SMME Policy Brief on RedTape Reduction_June 2025

The National Planning Commission (NPC), which oversees South Africa’s long-term development strategy known as the National Development Plan (NDP), is tasked with guiding government and society on vital issues affecting inclusive growth and sustainability. A core objective of the NDP’s Vision 2030 is to eliminate poverty, reduce unemployment, and lower inequality. To achieve these goals, the growth and vibrancy of small, medium, and micro enterprises (SMMEs) are identified as essential drivers for creating jobs and promoting economic transformation. 1.2. The NDP envisages a situation whereby small and expanding firms will become more prominent in the generation of the majority of new jobs created. It identifies SMMEs as the primary drivers of employment, with a target of generating 9.9 million out of the projected 11 million new jobs by 2030. To realise this ambition, the NDP highlights the need to reduce red tape by lowering regulatory burdens, streamlining administrative processes, and reducing the costs of doing business in key sectors. These measures are recognised as essential enablers of job creation through SMME growth and sustainability. 1.3. This policy brief outlines the context and background of the NPC’s work on red tape reduction. It also presents a summary of the key findings and recommendations contained in the advisory note to the Presidency and government, aimed at strengthening red tape reduction efforts to enable SMMEs to thrive, create jobs, and contribute meaningfully to inclusive and sustainable economic growth. 2. Background 2.1. Since the adoption of the NDP in 2012, successive administrations have introduced several initiatives aimed at reducing red tape. Research conducted by the second National Planning Commission (NPC) in 2017, titled The Limited Success of Entrepreneurial Activity by Locals in Townships and Rural Areas, identifies red tape as a significant constraint on Small, Medium, and Micro Enterprises (SMMEs), even more so than regulation itself. The study acknowledges that while regulation is necessary to ensure standards and protect consumers, excessive and inefficient administrative processes, such as onerous compliance requirements, obstructive bureaucracy, and limited state capacity, create barriers to entry and discourage formalisation. It further highlights that red tape, driven by outdated policies, poor systems, and skills shortages, stifles both formal and informal businesses, particularly in township economies.