Lerato Bacela, Financial Director at Old Mutual Insure

As South Africa enters a new financial year, small, medium and micro enterprises (SMMEs) are being encouraged to take a more proactive approach in responding to recent regulatory changes and emerging economic opportunities that could support sustainable growth.

“SMMEs remain a critical driver of economic activity and job creation in South Africa. At a time when unemployment continues to pose a significant challenge, the growth and sustainability of small businesses become more important than ever,” says Lerato Bacela, Financial Director at Old Mutual Insure.

Recent policy adjustments aimed at easing the cost of doing business provide an opportunity for SMMEs to reassess their operating model and plans for the year ahead. Notably, the Value Added Tax (VAT) registration threshold has increased from R1 million to R2.3 million, with meaningful implications for growing businesses.

This means that for enterprises with a turnover not exceeding R2.3 million, VAT registration is no longer mandatory. This change may reduce administrative and compliance costs and provide some relief to businesses operating in highly competitive environments and tight margins.

However, Bacela cautions against viewing deregistration as a simple decision. “While VAT deregistration can lower compliance costs, it also means businesses will no longer be able to claim input tax. SMMEs should carefully assess the financial impact and run the numbers and assess what is most appropriate for their specific circumstances,” she says.

The increase in the voluntary registration threshold to R120 000 also provides smaller businesses more flexibility as they scale. In the absence of clear transitional provisions for businesses that may fall below the new threshold, seeking professional advice will be essential.

Beyond regulatory changes, planned public-sector infrastructure investment over the medium term is expected to unlock opportunities across sectors such as transport and logistics. These programmes present SMMEs with the chance to participate more actively in supply chains and large-scale project delivery.

“These developments highlight the importance of being prepared and well-positioned,” says Bacela. “SMMEs should be thinking about how to align their services and capabilities with emerging opportunities, whether through partnerships, skills development or strengthening their operational capacity”.

With the new tax year underway, SMMEs may benefit from engaging professional advisors including accountants, bookkeepers and bankers and to help translate these regulatory and economic changes into practical opportunities and strategies.

“The operating environment remains challenging, but real opportunities exist. Businesses that take a deliberate, informed approach to growth are better positioned to benefit from these changes and to play a meaningful role in supporting economic resilience and employment.” Concludes Bacela.

Government has set the policy direction. It is now up to the market to translate these changes into tangible opportunities. With the right planning and support, proactive SMMEs can unlock more sustainable growth and contribute to much needed economic growth.