South Africa’s smallest businesses are doing the heavy lifting – but they’re still being left behind.
A new report by Finfind, in partnership with African Bank, reveals that formal micro enterprises – those turning over less than R1 million per year – account for the lion’s share of MSME job creation and funding demand in South Africa. Yet they remain the most underserved by the country’s funders.
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The SA MSME Access to Finance Report 2025, released this week, offers the most comprehensive analysis of small business funding realities since the inaugural 2018 edition. Based on over 10,000 verified funding requests and 605 active finance products, the data outlines a system still fundamentally misaligned with the needs of South Africa’s high-impact micro enterprises.
Key Findings:
- 85.6% of funding applicants are businesses with turnovers under R1m
- These enterprises are responsible for over 80% of MSME job creation
- 38.7% seek loans under R250,000, yet face the greatest funding rejection rates
- Female ownership increased to 36.1%, but female-targeted funding products have dropped by 33%
- Black-owned MSMEs now represent 83.7% of funding requests – up from 66% in 2018
“If we are serious about job creation, we must invest all our efforts in supporting the businesses that are creating the jobs,” says Darlene Menzies, CEO of Finfind.
The report shows that despite their outsized contribution to employment, small businesses are assessed with outdated consumer credit models, lack support to manage financial records, and are frequently blocked from funding opportunities that were not designed with their size or realities in mind.
Regional and Sector Insights:
- Gauteng remains the top province for MSME activity (37.3%), but its dominance is shrinking
- KZN, Mpumalanga, and Eastern Cape are seeing a steady rise in funding applications
- Top sectors include manufacturing, accommodation and food services, and agriculture
- (Pty) Ltd remains the dominant business structure, accounting for 88% of applicants
The Credit Gap:
- 50.9% of micro business owners have poor or below-average credit scores
- Less than 25% use formal accounting systems
- Only 36.8% have formal financial statements; 83.4% operate without payroll systems
“MSMEs with turnovers under R1 million are stuck in a blind spot,” says Jaco van Jaarsveldt, Chief Strategy and Innovation Officer at Experian SA. “We need to move beyond rigid scoring models and towards alternative data, open finance, and fintech-powered solutions.”
Demand vs Supply Disconnect:
- Startup finance is among the top three requested funding types – yet it’s absent from the top 10 funder offerings
- ICT, a low-demand sector (5.5%), is overserved with 125 funding products
- Hospitality and food services, high in demand, remain underfunded
Policy and Structural Reform Needed:
The report outlines a bold reform agenda, urging banks, DFIs, and regulators to:
- Rethink risk models to reflect MSME business realities
- Implement open finance frameworks for better data sharing
- Partner with fintechs to improve access and reduce costs for micro-loans
- Expand credit guarantee schemes for businesses under R1 million turnover
- Revise Reserve Bank reporting standards (BA200 and BA900) to improve MSME lending transparency
- Action the newly gazetted MSME funding policy
“Seven years later, the same systemic barriers persist,” says Menzies. “We cannot afford another lost decade. It’s time for coordinated, data-led action.”
The report is freely available at https://accesstofinancereport.co.za/ and is backed by African Bank, SAB Foundation, Experian, and the Department of Small Business Development.
