Five stories from 2025 that reshaped South African small business

The year 2025 tested South African small businesses in ways few could have predicted.

A budget that nearly collapsed, power that finally stayed on (mostly), punishing tariffs from a key trading partner, rising labour costs, and a fundamental shift in monetary policy.

Each development reshaped the operating environment for businesses across the country.

If you spent the year with your head down, focused on customers and cash flow, you may have missed some of the broader currents that will shape your planning for 2026 and beyond.

This article examines the five most significant developments from 2025 and, more importantly, what you can do about them now.

Here’s what we’ll cover:

The budget that almost wasn’t

South Africa’s 2025 national budget required three attempts before it finally passed.

The initial version, presented in February, proposed a one percentage point VAT increase that coalition partners flatly rejected.

A second attempt also faltered. It wasn’t until May that Finance Minister Enoch Godongwana delivered what became known as “Budget 3.0”, a compromise that withdrew the VAT hike entirely.

The withdrawal brought relief for consumers and businesses alike.

A VAT increase would have pushed up prices across the board, squeezing household budgets already stretched by years of above-inflation increases in electricity and food costs.

For businesses operating on thin margins, the scrapping of the increase meant one less cost pressure to absorb or pass on to customers.

However, the government still needed revenue.

Fuel levies increased instead, with the approved adjustment set at 16 cents per litre for petrol and 15 cents for diesel.

For any business that relies on transport (whether deliveries, logistics, or simply getting staff to work) this translates into higher operating costs.

The increase may seem modest, but it compounds across every kilometre driven.

According to summary statements from the 2025 National Budget process, government indicated plans to increase funding for small‑business support programmes, including initiatives focused on township and rural enterprises.

The exact amounts and qualifying criteria should be confirmed against the latest National Treasury publications.

What to do now

Review your transport and delivery costs with the fuel levy increase factored in. If you haven’t adjusted pricing since early 2025, this may be the trigger.

Check whether your business meets the criteria for any current support programmes offered through agencies such as the Small Enterprise Finance Agency (SEFA) or the Department of Trade, Industry and Competition (DTIC).

DTIC and SEFA both administer programmes that many eligible businesses never apply for.

The load shedding reprieve

January 2025 marked a milestone many South Africans thought they might never see: Eskom celebrated 300 consecutive days without load shedding, the longest streak since 2018.

For businesses that had spent years budgeting for generators, diesel, and lost productivity, the relief was tangible.

Factories could run full shifts.

Restaurants stopped throwing away spoiled ingredients. Shops stayed open through what used to be their dark hours.

The improvement came from several sources.

Eskom’s maintenance programme began showing results, with the utility reporting an approximate seven‑percentage‑point improvement in its energy availability factor by mid‑2024 compared to the prior year.

Private solar installations surged, with rooftop photovoltaic capacity increasing by 276% to over 6,100 megawatts by December 2024, which is more than Eskom removes from the grid during Stage 6 load shedding.

Businesses and households effectively built their own buffer against the grid’s failures.

But the reprieve proved fragile.

In late January 2025, multiple breakdowns at the Majuba and Camden power stations forced Eskom to implement Stage 3 load shedding without warning, catching many businesses off guard.

The sudden return demonstrated that while conditions have improved, the underlying infrastructure remains vulnerable.

The system got through winter 2025 without major outages, but analysts warn that this relied partly on reduced demand from businesses generating their own power rather than fundamental supply improvements.

What to do now

If you invested in backup power during the crisis years, don’t abandon that infrastructure yet.

The grid remains fragile, and those who mothballed their generators in early 2025 were caught out when load shedding returned.

However, if you installed solar, you may be able to reduce your generator maintenance budget while keeping the equipment serviceable.

For businesses that avoided the solar investment, the current period of relative stability offers an opportunity to plan and install without the urgency premiums that prevailed during peak load shedding.

Eskom tariffs have continued to rise in recent years, including an increase announced for 2025.

Further adjustments may occur, subject to NERSA’s annual approvals.

US tariffs and the AGOA expiry

April 2025 brought a shock that rippled through South Africa’s export sectors.

The United States imposed a 30% tariff on South African goods, effective from August 2025.

For businesses that had relied on the African Growth and Opportunity Act (AGOA) for duty-free access to American markets, the change was devastating.

AGOA had provided preferential access for over 6,000 products, including automobiles, agricultural goods, and textiles.

Industry bodies have noted that sectors such as citrus, automotive and wine are significant employers and exporters.

Changes to AGOA access may have knock‑on effects for businesses linked to these value chains

The automotive sector, concentrated in the Eastern Cape, faced the prospect of orders drying up.

Industry associations warned of significant exposure for sectors such as citrus, automotive and wine, with businesses facing increased uncertainty in key export markets.

The tariffs don’t just affect large exporters.

Small suppliers feeding into export value chains felt the impact too.

A macadamia processor in Limpopo or a component manufacturer in Gauteng may not export directly, but when their customers lose American orders, the consequences flow upstream.

AGOA lapsed on 30 September 2025. US officials later considered a short extension, though South Africa’s eligibility and the duration of any extension remained unresolved.

The South African Trade Ministry continues lobbying for full inclusion, but the outcome is not guaranteed.

The government responded with support measures for affected companies and announced a trade and investment package with China covering steel, tyres, automotives, battery manufacturing, pharmaceuticals, and rail.

Many analysts suggest that building a broader mix of markets and customers may help businesses reduce exposure to external trade shifts.

What to do now

If you export to the US or supply businesses that do, audit your exposure immediately.

Some businesses have found that selling branded end products rather than raw materials provides some insulation since the tariff bite is smaller when you’re capturing more of the value chain.

Others are negotiating with local suppliers to share the cost impact.

Businesses may want to explore new markets to strengthen resilience, depending on their sector and capacity.

The African Continental Free Trade Area offers duty-free access to a continental market of 1.3 billion people.

Asian markets, particularly through the China trade package, may offer opportunities your business hasn’t previously considered.

The Department of Trade, Industry and Competition has compiled support measures; check whether your business qualifies.

Minimum wage rises and compliance crackdowns

The national minimum wage increased in 2025, following the annual adjustment published in the Government Gazette.

Employers should ensure they reference the latest Gazette for the current hourly rate.

The increase itself was broadly expected.

The Department of Employment and Labour signalled intentions to expand its inspectorate and increase on‑site compliance activity.

Businesses that have historically relied on the low probability of inspection may find themselves facing audits they never expected.

The BCEA earnings threshold was also adjusted for 2025.

Businesses should confirm the most recent amount as published by the Department of Employment and Labour.

If you have employees who previously sat just above the threshold, they may now fall below it.

For SMEs, particularly those in labour-intensive sectors like retail, hospitality, and cleaning, the wage increase adds pressure to already tight margins.

However, the alternative of non-compliance carries increasing risk as enforcement capacity expands.

What to do now

Audit your payroll before an inspector does.

Ensure every employee is receiving at least R28.79 per hour for ordinary hours worked.

Check whether any employees have moved below the earnings threshold and need their overtime arrangements reviewed.

If you employ domestic workers, remember that the same rate applies, and that this sector has historically shown high rates of non-compliance.

For businesses struggling to absorb the increase, consider whether the Employment Tax Incentive can offset some of the cost.

Businesses employing qualifying young workers may be able to reduce their PAYE liability through the Employment Tax Incentive (ETI).

The value of the incentive depends on the employee’s remuneration and must be calculated according to SARS’ ETI tables.

The new inflation target and what it means for borrowing

In one of the most significant monetary policy shifts in decades, Finance Minister Enoch Godongwana announced a new inflation target of 3%, with a one percentage point tolerance band.

This replaced the previous target range of 3% to 6% that had been in place for 25 years.

The change matters because it sets the path for interest rates.

The South African Reserve Bank cut the repo rate to 6.75% in November 2025.

The Monetary Policy Committee is scheduled to announce the first interest‑rate decision of the year, which will confirm whether that level remains unchanged.

With the new 3% target, SARB modelling at the time indicated the possibility of further rate adjustments as the new inflation target is phased in.

For businesses carrying debt, this is meaningful relief.

Lower interest rates reduce monthly repayments on variable-rate loans, freeing up cash for other purposes.

They also make new borrowing more affordable, which could unlock expansion plans that didn’t make sense at higher rates.

SARB signalled progress toward the 3% target over the medium term; the 20 November 2025 cut to 6.75% reflected an improved inflation outlook and a firmer rand.

Over time, lower inflation expectations should feed through to supplier pricing, wage negotiations, and consumer spending patterns.

The transition won’t be instant as the Reserve Bank has indicated it will implement the new target over two years.

But the direction is clear.

What to do now

If you have variable-rate debt, you’ve already benefited from recent cuts. Future changes will depend on economic conditions and Monetary Policy Committee decisions.

However, if rates continue falling, you’ll need to decide whether to lock in current rates on a fixed-rate facility or ride the variable rate down.

There’s no universal answer as it depends on your risk tolerance and cash flow needs.

If you’ve been postponing investment decisions, it may be helpful to reassess your plans in light of current borrowing conditions.

The combination of lower rates and relatively stable inflation creates an environment more conducive to investment than South Africa has seen in years.

A financial advisor or banking partner can help you assess options that suit your cash‑flow needs.

Final thoughts

The developments of 2025 present a mixed picture for South African small businesses.

Load shedding relief and lower interest rates create genuine opportunities.

Tariff shocks and rising labour costs present genuine challenges. The budget chaos reminded everyone how quickly the policy environment can shift.

What connects these stories is the premium they place on adaptability.

The businesses that navigated 2025 successfully were those that built flexibility into their operations, maintained relationships with alternative suppliers and markets, and kept enough financial headroom to absorb shocks without derailing their core activities.

As you plan for 2026, consider which of these developments affect your business most directly, and use the practical steps outlined above to position yourself accordingly.

The macro environment will keep shifting.

Your job is to ensure your business can shift with it.