South Africa is hurtling deeper into an unemployment crisis that shows no signs of easing. Our official unemployment rate, which is already one of the highest in the world, has climbed yet again, rising from 31.9% in late 2024 to a staggering 32.9% in the first quarter of this year.
These statistics are a stark indicator of systemic failure. But while the formal economy falters, a quiet revolution is stirring. Across the country, small and medium enterprises (SMEs) are doing what the system cannot: creating jobs, hope, and momentum. If we are serious about breaking the cycle of unemployment (and we should be), it is time we stopped sidelining our SMEs and instead started banking on their hustle.
Despite being our most dynamic job creators, SMEs are often treated like a footnote in policy and finance. Even though we have an enormous number of funders, more than 300 according to the Finfind “SMME Access to Finance” report, access to capital remains a problem. About 75% of funding requests come from early-stage businesses or SMEs, exactly the type South Africa needs to be supporting if we want to tackle unemployment. Yet, these are the very businesses most likely to be rejected.
As a result, newer generations of entrepreneurs have become resilient to structural failures of traditional finance. Instead, they are self-funding their ideas through crowdfunding, transacting via crypto, plugging into the gig economy, and embracing informal networks of trade. What they lack in conventional assets such as bank loans and extensive credit lines, they make up for in agility, innovation and a deep understanding of underserved markets.
Traditional funders still rely on document-heavy processes that demand collateral few SMEs can offer. As a result, entrepreneurs in townships, side hustlers and those in the informal gig economy are often locked out. They are not lazy or unbothered — they are simply invisible to systems that were not built with them in mind.
If we are to address our unemployment crisis, banks need to rethink their approach. They can no longer afford to operate under outdated models that fail to acknowledge the innovation and resilience of local SMEs.
Thankfully, the tide is starting to turn, albeit slowly, with a handful of alternative funders stepping in to offer SMEs simpler, faster application processes. Tech-based funding models, such as Payfast’s repay-as-you-trade platform, which adjusts repayment schedules based on daily cash flows, are a good example of funders easing pressure on SMEs and, in turn, creating a win-win situation.
Thankfully, the tide is starting to turn, albeit slowly, with a handful of alternative funders stepping in to offer SMEs simpler, faster application processes
This issue is not just the supply of capital but also the appetite of funders. Whether it is banks or government grants, many funders gravitate toward industries promising short-term returns, such as fintech and logistics. While this is understandable, it is also short-sighted. Industries such as crafts, manufacturing and community services are desperately in need of funding too. Just last week, it was reported that South African craft breweries are closing at an alarming rate, not because the beer is not good but because capital is not flowing to them.
If we want funders to take SMEs seriously, they need to step up their game too, building bankable businesses from day one. This means formalising operations, developing solid systems and processes, ensuring compliance and assembling leadership teams that inspire confidence. Data is key here; the more you can demonstrate, the better your chances of unlocking funding.
South Africa’s unemployment crisis will not be solved by big corporates or the government alone. The solution lies in shifting our mindset from being in survivalist mode to one of intentional growth. Every SME that employs even five people is not just supporting those families but also multiplying stability in both the local community and, in turn, the wider economy. If we can enable thousands more to grow, thrive and hire, we can finally bridge the gap between potential and opportunity, driving job creation and creating steady economic growth.
No matter their size or sector, South African businesses are not short on ideas or hustle. They are short on belief and access to funding. The time to change that is now.
• Mtwentwe is MD of Vantage Advisory and host of the SAICA Biz Impact Podcast
