Living in a digital world doesn’t only mean cellphones and the Internet. It points to a large array of electronic devices and digital technologies that have the ability to improve the lives and businesses of all who use them. But in South Africa, citizens are still handicapped due to many barriers that prevent them from moving forward.
According to Lungi Sangqu, CEO of Africa Digital Success and former CIO, Transnet Freight Rail & UNISA, South Africa’s unemployment crisis demands solutions through digital transformation. “More than 32% of adults are jobless, and youth unemployment sits above 60%. In this bleak landscape, small, micro, and medium enterprises (SMMEs), lately known as Micro, Small, Medium Enterprises (MSMEs) should be our engine of hope.”
She acknowledges that while government and development agencies are working tirelessly to support SMMEs, entrepreneurs are being prepared for an analogue economy that no longer exists. “The missing ingredient in our support model isn’t just funding or mentorship — it’s digital readiness. Without it, we are setting up entrepreneurs to compete with outdated tools in a digital marketplace.”
It is clear that true transformation requires SMEs from both the formal and informal sectors to ‘get with the times’ and go digital.
“Digital transformation is still treated as an optional extra rather than as the foundation of modern business. Entrepreneurs learn to write business plans on paper, but when it comes to digital operations, from online banking to e-commerce, they are left to figure it out alone,” she adds.
“For many, the challenges are compounded by limited connectivity, lack of digital literacy, and inadequate access to devices. Programmes that do introduce technology often deliver generic “social media marketing” lessons to everyone, whether it’s a spaza shop owner in Giyani or a software developer in Cape Town, without considering sector or context.”
Competing Without Digital Tools
To Sangqu, the result is clear. “SMMEs don’t fail because of a lack of creativity or drive; they fail because they are digitally outmatched. In a globalised economy, a customer in Soweto can order a product from Shenzhen as easily as from a local small business. Without digital sophistication, local SMMEs will continue to lose market share on their home turf.”
There is Hope
The good news is that it isn’t all doom and gloom. In fact, one programme that is reimagining SME support is the United Nations Development Programme (UNDP) in South Africa, in partnership with the City of Johannesburg and Wakanda NPC, which has launched the Digital Innovation for Modernising the Independent Economy (DIME).
This is a pioneering initiative transforming the township economy through digital tools, improved food safety standards, and financial inclusion. It was developed in response to the 2024 foodborne illness outbreaks and introduces a new generation of digital public infrastructure for township economies.
Anchored by the Sphazamisa App, the platform integrates digital identity, food safety routines, traceability, stock management, and e-payment functionalities into one seamless interface. This ecosystem is designed to make township retailers safer, more resilient, and fully visible within South Africa’s evolving digital economy.
The first phase of DIME is now rolling out across Gauteng, offering township enterprises the tools and support systems needed to transition from traditional operations to a digitally enabled, finance-ready model.
UNDP South Africa Resident Representative and Director of the Africa Sustainable Finance Hub, Mr Maxwell Gomera, explains: “We’re not asking people to fit into frameworks never designed for them. We’re building new systems that recognise the independent economy for what it is: innovative, resilient, and investable. This isn’t charity – it’s an economic strategy. And here is the simple truth: when township enterprises grow with dignity and support, South Africa grows.”
DIME offers a nationally scalable blueprint for modernising the Independent Economy by ensuring township enterprises are not just surviving but thriving in the digital era.
“The City recognises the creative nature of the township economy. Whilst the City regulates the local economy, the intention is to enable rather than stifle. Regulation is about creating safe trading spaces, it’s about unravelling the invisible economy, it’s about unlocking value for small businesses. At the confluence of township entrepreneurship and digital innovation, growth explodes. As the City, we are gearing for innovation, inclusion and impact,” says Mathopane Masha, Executive Director: Department of Economic Development, City of Johannesburg.
“We must also shift our mindset about technology. Digital tools are not luxury add-ons; they are economic infrastructure: as vital as electricity or transport. Treating digital transformation as a “nice-to-have” perpetuates exclusion and inequality,” Sangqu concludes.
