The 2026 National Budget Speech was delivered by Finance Minister Enoch Godongwana on 25 February, against a backdrop of complex fiscal trade-offs. While the South African government continues to navigate high debt-servicing costs, its capacity to serve as the primary buffer against economic shocks is becoming more constrained, highlighting the growing importance of shared responsibility across the broader economy.
This year’s Budget Speech focused on fiscal consolidation and the slow, steady work of structural reform. An improved fiscal position meant that National Treasury was able to increase the compulsory VAT registration threshold for small businesses from R1 million to R2 million, improving cash flow, reducing the administrative burden and compliance costs and encouraging growth without early regulatory friction for businesses earning less than R2 million. The capital gains tax exemption for the sale of a small business for older individuals has increased from R1.8 million to R2.7 million, meaning that people over 55 who sell their business get a retirement planning boost, as the first R2.7 million of the capital gain is tax-free. This applies to small businesses worth R15 million instead of the previous R10 million. The VAT registration threshold and the capital gains tax exemption were last amended in 2009 and 2012, respectively. Both changes help to support entrepreneurship and support economic growth without increasing spending.
Fiscal constraints means that economic resilience can no longer be a responsibility that relies solely on the public sector. Instead, it needs to be a shared imperative where businesses, particularly small, medium and micro enterprises (SMMEs), play the role of shock absorbers.  The support signalled for small businesses in the budget, evidenced by the changes to long-standing thresholds is significant. Government wants small business to succeed, and now is the time for small business to stand up and be counted.
SMMEs: South Africa’s economic shock absorber
SMMEs are often described as the backbone of the South African economy, and for good reason. They are responsible for the vast majority of job creation and are the primary source of income for millions of households. When a small business thrives, it provides more than just a service; it provides a community with a sense of security and a path toward upward mobility.
In a tight fiscal environment, the state has limited resources to provide direct relief when disasters strike. This means that if an SMME is forced to close its doors due to an uninsured loss, the impact ripples outward, increasing the burden on social safety nets and the fiscus.
The rising cost of disruption
The modern risk landscape is becoming increasingly complex. Business owners today face the risk of multiple interconnected disruptions that can threaten their very survival. These include:
- Extreme weather: Climate-driven events such as the floods and wildfires witnessed in recent years are no longer once-in-a-lifetime occurrences but recurring operational risks.
- Infrastructure stress: While improvements in energy stability have been welcomed, aging municipal water systems and logistical bottlenecks continue to strain supply chains.
- Crime and cyber threats: Theft and civil unrest remain persistent concerns, while the rapid digitalisation of small businesses has provided new opportunities for cybercriminals to implement cyber-attacks.
For a large corporation, any one or more of these events might represent a temporary dip in quarterly earnings. For an SMME, a single fire, or theft of essential equipment, can result in the business shutting its doors forever.
Insurance as a strategic asset rather than a nice-to-have
In a tough operating environment, itis tempting for business owners to view insurance premiums as a nice-to-have expense that can be trimmed to save cash. However, this is a high-risk strategy.
Appropriate insurance and business continuity planning are no longer optional safeguards but key components of a proactive risk management strategy. While insurance helped absorb part of the financial impact during recent systemic shocks, the gap between those who are covered and those who are not continues to widen.
Business resilience is not just about having an insurance policy in place but rather about working with financial advisers to identify vulnerabilities and building a plan that ensures the business can keep paying its employees and serving its customers, no matter what happens. Both parties – insurers and business owners – need to play a proactive role in reducing risk through better safety protocols, digital security, and infrastructure backups.
Investing in resilience
As government focuses on narrowing the deficit and stabilising the macro-economy, the micro-economy – our local shops, manufacturers, and service providers, have a valuable opportunity to strengthen foundations and position themselves for sustainable growth.
By investing in resilience, businesses do more than just protect their own bottom line. They protect the livelihoods of their staff, the stability of their communities, and the long-term confidence of the South African economy. In a changing risk landscape, the question for SMME owners is no longer whether they can afford to invest in risk mitigation, but whether they can afford the cost of being unprepared.