Small businesses are the backbone of South Africa's economy, accounting for 91% of formal businesses, generating around 60% of employment, and contributing up to 34% of GDP. The township economy, valued at over R900bn a year, accounts for nearly 19.5% of total employment. These businesses play a crucial role in building an inclusive economy, but many face challenges that hinder their growth. Despite their importance, small and medium-sized enterprises (SMEs) continue to struggle, not due to lack of ambition or determination, but because of the odds stacked against them.
The South African government has recognized the significance of SMEs in driving economic growth. To support these businesses, they need access to finance, reliable infrastructure, simpler regulations, and inroads into larger markets. As consumers increasingly move their spending online, digital capability has become essential for SMEs to reach past their local customers. Digital tools can unlock new opportunities for growth, and many SMEs have already demonstrated a strong digital foundation, with sturdy adoption of digital payments.
According to the 2026 Mastercard SME Confidence Index, South African SMEs have a strong digital foundation and are commercially mature. More than half of the SMEs surveyed identified simple and seamless payment experiences as an important opportunity for growth, followed by safe and cyber-secure payment processing. This shift in thinking highlights the importance of digital tools in helping businesses reach customers, generate sales, and build something that lasts.
Mastercard's 2026 Online Retail in South Africa study projects that South Africans will spend around R159bn online in 2026, with online retail accounting for an average 10% of national retail turnover. The study also highlights how digital commerce is becoming part of everyday trade, with businesses using online platforms, marketplaces, and digital tools to expand their operations, improve efficiency, and reach more consumers.
Gabriel Swanepoel, division president for Africa at Mastercard, emphasizes the importance of collaboration in turning digital opportunities into real growth for SMEs. By working with fintechs, banks, and government, Mastercard is helping make digital payments, technology, and skills more accessible to SMEs, giving them the tools they need to scale and access to broader markets.
Swanepoel notes that with the right partnerships and tools, a business is no longer limited to the street where it begins. SMEs have the capability to scale anywhere, and it is essential to build the conditions that allow entrepreneurial ambition to translate into sustainable businesses. This requires widening market access, putting digital tools within easier reach, and strengthening collaborations that connect small businesses to opportunities.
The work to support SMEs is part of Mastercard's global commitment to connect and protect 500-million people and small businesses on their path to financial health by 2030. By supporting SMEs, Mastercard aims to help them turn their potential into sustainable growth, creating jobs and contributing meaningfully to the economy.
Key points
- SMEs account for 91% of formal businesses and generate around 60% of employment in South Africa.
- Digital capability is essential for SMEs to reach past their local customers and unlock new opportunities for growth.
- Collaboration is key to unlocking growth for SMEs, and Mastercard is working with fintechs, banks, and government to make digital payments and skills more accessible.
