SARS’ tighter enforcements demands financial discipline from SMEs
Last year, South African entrepreneurs learnt that waiting for certainty, clear policy signals, stable costs and predictable demand is no longer a viable strategy.
After navigating volatile input costs, shifting regulations and uneven consumer demand, many small and medium-sized enterprises (SMEs) ended the year leaner, disciplined and more realistic about what growth looks like. They learnt how to build momentum amid uncertainty, and their outlook is now cautious but quietly ambitious.
There are reasons for that confidence. Macroeconomic conditions have started to move in a more constructive direction. Inflation has moderated, interest rates have begun to ease, and the rand has shown strength few anticipated a year ago. These shifts matter, with lower borrowing costs lengthening planning horizons, while improved price stability gives business owners space to think beyond immediate survival.
As David Morobe of Business Partners Limited has often noted, SMEs tend to respond to improved conditions by first restoring discipline and repairing balance sheets before pursuing expansion. That sequence is now visible across parts of the economy, with many businesses profitable again but still hesitant to hire, invest or scale.
The defining question for 2026 is whether SMEs can move from operational stability to planned growth.
At the centre of that transition sits the thorny issue of cash flow. Businesses usually fail because liquidity pressures compound quietly, then suddenly. With Sars signalling tighter enforcement in 2026 as it attempts to close a tax gap estimated at nearly R500bn, financial discipline will become non-negotiable.
For SMEs, this means better forecasting, proactive tax planning and a clearer separation between business and personal finances. Those businesses that review cash positions regularly and act early will have far more options than those that only respond when pressure peaks.
Compliance, often viewed as a burdensome cost rather than a strategic tool, also deserves a reframe. In practice, formalisation unlocks access to funding, strengthens credibility with suppliers and enables participation in larger value chains. Businesses that delay compliance preserve short-term flexibility, but at the expense of long-term opportunity.
As South Africa’s economy becomes more decentralised and digitally enabled, large organisations will need to move faster and closer to local markets, and SMEs are uniquely positioned to do that. The corporations that build structured, scalable SME ecosystems will be the ones that stay competitive over the next decade
Digital capability is another line that will increasingly separate those who scale from those who stagnate. Larger SMEs continue to adopt digital payments, inventory management, analytics and cloud-based tools. In contrast, smaller informal businesses, particularly outside major metros, often remain constrained by skills gaps and affordability.
Arthur Goldstuck of World Wide Worx has consistently pointed out that technology adoption is more about relevance than about experimentation. This year, digital maturity will increasingly determine which SMEs can reach customers, manage costs, access finance and compete in new markets.
Another trend set to shape the year ahead is collaboration between corporates and SMEs, and I don’t mean larger private giants helping small businesses just to tick off their social responsibility. Partnerships work when they are designed intentionally, with clear objectives, accountability and shared value, to produce sustained, measurable results for both parties.
As South Africa’s economy becomes more decentralised and digitally enabled, large organisations will need to move faster and closer to local markets, and SMEs are uniquely positioned to do that. The corporations that build structured, scalable SME ecosystems will be the ones that stay competitive over the next decade.
Trade dynamics add further urgency. Global uncertainty and rising protectionism have made traditional export routes less predictable. At the same time, the African Continental Free Trade Area (AfCFTA) has shifted from distant ambition to practical opportunity. SMEs that invested time in understanding regional demand, logistics partnerships and regulatory alignment during 2025 enter 2026 with options, while those that did not remain confined to narrower, more volatile markets.
Policy execution will also play a decisive role with pragmatic entrepreneurs desiring clarity, consistency and follow-through. The fiscal uncertainty earlier in 2025 showed how quickly confidence can soften when there are signals of conflict. Sustained policy coherence will influence whether SMEs choose to invest, hire and expand.
What stands out most, however, is mindset. Despite fatigue and frustration, South African entrepreneurs continue to adapt, renegotiate, reprice, streamline and pivot. Confidence, as Morobe has observed, is reinforced by evidence, not rhetoric, and when business owners see stable policy, functioning infrastructure and accessible markets, they act fast.
This year will not reward inertia but rather intent, discipline, adaptability, and informed risk-taking, and those businesses that are prepared, not patient, will find room to grow, despite constrained conditions. Watch this space.
- Mtwentwe AGA(SA), is Managing Director of Vantage Advisory and host of the SAICABIZ Impact Podcast
