Small Business, Inclusive Growth and Industrial Policy in South Africa

Forum 2024: Small Business, Inclusive Growth and Industrial Policy in South Africa

TIPS forum2024 main banner VFF
30-31 July 2024

Trade & Industrial Policy Strategies (TIPS) will host its Annual Forum on Tuesday and Wednesday 30 – 31 July 2024.
The theme is Small Business, Inclusive Growth and Industrial Policy in South Africa.

The 2024 TIPS Forum seeks to deepen understanding of the small business sector in South Africa, how it is evolving, and the implications for industrial policy. The future of small business is core to an inclusive industrial policy in South Africa. Far fewer people earn livelihoods from their own businesses in South Africa than in other upper-middle-income countries. That reality is a core factor behind unusually high joblessness as well as deep inequalities in income and ownership. Industrial policy aimed at inclusive industrialisation must therefore seek a step change in the number of small businesses.

The Forum will discuss the systemic obstacles to the growth of small businesses in South Africa, and strategies for scaling up support and strengthening small business development as part of inclusive industrialisation. In doing so, the Forum will encourage discussion that considers the challenges and opportunities of the small business sector and inclusive industrialisation.

TIPS is partnering with, and receiving financial support for the Forum from, the DSI/NRF South African Research Chair in Industrial Development (SARChI) based at the University of Johannesburg. The Forum will be undertaken in association with the Department of Trade Industry and Competition (the dtic).

2024 Forum Context and Themes

Since 1994, the small business sector has received significant public and private attention as a source of economic growth and employment, and at the outset formed part of South Africa’s industrial policy. The legacy of apartheid, however, created structural barriers that have hindered the growth of this sector, limiting its impact. While there has been growth in the number of small businesses – from 590 000 formal small business in 2010 to 710 000 in 2022 – this growth has been insufficient to address the deficit left by apartheid. In other upper-middle-income countries, small business owners (employers and the self-employed) make up more than 20% of the working-age population. In South Africa, this is just 6%.

The National Industrial Policy Framework (NIPF) recognises small business and enterprise development as a core component of inclusive industrial development. A multitude of institutions, agencies and a national government department have emerged as part of support to the sector. This development, various packages of donor support and private sector programmes have contributed to building an eco-system to grow and nurture small businesses.

The negative impact of the COVID-19 pandemic and the global financial crisis before that, however, caused a significant decline in the small business sector. Both crises took years to recover from, and highlight the fragility and lack of a robust small business environment. Based in part on learnings from the global financial crisis, the COVID-19 pandemic brought stronger economic support packages. As a result, it has seen a quicker economic rebound. 
Climate change has in recent times become a climate emergency with devastating impacts across the globe. Responses to this crisis have varied across regions, with changes taking place in energy sources, fossil fuel use, trade requirements, and supply chains. These changes have taken place alongside a period of rapid and disruptive technological change, with implications for small business, employment, skills and emissions. 

Opportunities for development arise from stronger collaboration across the continent, as African countries strengthen their economies, support small businesses through industrial policy and improve continental trade arrangements. The African Continental Free Trade Area (AfCFTA) negotiations have been spurred on by an overwhelming need to do things differently and create opportunities for businesses of all sizes in multiple sectors to trade across the continent. With regional and global value chains shaping business operations, there are increasing opportunities in integrating small and medium enterprises (SMEs) into value chains and understanding the access to new markets, foreign exchange and the potential technology spillover effects on domestic firms and economies.

Looking ahead, inclusive industrialisation requires more decisive industrial policy interventions. Policy-orientated research is required to better understand the political-economy impacts, the socio-economic costs to society, and appropriate strategies and measures.The Forum offers the opportunity for collective critical analysis of possible solutions considering related opportunities and challenges, and further actions. The call for proposals covers broad themes addressing the impact on small businesses on industrial policy and inclusive growth, such as:

  • Building and enabling a small business ecosystem
  • The production structure in South Africa
  • Education, training and skills constraints within small and medium manufacturing enterprises
  • Access to finance and the role of the financial sector
  • Barriers to entry and access to global markets
  • The Master Plans, localisation, and other industrial policy instruments
  • The climate emergency and the Just Transition
  • Promoting green industrialisation among small businesses
  • The quality and affordability of infrastructure
  • Innovation in SMEs
  • Technological change
  • Strategies to promote more inclusive growth
  • Township enterprises
  • The AfCFTA and global trade
  • Integration into regional value chains (within SADC)