South Africa is carrying at least R84 billion in undeclared economic activity while simultaneously failing to account for R21 billion that has gone missing from public and commercial systems, according to two separate analyses reported by BusinessTech. Together, the figures sketch a dual crisis: a vast informal sector that operates beyond the tax net, and a accountability gap inside formal institutions that the state has yet to close.
The R84 billion figure represents what analysts describe as South Africa's 'secret economy' — transactions, labour, and commerce conducted outside formal regulatory and tax frameworks. For context, that sum is roughly equivalent to the entire annual budget of several mid-sized government departments combined. The informal economy is not new, but placing a rand value on it matters: it represents foregone VAT, PAYE, and corporate tax revenue at a moment when South Africa's fiscal deficit remains a chronic drag on sovereign credit ratings.
The R21 billion discrepancy is a separate and more acute problem. According to BusinessTech, the missing sum is linked in part to scrutiny surrounding Makro, the Massmart-owned wholesale retail chain that has come under regulatory or financial pressure. The precise mechanism behind the missing funds — whether procurement irregularities, audit failures, or broader supply-chain leakage — was not fully detailed in early reporting, but the scale alone places it in the category of material financial risk for any institution or supplier connected to the retailer.
Makro's troubles land at a difficult moment for South African retail. The broader Massmart group, majority-owned by Walmart, has been restructuring aggressively since 2022, closing stores and exiting loss-making formats. If Makro's financial controls are now also under question, it compounds pressure on a business that was supposed to be one of the group's more resilient pillars — wholesale to small businesses and caterers, a segment that should, in theory, benefit from the same informal economy that the R84 billion figure tries to capture.
For South Africa's tax authority, the South African Revenue Service (SARS), the R84 billion informal economy estimate is both a challenge and an opportunity. SARS has publicly committed to expanding its revenue base without raising statutory rates, and Commissioner Edward Kieswetter has repeatedly pointed to the untaxed informal sector as a recovery target. But formalisation is slow: businesses operating in townships and peri-urban markets often lack the banking infrastructure, bookkeeping capacity, or incentive to register. Closing even 20% of that R84 billion gap would yield roughly R16.8 billion in additional annual revenue — a meaningful dent in a deficit that the National Treasury has been struggling to contain.
The two numbers together point at a systemic vulnerability: South Africa loses revenue both at the bottom of the economy, where activity is simply invisible to the state, and at the top, where large formal institutions are apparently unable to fully account for billions in transactions. Both leakages ultimately burden the same fiscus and the same sovereign borrowing requirement.
For businesses operating in South Africa — particularly retailers, wholesalers, and their FMCG suppliers — the Makro situation is a reminder that counterparty financial health deserves scrutiny regardless of brand size. A R21 billion discrepancy at a single retail node can cascade into delayed payments, order cancellations, and credit risk for hundreds of suppliers, many of them SMEs with thin working capital buffers.
For investors and policymakers, the R84 billion informal economy is not a problem to be solved by enforcement alone. Countries that have successfully brought informal operators into the tax base — Rwanda and Kenya among them on the continent — did so by pairing registration incentives with simplified tax regimes and mobile-first payment infrastructure that generates automatic audit trails. South Africa has the mobile penetration and the banking depth; what it has lacked is a coherent small-business tax architecture simple enough to make compliance cheaper than evasion.
Why it matters: A combined R105 billion in unaccounted or untaxed economic activity — R84 billion structural and R21 billion acute — means South Africa's fiscal consolidation plan is being undermined from both ends of the market simultaneously, making meaningful deficit reduction nearly impossible without either aggressive formalisation policy or a direct reckoning with institutional financial controls.