By Thandekile Mbatha, Associate, Webber Wentzel

The 2026 Budget Speech delivered by Finance Minister Enoch Godongwana in February 2026 has in balance been referred to as a “good news” budget by the commentariat. At a macro level, the strides made toward fiscal consolidation and the raising of the VAT level for small-to-medium businesses are highly positive developments for key socio-economic measures, including employment.

Government has been highly consistent in emphasising the importance of small-to-medium businesses as part of its overall national economic growth strategy. Page 39 of the National Development Plan 2030 explicitly states “that most new jobs are likely to be sourced in domestic-orientated businesses, and in growing small- and medium-sized firms.”

Impact investing: Enabling businesses through commerce and impact

At what is a critical juncture for South Africa’s economy, a topic that merits significant attention when talking of growth, and driving change and impact is the role of impact investing in growing small-to-medium businesses and driving economic sustainability.

Impact investing is closely aligned with ESG principles for sustainable impact. Large corporations are seeking ways to deploy their capital that serve both commercial and impact imperatives simultaneously, guided by relevant industry regulations and statutes. Recently, Anglo American, together with Kumba Iron Ore launched an impact investment facility (with Kumba Iron Ore committing ZAR 51,2 million) aimed at assisting small-to-medium businesses in underserved regions across South Africa.

Another player in the impact finance space is Edge Growth which, in collaboration with its various partners, has deployed about ZAR1,75 billion into growing a sustainable ecosystem for small-to-medium businesses. These are some of the examples of how corporates are finding ways to position capital expenditure under the impact umbrella.

These moves have been complemented by movement within the public sector, with government making strides towards the growth of impact investment in South Africa through the launch of the National Taskforce for Impact Investing in 2019. President Cyril Ramaphosa noted in his 2026 State of the Nation address that the foundation of the government’s plan to revive growth and drive inclusion is investment. In particular, public infrastructure and “labour-intensive growth sectors that are capable of future growth”.

Government recognises the long-term dividends that can be realised through priority capital investment, which strongly mirrors the core objectives of impact investment and associated ESG frameworks. A further positive signal is the expression of interest by international investors seeking to unlock the value that inhabits South Africa’s economy.

Legislative gaps: An impact investment inhibitor

The potential of impact investing to support the long-term goals of a development-focused state is significant.

However, while South Africa’s economic growth story may be entering a more positive chapter in 2026/27, from a regulatory standpoint, there remains considerable limitation within South Africa’s impact investment regime. South Africa has a well-developed regulatory framework for mainstream investing, anchored by the Companies Act framework, B-BBEE laws, tax laws and the growing consideration of ESG requirements and factors.

Yet the absence of a bespoke impact investing regulatory framework, the lapse of key tax incentives, the voluntary nature of sustainability disclosures, fiduciary duty ambiguity, and structural constraints on institutional capital represent significant barriers that limit the scale and effectiveness of impact capital in the country.

Attracting meaningful levels of impact investment in South Africa requires a regulatory regime that can adequately protect that investment, one that complements the asset class’s dynamism.

What this regime should look like, and the legislative and policy adjustments required to create an attractive environment for local and international impact investors are key questions that must be addressed.

The current trajectory of both domestic and internal jurisprudence reflects a discernible shift toward greater scrutiny of non-financial representations, such as ESG commitments and sustainability disclosures - and the broader consequences of investment activity; yet these developments remain fragmented and largely reactive.

Domestically, the gap is even more striking. Impact‑related considerations seldom feature in judicial reasoning, leaving the core features of impact investing only partially understood and inconsistently applied in legal contexts. The result is a system that has not yet caught up with the ambitions of investors seeking to align commercial returns with social and environmental outcomes.

If we want impact investing to play the transformative role it is capable of, we need a more deliberate and integrated legal approach, one that recognises impact not as a peripheral concern, but as a legitimate and vital component of investment decision‑making.

As the market continues to evolve, it will be crucial to watch how jurisprudence responds and to learn from new examples emerging both locally and internationally that may point the way toward a more coherent and future‑fit framework.