Regulatory BurdenproposedMedium TermSmall Business Development

Informal Economy Integration: Simplified Tax and Municipal Trading Infrastructure

Theme: informal_economy

First raisedNov 2022Last discussedSept 2023Dormant — not discussed in 12+ months

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Assessment

Growth Impact3/5

Feasibility3/5

Responsible: Department of Small Business Development / SARS / municipalities

Feasibility Assessment

The informal economy employs 3 million+ workers. Formalisation is rational only when benefits exceed costs — and currently they rarely do. The 2022 informal traders engagement session highlighted the municipal by-law and licence cost burden. Addressing this requires SARS, Treasury, and municipal cooperation. Tractable with political will but requires multi-departmental alignment.

Stakeholder Landscape

Who backs this reform, who needs convincing, and which interests or red lines shape political feasibility.

Reviewer

Open review workspace

Backers

1 stakeholders

Negotiation weight

0 conditional actors

Opposition weight

0 opposing actors

Review coverage

0/2

All mapped stance notes are still draft

Provenance warning

Every mapped stakeholder stance for this idea is still draft. The coalition score is directional only until at least the high-influence actors are reviewed.

Coalition Read

76/100Coalition-ready

Anchor: COSATU.

Political Tractability

—Needs reviewed signals

No reviewed signals · 0% of mapped influence has been reviewed.

Backers1 stakeholder

COSATUCoalition anchordraftInfluence 9/10

COSATU supports informal economy integration as it extends labour protections and social security to vulnerable workers.

Interest: Worker protections under the Labour Relations Act and Basic Conditions of Employment Act; collective bargaining rights; equitable wage growth; just tr…

Concern: Labour market flexibility reforms that erode LRA and BCEA protections; Eskom unbundling without adequate just transition planning for NUM members; pri…

Engagement path: Meaningful social dialogue through NEDLAC before structural reforms are finalised; just transition funding ring-fenced in MTEF; skills retraining and…

Watchlist1 stakeholder

Business Unity South Africa (BUSA)High-salience observerdraftInfluence 8/10

BUSA is neutral on informal economy integration, recognising its importance but focused on formal sector reform priorities.

Interest: Cross-sector structural reform across energy security, logistics efficiency, regulatory certainty, labour market flexibility, and digital infrastructu…

Concern: Slow implementation pace relative to policy announcements; inconsistency between reform rhetoric and regulatory decisions (e.g. NERSA tariff approvals…

Engagement path: Already actively engaged. Seeks implementation accountability mechanisms with published milestones, predictable regulatory timelines, and NEDLAC outco…

Description

South Africa's informal economy employs an estimated 2.8-3.2 million workers predominantly in retail, food vending, and household services, but operates largely outside the formal regulatory and tax system. SARS's Turnover Tax regime for businesses below R1 million annual turnover has seen slow uptake due to administrative complexity, while municipal trading infrastructure — market stalls, ablution facilities, electricity connections — is chronically inadequate in most townships and CBDs. The DSBD's Informal Economy Policy Framework (2019) and Operation Vulindlela's work on the spatial economy identify informal economy formalisation as an untapped labour market and fiscal resource. This reform combines SARS simplification with COGTA/SALGA-driven municipal infrastructure investment to lower the cost of formalisation.

OECD

Referenced in OECD Economic Surveys: South Africa

OECD SA Survey (2017, 2020, 2022, 2025). The 2025 survey calls for boosting public investment especially in electricity, water and rail.