For the millions of entrepreneurs who form the backbone of South Africa’s economy, finance minister Enoch Godongwana’s 2026 budget speech evoked a collective sigh of relief. In a landscape defined by relentless pressure, this budget was a welcome breather, a clear signal that the government is listening to the challenges on the ground.
The decision to withdraw proposed tax hikes and, most significantly, to more than double the VAT registration threshold from R1m to R2.3m, is a pragmatic and powerful move. For years the R1m ceiling acted as an artificial growth constraint, forcing many small and medium-sized businesses (SMBs) to choose between stagnation and a sudden, overwhelming compliance burden.
By raising this threshold, the minister hasn’t just adjusted a number; he has knocked down a formidable barrier to growth, allowing business owners to focus on what they do best: innovating, creating jobs and driving the economy forward.
Digitalisation
This fiscal relief is the headline, but the true, lasting opportunity lies deeper within the speech, in the threads connecting structural reform, compliance and digitalisation. The real work begins now, and it’s digital.
The minister’s acknowledgement of data infrastructure and AI as critical economic pillars, alongside the modernisation of our national payments system, is not merely tech-speak. It is the foundation for the next stage of our economic recovery. While fiscal measures provide the space for SMBs to breathe, it is technology that will give them the power to run.
Our research with the International Chamber of Commerce has consistently shown that digital adoption is the single greatest enabler for SMBs. Businesses that use digital tools for accounting, invoicing and reporting are not only more efficient but are also far more likely to access the finance needed to scale. The bottleneck for most SMBs isn’t a lack of ambition; it’s the complexity of reporting and compliance that consumes their most precious resource: time.
Strategic insight
This is where the minister’s vision for a digital economy must translate into tangible action. The increase in the VAT threshold frees up countless hours previously lost to administrative tasks. The critical question now is what businesses will do with that reclaimed time. The answer must be to embrace digitalisation. It is the bridge from simply surviving to actively thriving.
This transition moves compliance from a burdensome, backward-looking task to a forward-looking source of strategic insight. Modern, AI-powered tools transform financial data from a static record into a dynamic asset. They can forecast cash flow, identify opportunities for cost savings, automate routine tasks and provide the real-time insights needed to make agile decisions in a volatile market.
The government’s commitment to building digital infrastructure provides the rails; technology providers like Sage deliver the engine.
Budget 2026
The focus on structural reforms in energy and logistics is crucial. A digitised business cannot function if the power is off or its products are stranded at port. These reforms create the stable operating environment in which digital efficiencies can truly pay dividends, building the resilience our economy desperately needs.
Budget 2026 has set the stage. It provides immediate, necessary relief while pointing towards a more ambitious, digitally enabled future. But a vision without execution is just a dream. The challenge now is to make this digital transition accessible and practical for every SMB, regardless of their size or sector.
This requires a concerted effort from all sides: government must continue to create a stable and enabling environment; technology partners must provide affordable and intuitive tools; and SMBs must seize this opportunity to invest in their own digital capabilities.
The minister has given South Africa’s entrepreneurs a much-needed breather. Now we must collectively help them harness the power of technology to take the next big leap forward. Knocking down these barriers, both fiscal and digital, is how we build the inclusive, resilient, and prosperous economy South Africa deserves.
• Burger is MD of Sage Africa & Middle East.
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