Starting and growing a business is hard; we shouldn’t make it even harder. 

And it’s something President Cyril Ramaphosa should focus on to get the economy growing.

It’s no secret that the cumulative impact of small businesses in SA is enormous. SA’s 2.67 million small, medium and micro-enterprises provide around 11.4 million jobs and kick in around 34% of SA’s GDP. And with AI anticipated to have a major impact on corporate hiring in the next few years, the future of employment is most likely self- or small business. 

But South Africa isn’t ready for this, by a long shot. 

Reform is necessary. But what would make the biggest impact? Here are my top 3:

It's very seldom that a new hire brings ROI to a company in month one. Add up the time it takes the founder to onboard, coach, guide and support, plus their salary, and it’s easy to see why a single hire is a major risk for a growing company. Mishiring is extremely costly – it could even sink the business.

The result? Most founders don’t hire nearly as fast as their growing companies demand.

If we are serious about startups creating jobs, we need to reduce the risk of hiring the first few people.

A practical step would be introducing a startup labour flexibility window for the first 10 employees. Early-stage companies are fragile. One bad hire or one drawn-out dispute can materially damage the business. Founders should have slightly more flexibility in those early years while they are still finding product-market fit and stabilising revenue.

We also need simplified probation and performance processes. Not weaker worker protection, but clearer, faster and more predictable procedures that small businesses can actually navigate without legal teams. The goal should be fairness and speed, not bureaucracy.

Equally important is fixing Employee Stock Ownership Plans (ESOP) regulation. Equity is often the only way startups can compete with corporate salaries. Clear, tax-friendly rules that make employee share schemes viable would unlock talent and align teams around long-term value creation.

Finally, South Africa should create a simplified labour dispute framework for companies with fewer than 10 employees. The intent is not to strip away employee rights, but to reduce unnecessary compliance burden and prevent process abuse. When hiring feels less risky, founders hire more.

Collecting and paying VAT is a lot of admin and costs money. And many small businesses dread going over the R1m per year threshold that triggers VAT enforcement. This threshold hasn’t changed since 2009. Just adjusting for inflation, the threshold should be closer to R2m. This is very easy to do (as motivation will be inflation) and can give SME’s a major boost!

Another expense incurred when hiring is buying a computer/laptop for the new staff member to work on. 

But not only is the cost a cashflow impact, having the asset depreciate over 3 years further erodes startup cashflow. Allow expensing of technology equipment purchases within the year of purchase up to R50,000 per year.

Offer tax incentives for making new hires that are in line with the government’s employment equity targets. Instead of penalising people who are not complying, offer tax incentives. This will effectively make the cost of employment cheaper and could transform the workplace much faster than any other initiative currently in place.

Finally, offer a personal income tax cap for founders of startups/small businesses for the first 5 years of operating. This tax incentive would, in most cases, result in bigger reinvestment into their businesses, furthering growth and driving employment.

Getting funding in SA is still a major challenge for many startups. Government can fuel this sector by introducing a government-backed SME credit guarantee scheme. Empower current business funding operators like Lula to do even more, for more businesses of all sizes.

In addition, we should introduce a targeted capital gains exemption for investors who fund early-stage companies and hold their shares for at least five years. The exemption should apply only to new primary shares issued directly by qualifying startups, with clear limits on company size, age and asset base. Gains could be exempted up to a capped amount to prevent abuse. 

The objective is simple: reward patient risk capital. When investors know that the upside will not be heavily taxed if they back a company for the long term, the risk-reward equation shifts dramatically in favour of early-stage investing.

In addition to a long-term exemption, South Africa could allow investors to defer capital gains tax if they reinvest proceeds from one qualifying startup into another within a defined period. This keeps capital circulating inside the startup ecosystem instead of exiting into passive assets. A rollover mechanism encourages serial angel investors and founders who have exited to redeploy their experience and capital into the next generation of companies. It builds compounding momentum rather than one-off success stories.

South Africa already has an R&D tax incentive, but its structure often benefits companies once they are profitable rather than when they are struggling to survive. For early-stage firms, especially in software, BioTech and deep tech, the real constraint is cash flow. The incentive should be modernised with faster approvals, clearer qualifying criteria and a mechanism that allows loss-making startups to offset payroll taxes or receive partial refunds. Innovation policy must function as growth fuel, not as a delayed accounting benefit.

Finally, there has been some talk of allowing pension funds to allocate a small percentage to venture capital asset class. Given the maturity of the VC scene in SA, there is reason to believe that the time is right for something like this. This can unlock billions for growing startups and could turn the talent we already have into a startup powerhouse.

While AI might lead to job shedding at corporates, it also makes it easier than ever to start and grow a business. It’s time for legislation and policy to catch up with the opportunity.