IMF calls for easing small business regulations as critics decry red tape

International financial institution warns that SA's regulatory frameworks are stifling growth

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MINISTER of Small Business Development, Stella Tembisa Ndabeni, briefing media on Global SME Ministerial Meeting in May 2025. The IMF economists said the proposed Business Licensing Bill of 2025 presents an opportunity to modernise the current system, which is highly decentralised and often inconsistently applied across municipalities.

(GCIS)

THE International Monetary Fund (IMF) said on Wednesday that simplifying South Africa’s regulatory framework for small businesses could unlock entrepreneurship, stimulate investment and create much-needed jobs, though critics warn that proposed new licensing rules could have the opposite effect.

In a new analysis, IMF economists said excessive and fragmented regulations remain a major obstacle to business growth in South Africa, particularly for small and medium-sized enterprises (SMEs) that are responsible for most job creation.

"Operating a business in South Africa—especially dealing with product-market regulations such as required licensing and permitting—is significantly more burdensome, fragmented, and costly than in peer economies,” said Tidiane Kinda, the IMF's senior resident representative for South Africa, and Nasha Mavee, the IMF's local economist, in the report.

The economists warned that the country's regulatory burden is undermining growth and employment at a time when unemployment remains extremely high.