SIYABULELA MAKUNGA

For many South Africans, the economy does not feel open or full of possibilities. It feels closed.

The same dominant names appear on supermarket shelves and across essential services such as transport, telecommunications, banking, energy and food. For small businesses trying to break in, competition can feel less like an open race and more like pushing against a locked door.

That is why the Competition Commission’s second Concentration Report, released last week, matters. The report is more than just a technical document; it asks why it remains so hard for new firms to grow, for jobs to be created, and for more South Africans to participate meaningfully in the economy.

The findings are sobering. Looking at 228 sub-sectors and about 450,000 tax-registered firms between 2017 and 2021, the commission found that between one-third and one-half of these sectors are highly or moderately concentrated.

There has been some improvement since 2017, but for many entrepreneurs and consumers, it has not been enough to change daily reality.

This is not an argument against large firms. Big business is vital to growth, investment and jobs. The problem arises when markets become so concentrated that smaller firms cannot enter, compete or scale. SA’s economic structure did not emerge by chance. Apartheid deliberately concentrated ownership, opportunity and participation in the hands of a minority. Democracy changed the political system, but many of these economic patterns remain.

A more competitive economy is not only good for business. It is good for workers, consumers and communities too.
— Siyabulela Makunga

You can still see it in who owns businesses, who wins contracts, who accesses supply chains, and who remains trapped in survivalist enterprise. Small businesses are central to changing that picture. Micro, small and medium enterprises make up 97% of tax-registered firms, yet account for only 22% of total turnover. This points to the country’s “missing middle”: many firms start small, but too few grow into stable, medium-sized businesses.

Covid-19 widened this divide. While many smaller firms closed or downsized, larger companies were better able to absorb the shock. Even so, small businesses remain major job creators, accounting for 44% of employment and generating jobs more intensively than larger firms.

For ordinary South Africans, concentration is not an abstract concept. It shapes prices, limits choice and determines whether local businesses can survive. A township entrepreneur may struggle to access formal supply chains, while a promising local brand can be squeezed out by entrenched incumbents with scale and market power.

Many young entrepreneurs remain informal not because they lack ambition but because entering the formal economy can be costly and unnecessarily difficult. In a country facing unemployment, inequality and exclusion, that is not a niche policy issue. It is central to economic inclusion.

The value of the Concentration Report is that it does more than diagnose the problem. It points to what must change. SA must remove barriers that stop smaller firms from entering, surviving and growing. That means opening routes to market, reducing unnecessary licensing burdens, and reviewing regulations that unintentionally protect established players.

It also means using competition policy more decisively, including merger control and market enquiries, to stop markets from becoming even more closed.

A more competitive economy is not only good for business. It is good for workers, consumers and communities too.