To unlock our economy, we must first unlock our smallest businesses
7 min read
The trajectory of South Africa’s economy is inextricably linked to the vitality of its small and medium-sized enterprises (SMEs). This is not a new observation, but a foundational truth that informs our national development goals.
Here in South Africa, this is powerfully demonstrated by the government’s concerted push toward a digital-first economy, through key initiatives like the South African Revenue Service (SARS) Modernisation Project and a unifying Digital Transformation Roadmap.
The urgent question leaders must now address is no longer if SMEs are the engine of our economy, but how we provide the high-octane fuel required for them to drive the inclusive growth our society demands.
Recent discussions at the World Economic Forum (WEF) have confirmed a clear consensus: the answer lies in a profound and strategic approach to digital transformation. This is not about mere adoption of technology as a peripheral tool. It is about re-architecting the very systems that govern how businesses operate, compete and access capital, thereby building a more resilient and dynamic economic base.
This national shift is echoed at the highest levels of government, where President Cyril Ramaphosa’s recent remarks on SARS underline the critical importance of modernising state systems. He noted that SARS’ record R2.3-trillion revenue collection stems from upgraded digital infrastructure, restored institutional integrity and technology-driven efficiency – proving that digital capability is a national competitive advantage.
He emphasised that simpler, more predictable, tech-enabled systems create a smoother and more confidence-building environment for both citizens and businesses.
A structural barrier, not an ambition deficit
The core challenge facing South African businesses today is not a lack of entrepreneurial spirit. It is a set of deep-seated structural barriers that trap promising ventures in the ‘missing middle’: unable to scale from small to medium-sized firms that create sustainable jobs.
A primary barrier, as highlighted at the WEF, is the traditional model of finance. Compounding this is the significant weight of regulatory complexity. The constant pressure of tax, payroll and other filings – pressures that will continue to evolve with impending changes such as e-invoicing for VAT – places a heavy administrative load on SMEs and diverts focus from growth. These are structural inefficiencies that entrepreneurs cannot overcome through effort alone, which is why the shift toward more modern, technology-enabled public systems is so critical.
From burden to strategic advantage
To make the national digital agenda work for everyone, we must champion a new paradigm that transforms compliance from a burden into a strategic advantage. This requires focusing on three interconnected pillars:
1. First, we must use technology to build resilience through optimisation.
For years, the focus for struggling businesses has been on cost-cutting. The conversation has now rightly shifted to optimisation. Digital tools provide the real-time insights into cash flow and operational costs, which allow a business to become more efficient. By intelligently automating financial processes, SMEs can move beyond simply surviving and begin to proactively build the financial resilience needed to weather economic uncertainty.
2. Second, we must deploy technology as an equaliser, enabling strategic sophistication.
The South African market has matured. It is no longer enough for an SME to simply have a digital presence. By embedding advanced capabilities like artificial intelligence within accessible platforms, we democratise efficiency. Automation can streamline complex regulatory filings, from PAYE to new environmental, social & governance standards, but its true power lies in elevating a business’s strategic capabilities. It unlocks insights from their own data, allowing them to compete with a level of sophistication previously reserved for large corporations.
3. Thirdly, we must prioritise shared infrastructure over isolated tools.
The true power of digital transformation is unlocked not by individual apps but by a connected ecosystem. Standardised frameworks are the bedrock of this ecosystem, as we see clearly in the government’s Digital Transformation Roadmap. Specifically, within the SARS Modernisation Project, the move to a national e-invoicing standard is a critical component that reduces friction, builds trust between trading partners and lowers the cost of participation in the formal economy. This shared foundation is what allows small businesses to seamlessly connect to larger supply chains and global markets.
The imperative of leadership
This transformation does not happen on its own. It requires decisive leadership. As insights from the WEF made clear, it is imperative for CEOs to personally own the digital agenda. As leaders in the business community, we must champion policies that foster this broader ecosystem and ensure the government’s digital and industrial policies are designed with a clear understanding of the operational realities for SMEs.
For example, SARS’ turnaround is a powerful reminder that modernisation is not just an operational upgrade – it is a hallmark of capable leadership. By strengthening systems, improving service delivery and removing unnecessary friction from compliance, SARS has shown how a digitally enabled regulatory environment can actively support growth. For SMEs, this shift creates a more predictable, accessible and confidence-building landscape in which businesses can operate, invest and scale.
The digital transformation of our SME sector is the most powerful lever we have for achieving economic stabilisation and creating dignified work. At Sage, our purpose is to knock down barriers so everyone can thrive. For us, this means building the trusted networks and intelligent tools that simplify complexity and turn ambition into action. It is our collective responsibility to ensure this engine of growth is not just running but firing on all cylinders – powering our nation forward.
Jordaan Burger
Managing Director
