The Failure Rate of Small, Medium and Micro Enterprises in South Africa: A Pre- and Post-COVID-19 Comparative Review

Small, medium and micro enterprises (SMMEs) are widely regarded as engines of employment, growth and inclusion in South Africa, yet they are also reported to fail at among the highest rates in the world. This paper reviews and synthesises the evidence on SMME failure in South Africa and compares the pre-COVID-19 and post-COVID-19 eras. Adopting a structured narrative-review design, it draws together academic studies, institutional reports and policy documents to characterise the magnitude, drivers and dynamics of SMME failure across the two periods. The review finds that, well before the pandemic, widely cited estimates suggested that between 50% and 80% of SMMEs failed within their first three to ten years of operation, driven by an interacting set of internal weaknesses limited management, marketing and financial skills and weak internal controls and external constraints, chiefly restricted access to finance, a difficult regulatory and economic environment, crime, and unreliable infrastructure. The COVID-19 pandemic and the associated lockdowns acted as a severe demand and liquidity shock that disproportionately harmed smaller, informal and tourism-dependent enterprises, while government relief was captured mainly by larger, formal firms. In the post-COVID era, the sector confronts a precarious recovery in which pre-existing structural weaknesses have been compounded by an intensifying energy crisis, even as digitalisation and innovation offer partial routes to resilience. The paper argues that COVID-19 should be understood as an accelerant of long-standing structural fragilities rather than their origin, and that the chronic unreliability of South African SMME failure statistics is itself a policy problem. Implications for finance, relief design, skills development and the enabling environment are discussed.   Received: 12 May 2026 / Accepted: 30 June  2026 / Published: July 2026