Small and Medium Business Development

The document argues that while small and medium businesses are critical for formal employment in South Africa, the sector has remained stagnant or declined over the last decade. It critiques the National Development Plan's job creation targets as unrealistic and highlights a significant imbalance in government support, which heavily favors large businesses. The brief proposes a shift toward a 'national social compact' (Quadrant IV) involving economy-wide reforms, including tax incentives for startups, tenure reform in Traditional Authority Areas, telecommunications liberalisation, and the use of competition policy to open market access for small and black-owned businesses.

• The National Development Plan's (NDP) goal for small and medium businesses to create 90% of new jobs by 2030 is considered unrealistic, as it would require between 1.3 million and 9.9 million new enterprises depending on failure rates.
• Despite their role in employment, the small business sector in South Africa has not grown significantly over the past ten years and may have actually decreased.
• Small formal businesses are a major source of formal employment, employing 4.3 million people compared to 3.6 million in approximately 30,000 large formal businesses.
• South Africa has one of the lowest rates of established business ownership globally, alongside low entrepreneurial intent.
• Government financial support is overwhelmingly directed toward large businesses, with small businesses receiving only 9.9% of subsidies and incentives and 1.39% of capital transfers.
• The brief identifies highly concentrated economic ownership, rather than labour regulations, as the primary cause for the slow growth of the small business sector.
• Proposed interventions to support the sector include zero or lower taxes for formal startups, tenure security in Traditional Authority Areas, and completing telecommunications reforms to lower data costs.
• Competition policy can be used to assist small and black-owned businesses by mandating shelf space in supermarkets, limiting exclusive retail leases, and implementing supplier development programmes in agro-processing.

APA

Hassen, E.-K. (2018). Small and Medium Business Development. Institute for Economic Justice. https://iej.org.za/wp-content/uploads/2020/07/Stream-3-Policy-Brief-2-Small-and-Medium-Business-Development-1.pdf

Chicago

Hassen, Ebrahim-Khalil. Small and Medium Business Development. Institute for Economic Justice, 2018. https://iej.org.za/wp-content/uploads/2020/07/Stream-3-Policy-Brief-2-Small-and-Medium-Business-Development-1.pdf.

Wikipedia

{{cite report |last1=Hassen |first1=Ebrahim-Khalil |title=Small and Medium Business Development |publisher=Institute for Economic Justice |date=August 2018 |url=https://iej.org.za/wp-content/uploads/2020/07/Stream-3-Policy-Brief-2-Small-and-Medium-Business-Development-1.pdf |access-date=17 August 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{hassen2018small, author = {Hassen, Ebrahim-Khalil}, title = {{Small and Medium Business Development}}, institution = {Institute for Economic Justice}, year = {2018}, month = aug, url = {https://iej.org.za/wp-content/uploads/2020/07/Stream-3-Policy-Brief-2-Small-and-Medium-Business-Development-1.pdf}, urldate = {2026-08-17}, note = {Indexed by Climate Insights Directory} }