“If MSMEs are the backbone of the economy, why do they still crawl under the weight of bureaucracy and exclusion?”
MSMEs (Micro, Small and Medium Enterprises) are hailed as the “engine of inclusive growth.” They contribute 34% to South Africa’s GDP and account for over 50% of employment, while across Africa they make up 90% of businesses. Yet they are trapped in a paradox — celebrated in speeches, but starved of resources and policy attention. Are they truly the industrial revolutionaries of the 21st century, or merely economic stepchildren used to absorb unemployment and tick B-BBEE scorecard boxes?
The MSME Reality Check
The numbers are big, but the support is small.
- 34% – Contribution to SA GDP
- 50%+ – Share of total employment
- 90% – Proportion of African businesses
- 40% – Estimated financing gap for MSMEs (IFC)
The Myth of the “Backbone”
Calling MSMEs the “backbone” of the economy is almost cliché. Yet that engine sputters under:
- Crippling compliance costs
- Late payments by corporates and government
- Limited access to finance – 40% of formal MSMEs in emerging markets face unmet funding needs
The result? A sector stuck in survival mode, unable to industrialize or innovate at the pace required to compete globally.
“MSMEs are expected to absorb unemployment, innovate, and industrialize – yet rarely given the tools to compete.”
Industrial Revolutionaries in Waiting
Across Africa, MSMEs are finding ways to break free:
- Kenya’s Jua Kali sector – evolved from informal roadside workshops to tech-enabled, export-ready clusters.
- South African township logistics startups – redefining last-mile delivery.
- Craft brewers and renewable energy installers – creating new value chains and forcing corporates to rethink distribution models.
These MSMEs are not passive victims. They are reshaping markets, disrupting incumbents, and leveraging digital tools to access markets once closed to them.
The Policy Contradiction
Governments trumpet MSMEs rhetorically but often strangle them with overregulation.
- A single missed UIF payment can disqualify a small business from tenders.
- Procurement processes are designed for compliance-heavy corporations.
- Development finance institutions focus on “scalable startups,” ignoring steady job-creating businesses.
Stepchildren No More
The Fourth Industrial Revolution won’t wait for policy catch-up. South Africa and Africa must act now:
- Radical Procurement Reform – Guarantee 30-day payments and reward innovation, not just compliance.
- Credit Access Revolution – Use data-driven credit scoring to unlock working capital.
- Policy Simplification – Remove redundant compliance layers.
- Industrial Clustering – Invest in sector-specific hubs to allow MSMEs to share infrastructure and scale competitively.
“Either MSMEs are elevated to co-architects of economic transformation, or Africa risks missing another industrial wave.”
Revolution or Regression?
MSMEs are not inherently fragile — they are structurally starved. With the right incentives, they can lead Africa’s industrial renaissance. Without them, “inclusive growth” will remain just a buzzword, not a blueprint.
