How innovative South African SMEs are thriving through digital transformation

RECENT reports of an uptick in business liquidations in South Africa, 145 in October alone, may have understandably set off alarm bells about the health of the country’s small business sector, but while closures have a profound impact on communities and livelihoods, they don't tell the full story.

- LOUISE SOUTHALL

A KEY component of this ability to navigate challenging economic conditions is technology use, says the author.

(AI Lab)

A sector under pressure, but still standing

Beneath the surface, the reality is more nuanced. South Africa’s small and medium enterprises (SMEs) are showing remarkable resilience, adaptability, and even growth, often fuelled by digital transformation and an entrepreneurial spirit that refuses to be extinguished.

Despite the uptick in liquidations, SMEs remain a driving force in South Africa's economy.

According to the South African Chamber of Commerce and Industry (Sacci), the country is home to approximately 2.67 million small, medium, and micro-enterprises (SMMEs).

Of these, 91% of formal businesses are SMEs, collectively contributing around 60% of employment and 34% of national GDP. These figures underscore the sector's foundation role in the economy.

It's no secret that South Africa's SMEs are operating in a challenging environment, navigating a fragile recovery and new uncertainties, such as shifting US trade policies. Persistent issues such as unreliable energy supply, difficulties accessing affordable finance, and lagging digital infrastructure continue to put pressure on business owners.