As someone passionate about South Africa’s economic landscape, I often wonder about the balance of power within our industries. Are a few giants monopolising the market, or is there room for the smaller players to thrive? Luckily, Stats SA has shed light on this with fascinating research into market concentration and the role of small businesses. Here’s what I’ve discovered.
MARKET CONCENTRATION: WHO HOLDS THE POWER?
Stats SA’s concentration ratios offer an intriguing glimpse into the distribution of market share across 14 industries from 2018 to 2022. These ratios measure how much of an industry’s income is generated by its top five players.
Ocean fisheries top the list as the most concentrated sector, with 67% of income dominated by just five enterprises. On the flip side, agriculture stands out for its diversity, with the same group contributing only 4.1% of total income—a true testament to its more equal playing field.
The story doesn’t stop there. Transport via pipelines and railway transport are also tightly controlled by a few, while industries like retail fuel sales, medical practices, and restaurants enjoy a more dispersed market share.
THE UNSUNG HEROES: SMALL BUSINESSES
Small and micro businesses are the lifeblood of our economy, particularly in sectors like food and beverages, where they generate 59% of total income and employ 60% of the workforce. The construction industry has also seen a remarkable rise in small business influence, with their turnover share jumping from 17% in 2013 to 40% in 2023.
While mining and utilities remain heavily concentrated, small businesses have made modest gains here too, proving their resilience even in challenging industries.
A CLOSER LOOK AT TRENDS
Stats SA’s Annual Financial Statistics (AFS) reports reveal a mixed bag for small enterprises. While their contribution to turnover peaked at 24% in 2021, it has since dipped to 21% in 2023. Still, this is a notable improvement from the 16% recorded a decade ago.
Construction has led the charge, showcasing the dynamic role small businesses play in shaping the economy. However, sectors like community and social services have seen a decline, suggesting room for further investigation into the factors at play.
WHAT DOES THIS MEAN FOR SOUTH AFRICA?
Stats SA’s findings highlight three key takeaways:
- Industries like mining, utilities, and fisheries remain dominated by large enterprises.
- Small businesses are crucial to employment, particularly in food, beverages, accommodation, and trade.
- While small enterprises have made progress, their influence has slightly waned since 2021, leaving room for growth.
LET’S CELEBRATE AND SUPPORT SMALL BUSINESSES
As I reflect on these insights, I’m reminded of the importance of nurturing small businesses. They are more than just economic contributors—they are community builders, job creators, and drivers of innovation.
If you’d like to dive deeper into these findings, Stats SA’s detailed reports are a treasure trove of information. Whether you’re an entrepreneur, policymaker, or simply curious, these insights can help shape our collective future.
South Africa’s economic landscape is as complex as it is inspiring. Let’s continue to champion inclusivity and create opportunities for everyone to thrive.