The Competition Commission wants to cut back on red tape hampering small businesses.
Image: Mthobisi Nozulela | IOL
The Competition Commission has launched a wide-ranging review of regulations that may be choking competition and preventing small and medium enterprises from entering or expanding in South African markets.
The move forms part of broader efforts to unlock economic growth, improve the ease of doing business and make markets more accessible.
In his 2026 State of the Nation Address, President Cyril Ramaphosa flagged the need to cut red tape, an issue that has repeatedly been raised in the Commission’s market inquiries and by businesses trying to navigate complex regulatory systems.
While regulations are intended to protect consumers and ensure safety and stability, the Commission said poorly designed or implemented rules can have the opposite effect such as raising costs, delaying entry and limiting growth.
This, in turn, can reduce competition, curb innovation and constrain job creation.
The Commission said it will examine a range of regulations, including licensing frameworks and sector policies, to assess whether they are necessary or unnecessarily restrictive.
It will also look at whether current rules entrench market concentration, limit participation and disadvantage smaller or non-integrated firms.
Businesses have been invited to submit examples of regulatory barriers, including complex licensing processes, restrictive permit conditions, unnecessary limits on operators and rules that constrain pricing, location or market access.
The Commission also highlighted ongoing issues such as administrative delays, inconsistent interpretation of regulations and backlogs that can stall business activity.
Research shows these challenges are not new.
In 2025, the Organisation for Economic Co-operation and Development said unlocking South Africa’s growth potential requires a more business-friendly regulatory environment, with reforms aimed at reducing barriers to entry and supporting entrepreneurship.
“Encouraging entrepreneurship and new business creation fuels a competitive environment, which, in turn, benefits from a strong regulatory framework that ensures fair competition. This creates a virtuous cycle, where fair opportunities for growth further stimulate innovation and job creation,” the OECD said.
The organisation noted that overly restrictive regulations can limit business dynamism and make it harder for firms – particularly smaller businesses – to enter and grow.
Micro, small and medium enterprises employed about 59% of South Africa’s workforce in 2022, below the OECD average of 69%, highlighting the sector’s role in job creation as well as its constraints.
At the same time, business formation has slowed. The Global Entrepreneurship Monitor shows that only 8.5% of adults were involved in early-stage entrepreneurial activity in 2022/23, down from 11% in 2019 and below the global average.
The OECD also pointed to practical barriers, noting that starting a business in South Africa can take around 40 days, while licensing and permit systems remain relatively restrictive and can increase compliance costs.
Delays and uncertainty in regulatory processes can further discourage new entrants, particularly where approvals are slow or inconsistent.
The Commission’s review is expected to feed into recommendations aimed at removing or reforming these barriers, while maintaining protections for consumers and market stability.
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