundation.
Main Report
Download a copy or read online: South Africa's petrochemicals and basic chemicals in the context of South Africa's energy transition focussing on Sasol's Secunda coal-to-chemicals-and-liquids facility
Policy Brief
Download or read online: Petrochemicals and South Africas energy transition Sasols Secunda coal to chemicals and liquids facility
The Real Economy Bulletin - Second Quarter 2024
Main Bulletin: The Real Economy Bulletin - Second Quarter 2024
In this edition
GDP growth: The GDP eked out 0.4% growth in the year to the second quarter of 2024. That comes on top of near-stagnation from early 2023, which was largely a result of falling mining and metals prices combined with difficulties at Eskom and Transnet. Manufacturing value added climbed 1.1% in the quarter, but is still lower than it was two years ago. It is 7% below its pre-pandemic levels. Metals revenues have fallen precipitously since 2022. Read more.
Employment: In the year to the second quarter of 2024, employment reportedly expanded by just over 300 000 or almost 2% – far faster than reported GDP growth. The informal sector saw the most rapid growth, expanding by 3.3% compared to just 1.2% for the formal sector. As a result, the share of adults with paid employment stabilised at 40%, still well below pre-pandemic figures and far lower than the global norm of 60%. Manufacturing employment recovered from steep job losses in mid-2023, gaining 100 000 jobs year on year. Read more.
Infrastructure: From the mid-2010s, both Eskom and Transnet saw lower sales but higher tariffs. In the second quarter of 2024, electricity generation showed significant signs of recovery at both Eskom and private suppliers. Transnet rail and ports, however, declined further. In real terms, both electricity and rail tariffs increased faster than headline inflation. Read more.
International trade: South Africa had a surplus in goods trade in the second quarter of 2024. That continued an almost unbroken string of surpluses since the 2020 pandemic, mostly because slow economic growth has dampened imports while global mining prices, although off their peaks, remain stronger than before the pandemic. Both goods exports and imports were lower than a year earlier, although exports ticked up compared to the previous quarter. Read more.
Investment and profitability: Over the year to the second quarter of 2024, the investment rate fell to 14.6%, down from its post-pandemic peak of 15.3% and well below pre-pandemic levels. Both government and private investment shrank sharply over the year. By type of capital acquired, public works and buildings accounted for most of the decline, while machinery and equipment increased, in part reflecting large-scale investment in renewable electricity. In terms of profitability, manufacturing remained stable but mining and construction experienced a decline. Read more.
Foreign direct investment projects: The TIPS Foreign Direct Investment Tracker monitors FDI projects quarterly, using published. It added 11 projects across four industries – electricity, services, manufacturing and mining – in the second quarter 2024. Less than a handful of projects reported values for their respective investments; the R8.1 billion investment value reported for the quarter comes from only three projects. The Tracker updated progress for 17 projects recorded previously. Read more.
Briefing Note 1: Women's economic access and the limitations of "men in hard hats" industrial policy - by Nokwanda Maseko. Post-apartheid industrial policy has for the most part fallen short of delivering economic inclusion for women, particularly Black women. While there have been some improvements in women’s economic outcomes since 1994 – in part due to policies aimed at redressing broader structural inequality – South African industrial policy has primarily focused on “hard hats” industries built under apartheid. These industries – like automotive manufacturing, petrochemicals and energy – often offer workers comparatively good economic outcomes in terms of earnings and social protection, but they are dominated by men. Read the Briefing Note online: Women's economic access and the limitations of "men in hard hats" industrial policy.
Briefing Note: SMMEs in the Just Transition - by Elize Hattingh and Michael Hector. Small, Medium, and Micro Enterprises (SMMEs) are widely acknowledged as vital drivers of economic growth and job creation globally. The National Integrated Small Enterprise Development Masterplan indicates that stimulation of the SMME sector can address unemployment – SMMEs are a source for job creation and economic growth and seen in South Africa as an integral part of achieving sustainable development. In addition, SMMEs account for 90% of businesses and provide over 50% of employment opportunities, contributing around 40% to the GDP in emerging economies. However, the potential of SMMEs to drive the Just Transition is underutilised, particularly for marginalised groups that face significant barriers to participation in the green economy. Read the Briefing Note online: SMMEs in the Just Transition.
TIPS industry studies aim to provide a comprehensive overview of key trends in leading industries in South Africa. For each industry covered, working papers will be published on basic economic trends, including value added, employment,investment and market structure; trade by major product and country; impact on the environment as well as threats and opportunities arising from the climatecrisis; and the implications of emerging technologies. The studies aim to provide background for policymakers and researchers, and to strengthen our understanding of current challenges and opportunities in each industry as a basis for a more strategic response.
This industry study reviews South Africa’s international trade in plastics, in terms of both imports and exports. It looks at global plastics production and use, as well as trends in trade.
Industry Studies
Technological Change in the Food Processing Industry 2024
Technological Change in the Plastics Industry 2024
South Africa's International Trade in Plastics 2024
Technological Change in South Africa's Automotive Industry 2024
Technological Change in the Capital Goods Industry 2024
Clothing and Textiles International Trends 2024
International Trends in the Capital Goods Industry 2024
International Trade in South Africa's Automotive Industry 2024
Capital Goods in South Africa 2024
Additional studies for other industries will be added when finalised