The quiet entrepreneurial power of South Africa’s services sector

When South Africa’s policymakers and business leaders talk about entrepreneurship, the spotlight usually falls on retail, manufacturing, and technology startups. Yet sitting just off-centre stage is a silent force: service-based businesses. 

From freelance marketers and local content creators to township writers, designers, consultants, and customer service innovators, the service economy remains both overlooked and undervalued.

In truth, it carries immense untapped potential to drive inclusive growth, generate jobs, and reshape South Africa’s entrepreneurial landscape.The numbers tell their own story. According to the World Bank. South Africa’s services sector has quietly become the backbone of the economy. Back in 1990, it accounted for 52.4 percent of GDP. By 1997, as the country stabilised post-apartheid, that figure had jumped to 60 percent, driven by growth in financial services, tourism, and retail. The rise continued to 63.5 percent in 2006, showing that services were not just growing; they were proving resilient in the face of global market shifts.

The 2008 global financial crisis offered a stress test, and while there was a temporary dip, the sector bounced back to 63.6 percent in 2009, holding steady around 64 percent through 2019. Then came the pandemic. In 2020, services edged up to 64.6 percent as healthcare and public services surged. What do these numbers tell us? For one, services are more than a passive component of the economy, they are a stabiliser. Unlike sectors tied to heavy industry or exports, service-based enterprises can adapt quickly, absorb shocks, and continue to create jobs.

And yet, small-scale and township-based service providers are still treated as though they don’t really count. The irony is striking, service businesses often need less upfront capital than traditional product-based ventures, but what they do need which are networks, visibility, digital platforms are often out of reach.

Picture a township graduate offering bookkeeping services, or a rural creative running a social media consultancy. They’re building sustainable businesses, but because they don’t fit the narrow “factory” or “retail” mould, they get left out of incubation pipelines, funding schemes, and policy conversations. It’s not a gap; it’s a blind spot.

This gap in recognition is not just a policy issue; it’s an economic opportunity being ignored. In the first quarter of 2025, South Africa’s youth unemployment rate (ages 15 to 34) rose to 46.1 percent, while for those aged 15 to 24 it reached a devastating 62.4 percent. Against this backdrop, the service sector stands out as one of the most agile and scalable pathways to absorb skilled yet underutilised young people.

One of the greatest strengths of service-based enterprises is how easily they leap across borders. While physical goods require factories, trucks and ports, digital services move in seconds. A copywriter in Tembisa can polish copy for a client in London. A virtual assistant in Venda can keep a Nairobi start-up on track. A township design agency can pitch bold ideas to New York brands without ever leaving home.

With affordable internet, reliable global payment systems and strong professional networks, South Africa could transform itself into a serious outsourcing destination. Yet the barriers remain glaring. Funding agencies favour tangible, product focused enterprises. Business competitions celebrate prototypes, not pitch decks for editorial firms or creative agencies. Municipal policies concentrate on hawker licences and SMME permits, offering little infrastructure for service entrepreneurs. The result is that thousands of micro-enterprises remain invisible, surviving on word of mouth rather than scaling into sustainable, job-creating businesses. Service-based enterprises have proven their resilience in ways that often go unnoticed.

During the Covid-19 pandemic, designers pivoted to online consulting, virtual assistants kept startups running remotely and local content creators delivered work to clients across the globe, all while many traditional businesses faltered. South Africa’s economy does not just need more entrepreneurs; it needs a richer, more diverse entrepreneurial story where service innovators are not side players. With the right support from development finance institutions, targeted incubators, and private sector procurement, these ventures could flourish, turning potential into tangible growth. 

 Boitshoko Shoke and Londani Mpharalala  work in the Research and Impact Office at 22 On Sloane

*** The views expressed here do not necessarily represent those of Independent Media or IOL.

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