{"id":873925,"date":"2026-09-05T14:00:00","date_gmt":"2026-09-05T12:00:00","guid":{"rendered":"https:\/\/businesstech.co.za\/news\/?p=873925"},"modified":"2026-09-04T17:59:08","modified_gmt":"2026-09-04T15:59:08","slug":"businesses-going-after-south-africas-r900-billion-economy-should-be-worried","status":"publish","type":"post","link":"https:\/\/businesstech.co.za\/news\/business-opinion\/873925\/businesses-going-after-south-africas-r900-billion-economy-should-be-worried\/","title":{"rendered":"Businesses going after South Africa’s R900 billion economy should be worried"},"content":{"rendered":"\n

The Competition Commission has published a report on South Africa’s rural and township economy, which signals the government’s increasing focus on the sector and potential regulations to come.<\/p>\n\n\n\n

The report provides an overview of the economic dynamics of the country’s informal sector to inform future policy and regulation.<\/p>\n\n\n\n

South Africa’s rural and township economy is estimated at R900 billion<\/strong><\/a>, largely informal and untaxed, presenting huge opportunities for any business that can tap into it.<\/p>\n\n\n\n

However, the commission’s report identified several barriers to entry for small businesses in the sector, sowing the seeds of potential regulatory interventions. This includes possible enforcement action.<\/p>\n\n\n\n

Werksmans Attorneys’ head of regulatory, Ahmore Burger-Smidt, said the report could have far-reaching consequences for any business working in rural economies.<\/p>\n\n\n\n

She said the commission’s report is “explicitly forward-looking” and could be used as a basis for future policy or enforcement shifts.<\/p>\n\n\n\n

“For any organisation with a presence in or connection to township and rural markets, the report warrants careful attention,” she said.<\/p>\n\n\n\n

“The report provides the commission with a rich empirical foundation, a clear analytical framework, and an evident appetite for follow-through.”<\/p>\n\n\n\n

She outlined that one of the commission’s first priorities is to address the administrative red tape that prevents many businesses from starting in rural economies.<\/p>\n\n\n\n

The report argued that these administrative barriers prevent many small businesses from becoming legitimate, providing a competitive advantage to large companies with industry experience.<\/p>\n\n\n\n

Without following the correct administrative and regulatory steps, small businesses remain in the informal sector.<\/p>\n\n\n\n

The informal sector encompasses businesses that are not formally registered and often avoid paying taxes or complying with industry standards.<\/p>\n\n\n\n

South Africa’s government has brought in several initiatives in the past to streamline the process of formally registering businesses, but the commission argues that more needs to be done.<\/p>\n\n\n\n

Burger-Smidt said the Competition Commission intends to engage with several stakeholders, including municipalities, the South African Local Government Association, and the Department of Small Business Development.<\/p>\n\n\n\n

These engagements would centre around “identifying the regulatory burdens which can be simplified, standardised or better supported.”<\/p>\n\n\n\n

A warning for big businesses<\/h2>\n\n\n\n
\"\"<\/a><\/figure>\n\n\n\n

The Competition Commission’s report found that small businesses in township economies face severe challenges in procuring their retail goods.<\/p>\n\n\n\n

While larger businesses and national chains have sophisticated logistics networks to keep wholesale costs low, small businesses in townships or rural areas lack access to wholesalers.<\/p>\n\n\n\n

This means that small businesses face higher costs, less reliable supply, and a weaker bargaining position than their larger counterparts.<\/p>\n\n\n\n

The result from this procurement imbalance could be an anti-competitive business environment, which favours large retail chains.<\/p>\n\n\n\n

The report found these procurement challenges in several industries, including agriculture, hospitality, and retail services.<\/p>\n\n\n\n

The high cost of goods for small businesses also leads them to make smaller purchases, further weakening their bargaining power, the Competition Commission’s report found.<\/p>\n\n\n\n

“These procurement asymmetries translate into higher procurement costs for township and rural businesses and narrower product ranges for the consumers who shop at smaller outlets,” Burger-Smidt said.<\/p>\n\n\n\n

She said these findings are far more than theoretical and could be the basis for enforcement action or policy changes.<\/p>\n\n\n\n

“The report does not shy away from the possibility of enforcement action,” she said.<\/p>\n\n\n\n

“It identifies specific categories of conduct, exclusionary access to retail channels, discriminatory procurement conditions, and supply arrangements that disadvantage smaller firms, that may form the basis for market conduct investigations.”<\/p>\n\n\n\n

“The Commission has now signalled that it would be looking into prioritising procurement and upstream access and even making provision for competition conditions aimed at addressing service delivery and infrastructure.”<\/p>\n\n\n\n

While the Competition Commission has not explicitly stated its next move, Burger-Smidt said businesses should be prepared for action.<\/p>\n\n\n\n

“Whether the practical impact will be felt primarily through enforcement, through policy reform, or through a combination of both, the direction of travel is unmistakable,” she said.<\/p>\n","protected":false},"excerpt":{"rendered":"

The Competition Commission’s report on rural and township economies could be the basis for major regulatory action in the sector.<\/p>\n","protected":false},"author":131,"featured_media":738893,"comment_status":"open","ping_status":"closed","sticky":true,"template":"","format":"standard","meta":{"_sma_x_autopost_status":"failed","_sma_x_autopost_error":"Instagram publishing failed: Instagram returned HTTP 400: Media ID is not available","_sma_x_post_id":"2096206984106131562","_sma_facebook_post_id":"191437357620492_2196631267823939","_sma_instagram_post_id":"","_sma_x_attempts":1,"footnotes":""},"categories":[4],"tags":[26415,1516,26414],"class_list":["post-873925","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-business-opinion","tag-ahmore-burger-smidt","tag-competition-commission","tag-weksmans"],"_links":{"self":[{"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/posts\/873925","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/users\/131"}],"replies":[{"embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/comments?post=873925"}],"version-history":[{"count":29,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/posts\/873925\/revisions"}],"predecessor-version":[{"id":873984,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/posts\/873925\/revisions\/873984"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/media\/738893"}],"wp:attachment":[{"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/media?parent=873925"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/categories?post=873925"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/tags?post=873925"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}