The global trade landscape is shifting dramatically. In a move that could have serious economic consequences, US President Donald Trump recently announced a 10% tariff on all imports to the US, with additional reciprocal tariffs for dozens of countries, hitting South Africa with a staggering 30% levy.
Given that the US is South Africa’s second-largest trading partner after China, this policy shift raises urgent questions about how local businesses and small and medium enterprises (SMEs) can adapt. As major economies prioritise domestic industries, South Africa must consider how to strengthen its own economic resilience.
One of the country’s greatest, yet under-utilised, economic assets is the SME township economy — valued at an estimated R900bn. By unlocking its full potential, South Africa can drive transformation, foster inclusive growth and create new investment opportunities in the face of shifting global trade dynamics.
More than 60% of the country’s urban population live in townships and nearly 30% of the workforce is employed there. From spaza shops and taxi businesses to micro-manufacturing and e-commerce, township entrepreneurs sustain millions, yet this vibrant sector remains largely disconnected from the broader economy.
For township-based SMEs, success is often blocked by limited access to funding, digital platforms and formal business networks. Traditional banks require collateral and credit histories, conditions many township business owners cannot meet. As a result, they rely on informal financial systems such as stokvels, which manage more than R50bn annually.
Instead of looking outward for solutions, the country must turn its focus inward. Corporate South Africa holds the key to integrating township SMEs into their supply chains. By sourcing products and services from these enterprises, corporations can help them scale, create jobs and drive sustainable economic growth.
At a recent Proudly South African buy local summit and expo, fashion designer David Tlale told me South Africa has all the raw materials needed for the fashion industry, and many luxury brands source their materials here. Entrepreneurs such as Tlale manufacture locally but sell globally, highlighting the potential for township businesses to integrate into high-value supply chains.
E-commerce and digital platforms play a crucial role in bridging the gap between township entrepreneurs and broader markets. Logistics networks, cashless payment systems and digital shopfronts allow businesses to expand beyond their immediate communities. However, access alone isn’t enough. Township entrepreneurs need targeted support in financial literacy, digital skills, and business management to grow.
Takealot, through its township economy initiative (TTEI), has set a great example. By creating franchise hubs in townships such as Soshanguve, Mamelodi and Thembisa, it is integrating township businesses into South Africa’s e-commerce ecosystem while creating local jobs, improving accessibility and boosting local economies. What sets this initiative apart is its commitment to removing financial barriers, offering training and support without franchise fees and reinvesting in communities.
A nationwide shift, where businesses commit to long-term partnerships and supply chain inclusion, would unlock the R900bn potential of township SMEs
To truly transform the township economy, more corporations must follow suit. A nationwide shift, where businesses commit to long-term partnerships and supply chain inclusion, would unlock the R900bn potential of township SMEs. This could be the key to South Africa’s next economic boom and a solid reminder that global trade isn’t a one-way street.
Government policy reform is also essential. Streamlining bureaucratic processes and creating a supportive environment for township businesses to access funding and infrastructure would make a world of difference. Expanding digital payment solutions and mobile banking could further integrate township businesses into the broader economy, ensuring seamless transactions.
Additionally, the R50bn stokvel economy holds immense potential. If harnessed properly, stokvels could become a powerful funding mechanism for township SMEs, enabling them to grow and thrive.
Several industries have the potential to transform South Africa’s rural economy into a billion-dollar sector, particularly in light of shifting trade dynamics and tariffs. Sectors such as cannabis, tourism, farming, craft markets and agro-processing could thrive by leveraging new market opportunities. Strengthening rural entrepreneurial networks would enable businesses to tap into export markets, driving economic transformation.
Looking at global examples, South American countries have capitalised on the tequila boom, where farmers benefit from planting agave to meet increasing demand. The tequila industry is projected to reach $14bn by 2030, highlighting the power of localisation strategies in integrating local economies into global value chains.
The township economy is not just a social cause but a massive economic opportunity. With the right investment from businesses, policymakers and investors, South Africa could see a new generation of industry leaders emerging from townships. The country does not need to look outward for economic solutions when the answer lies within. By unlocking the full potential of township SMEs, South Africa could drive inclusive, sustainable growth and create an economic boom rooted in local ingenuity and resilience.
• Mtwentwe AGA(SA) is MD of Vantage Advisory and host of the SAICA Biz Impact Podcast
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