Can small and micro businesses form the basis of a more inclusive economy in South Africa? To find answers to these questions, CDE convened a series of conversations with global and local experts in late 2020.
South Africa’s informal sector is very small compared to other African countries, contributing 6% to GDP and 17% of all employment. This is because the productivity differences between the formal and the informal sector are known to be much larger in South Africa.
Tweaking regulatory restrictions or providing various forms of direct support to small and micro firms may make little difference if the whole economy does not move onto a higher growth trajectory. We should avoid thinking about policies for small or informal or township firms in isolation from the broader economy.
The only way forward is to expand inclusion and growth. Doing one without the other will not get us to where we want to be.