PHOSANE MNGQIBISA | Does the G20 Summit Declaration signal a new chapter for MSMEs and South Africa’s township economy?

As the 2025 G20 Summit concluded in Johannesburg, a clear message resonated throughout Sandton’s convention halls.

The message is that inclusive global economic growth is impossible while millions are deprived of opportunities.

This summit marks the first time G20 leaders gather on African soil, and their declaration carries significant implications for South Africa’s MSMEs and its extensive, often-overlooked township economy.

Although the G20 Leaders’ Declaration adopts a global outlook, it highlights specific challenges faced by small enterprises. These include financial exclusion, high interest rates, load shedding, and weak local demand.

Such issues are particularly common in South Africa’s townships, where over 6 million residents depend on informal and small businesses for their livelihoods.

Clause 38 of the Declaration emphasises the significance of MSMEs and startups in promoting employment, innovation, and economic growth.

This acknowledgement is especially relevant for South Africa, where unemployment is at 31.9%, and the Ginicoefficient ranges from 0.64 to 0.67.

Despite being Africa’s largest economy, with a nominal GDP of approximately $400 billion (R7 trillion) and a relatively advanced infrastructure, South Africa continues to face the triple challenges of poverty, inequality, and high unemployment more than 30 years after the apartheid era.

Financial inclusion was a key focus at the summit, marking a major milestone for MSMEs and reaffirming the G20’s dedication to bridging the small-business financing gap.

Clause 71 emphasises the importance of better access to credit, insurance, savings, and secure payments, all aimed at supporting small businesses and building trust in financial systems. Globally, the financing gap stands at US$5.7 trillion, with Africa's MSMES facing a subset gap of US$330 billion.

In South Africa, MSMEs and township enterprises make up only a small portion of the unmet demand. Nevertheless, intense competition and the potential for funding create significant opportunities.

This offers renewed hope for township entrepreneurs and MSMEs. For years, traders in Soweto, Alexandra, Soshanguve, Khayelitsha, and Tembisa have faced high capital costs, strict collateral demands, and exploitative lending practices.

This underscores the need for governments and financial institutions, such as development finance institutions (DFIs), banks, and asset managers, to expand access to affordable credit, blended finance options, microinsurance, and digital lending platforms tailored to microenterprises.

When implemented locally, this change will reduce the cost of doing business, facilitate expansion, and integrate township enterprises into mainstream economic value chains.

Industrialisation for the People promotes an ambitious agenda focused on inclusive and sustainable industrial growth. Clauses 35 to 37 emphasise that manufacturing is essential for creating decent jobs, increasing productivity, and encouraging economic diversification.

It also stresses that industrial policies should deliberately include small businesses and vulnerablecommunities.

This could be a pivotal moment for township economies, which have traditionally been confined to consumption rather than production for decades. Nonetheless, the potential is considerable.

Township entrepreneurs, from backyard mechanics to textile cooperatives, food processors, welders, furniture makers, and digital creators, are already working in sectors that could serve as the backbone of local industrial clusters.

The G20’s focus on inclusive manufacturing causes South Africa to rethink its spatial economic approach.

Municipalities will need to better justify initiatives such as creating township industrial parks, providing equipment subsidies, formalising trading zones, and developing micro-logistics networks that allow township-produced goods to compete on a larger scale, both locally and internationally.

Digital transformation took centre stage, with the declaration notably highlighting these areas. For instance, Clauses 44 to 47 outline the AI for Africa Initiative, which aims to expand digital infrastructure, foster AI skills across African nations, and establish sovereign AI capabilities aligned with the continent’ development goals.

This milestone is more than just technological; it plays a crucial role in supporting local township economies. Affordable data, digital platform access, and AI-driven tools are already changing commerce in townships and rural communities.

For example, online clothing stores in Gugulethu and food delivery services in Kagisoshow how digital innovation helps address long-standing issues.

The G20's commitment highlights plans to boost investments in cloud infrastructure, digital public goods, and platforms that help township MSMEs manage inventory, automate bookkeeping, promote products, and reach regional and global markets. In simple terms, AI and digital access could finally allow township entrepreneurs to compete on a level playing field.

Food Security: Enhancing Informal Agriculture. Food insecurity continues to be a major challenge for many township households. Clauses 39 to 43 of the G20 declaration highlight the need to modernise agriculture, bolster the local food system, and assist smallholder farmers, particularly women and youth, by providing targeted financing, leveraging digital technology, and building climate-resilient infrastructure. This will open up valuable opportunities for township agribusinesses.

Additionally, urban agriculture, poultry projects, community gardens, and township-based food processors commonly function outside national food strategies.

The renewed global focus on local food production and value chains gives South Africa a political push to grow these initiatives, particularly in townships where food prices, transportation costs, and supply disruptions are most acute.

Infrastructure Investment and Africa Integration Strengthen Township Markets. Clauses 63 and 87 emphasise quality infrastructure, regional trade integration, and the implementation of the African Continental Free Trade Area (AfCFTA) as engines of growth and industrialisation for Africa.

This marks a watershed moment for township traders seeking access to continental and global markets.

The G20’s support for increased Africa–G20 cooperation indicates that informal and small-scale producers may soon benefit from transport and logistics corridors, cross-border infrastructure, simplified trade procedures, and capacity-building for export readiness.

This means that a spaza bakery in Katlehong or a leather workshop in Umlazi could, with the right support, access markets in Botswana, Namibia, Mozambique, or overseas, a prospect once unimaginable.

Women and youth are essential for development. Clauses 101 to 103 strongly emphasise gender equality, youth participation, and addressing disparities in the labour market, including securing equal access to finance and markets for women entrepreneurs. In township economies, where women operate most microenterprises, this marks a significant shift.

From childcare providers and hair salons to street vendors and caterers, women play a crucial role in supporting the social and economic life of townships. Offering them direct access to capital, training, markets, and technology will accelerate progress at both household and community levels. Youth can also benefit from digital skills training, AI capacity building, and employment programmes that support industrial development.

The declaration’s commitments on climate, such as just transitions, clean energy, and resilient infrastructure, offer benefits to MSMEs. Sections 24-30 aim to improve energy access, promote clean cooking, and fund renewable projects for small businesses.

This could mean better access to rooftop solar, batteries, clean cooking, and green funds for township enterprises, reducing costs for shops, restaurants, welders, tailors, salons, and manufacturers affected by daily load shedding.

A New Economic Moment for Township Enterprises: The 2025 G20 Leaders’ Declaration should serve as a strategic guide that accurately reflects the realities of South Africa’s township economy.

It must acknowledge that growth relies not only on large corporations but also on township entrepreneurs such as barbers, mechanics, traders, designers, caterers, manufacturers, and digital innovators, who are critical for inclusive growth across Africa.

For South Africa, this declaration offers political credibility, international support, and developmental momentum that policymakers need to recognise.

If South Africa aligns its national policies, provincial development plans, and municipal strategies with these commitments, MSMEs and township economies could shift from merely surviving to becoming central to Africa’s next development phase. The G20 has paved the way; now it’s South Africa’s responsibility to take the opportunity.

Phosane Mngqibisa is a final year student - PhD, Deputy Chair of GEP, Economic Research and Policy Analyst.