The Competition Commission’s inaugural report on the township and rural economy finds that market access problems and regulatory barriers are the primary constraints preventing businesses in South Africa’s townships and rural towns from scaling beyond subsistence operations. The study, launched on Thursday, also highlights the deep financial strain on households in these areas.
Household incomes and business structure
Two business and consumer surveys underpinning the report show that 53% of rural households and 37%–47% of township households report monthly incomes below R3,500. That level of income, the report says, helps explain why much of the economic activity in these communities remains informal and survivalist in nature rather than productive and growth-oriented.
| Area | Share of households earning < R3,500/month |
|---|---|
| Rural | 53% |
| Township | 37%–47% |
Key barriers identified
The report finds businesses in townships and rural towns face a range of obstacles that limit their ability to grow and access wider markets. The principal constraints include:
- restricted procurement channels and unfavourable procurement terms;
- limited access to formal outlets such as malls, shopping centres and online platforms;
- regulatory compliance costs that disproportionately affect small, informal enterprises.
“This calls for follow-on work by the commission to understand these barriers better, but to also undertake follow-up work on the implementation of the recommendations of previous market inquiries … to identify any instances where issues of exclusivity and the cost of accessing markets still prevail,” the report says.
Policy context and possible follow-up
The findings come as cabinet in March approved publication of a draft township and rural economy development and revitalisation policy aimed at transforming these local economies from consumption-driven areas into integrated, productive hubs. The policy seeks to reduce regulatory burdens and open channels for local businesses to participate in mainstream value chains.
The Competition Commission suggests its report will be a springboard for further work, including closer scrutiny of whether previous recommendations from market inquiries have been implemented. It explicitly points to its 2019 grocery retail market inquiry (GRMI) as an antecedent and says follow-up work could identify instances of exclusivity or other practices that continue to raise the cost of market access for small suppliers.
If follow-up investigations find that malls or shopping centres operating in township and rural areas have not adopted the GRMI recommendations, the commission said it may initiate market-conduct probes. The report does not allege specific parties are currently in breach; rather, it flags structural problems that merit targeted enforcement and policy responses.
What this means for households and small firms
For households on incomes below R3,500, the report underlines a narrow margin for discretionary spending and investment in small enterprises. When procurement channels favour larger, formal suppliers or when compliance costs are high, local entrepreneurs struggle to move from survivalist trading to formal, sustainable businesses that can hire staff and furnish stable incomes.
Opening up procurement, easing compliance where appropriate, and improving access to formal retail and digital platforms would not only broaden consumer choice but could also be a pathway to job creation and greater economic inclusion — objectives that the draft government policy and the commission’s recommendations both seek to advance.
The Competition Commission’s report is a diagnostic step. Its proposed follow-on work will be watched closely by policymakers, retailers, property owners and civil-society groups interested in whether concrete measures follow to connect township and rural suppliers to larger markets and to reduce the regulatory costs that currently hobble many small enterprises.
