Reserve Bank targets South Africa’s hidden R1 trillion economy

The South African Reserve Bank (SARB) is looking to shed new light on South Africa’s informal economy, a vast market estimated to generate between R1 trillion and R1.13 trillion in annual turnover.

The central bank is launching a pilot for its QR+ initiative, which could help it collect better data on economic activity among informal businesses, including spaza shops, street traders and other small enterprises that often operate outside the formal financial system.

The initiative could give policymakers a clearer picture of a significant part of the economy that remains difficult to measure accurately.

South Africa’s informal economy is far larger than many people realise. It includes spaza shops, informal food businesses, commuter taxis, hair salons, roadside traders and backroom rental operations.

According to informal economy expert GG Alcock, the sector generates between R1 trillion and R1.13 trillion in annual turnover.

Despite its scale, much of this economic activity is not captured in the same way as business conducted by registered companies. This makes it difficult for policymakers and financial institutions to understand the sector’s full contribution to the economy.

The informal economy is also an important source of employment. Statistics South Africa reported that informal-sector employment accounted for 19.5% of total employment in the fourth quarter of 2024.

Its 2023 Survey of Employers and the Self-Employed also found that approximately 1.9 million South Africans were running businesses that were not registered for value-added tax (VAT), up from 1.5 million a decade earlier.

The proposed QR+ pilot could help the Reserve Bank improve its understanding of transactions and commercial activity within informal markets.

Better information could help the central bank and other policymakers assess how money moves through different parts of the economy, including businesses that rely heavily on cash.

At present, estimating the size of the informal economy is challenging because many businesses do not produce the same financial records or transaction data as larger formal enterprises.

The Reserve Bank’s broader work on payments also recognises that cash remains important in South Africa. Its 2026 research on the cost of cash found that cash accounted for approximately 56% of consumer transactions by volume, using 2024 as the base year.

A clearer picture of informal economic activity could help government and financial institutions develop policies and services that better reflect the realities of small businesses.

For example, improved data could help identify where businesses need better access to finance, payment infrastructure and other support to expand their operations.

It could also help policymakers distinguish between different types of informal businesses rather than treating the sector as one uniform market.

However, better measurement does not automatically mean that small businesses will receive more funding or face fewer barriers. The eventual impact will depend on how the information is used and whether the resulting policies address the challenges faced by entrepreneurs.

There will also be questions about how transaction information is collected, how privacy is protected and whether informal traders can participate without facing unnecessary administrative burdens.

The Reserve Bank’s initiative highlights the importance of understanding economic activity beyond the country’s largest companies and registered businesses.

South Africa’s informal sector supports livelihoods, supplies goods and services to communities and provides opportunities for people who struggle to find employment in the formal economy.

By gathering better information about this market, the central bank could help close an important gap in the country’s economic data.

The challenge will be turning that information into practical improvements for the businesses and workers who keep this R1 trillion economy moving.

Sources: Reserve Bank wants to unmask South Africa’s hidden R1 trillion economy – Daily Investor

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