Digital Connectivity Gaps Hitting Small Businesses Hardest, Cape Chamber Survey Finds

Many small and micro-enterprises are feeling left behind in the push for digital connectivity, according to key findings from the Cape Chamber of Commerce and Industry's latest Business Environment Survey.

While regulatory compliance (58.0%) and market conditions remain the primary countrywide operational hurdles, digital infrastructure constraints are escalating rapidly at a local level. Digital connectivity ranked 11th overall out of 61 tested constraints in the Western Cape (47.6%), rising to 6th at a provincial level and 3rd at the local precinct level—where 44.5% of respondents cited it as a serious barrier.

The impact is most severely felt by micro-enterprises, which lack the capital to buffer against rising operational costs or poor service delivery. Written survey responses highlighted a complex mix of digital friction rather than a single dominant failure:

Infrastructure Requirements: Businesses in cybersecurity and IT services emphasized the critical need for reliable, cost-effective fibre internet.

Cost and Capital Pressures: Smaller firms reported severe funding constraints, forcing a reliance on open-source software, capital support, and specialized tech bursaries.

Skill Shortages & Regulation: Respondents cited a lack of technical competence among service providers as a major cause of prolonged downtime, alongside growing concerns regarding non-compliant operators operating outside industry regulations.

Rae Wolpe, an economist with Impact Economix which analysed the survey data, says the digital connectivity constraint is notably a local issue -- less a national policy failure than a local infrastructure and permitting one. "The important thing about this finding is where it sits. Digital connectivity is not a top-tier constraint when businesses look at the country as a whole, but it climbs steadily as the question moves closer to home, and it lands third at precinct level," says Wolpe,  

"It also tells you why the pain is concentrated among micro and small firms. A larger business absorbs a bad line by paying for a second one; a firm with three people and no capital buffer simply loses trading days."  

"The policy context is that the reforms which would fix this are real but unfinished. The national rapid deployment framework, which would standardise how municipalities handle wayleaves and rights of way, is still in draft, and only a handful of municipalities have adopted the model by-laws."

Cape Chamber President Jacques Moolman said the connectivity challenge requires coordination between different spheres of government:  "The Western Cape has built the country's most substantial public connectivity network through its long-running partnership with Liquid, but it was designed for citizen access at schools, clinics and libraries rather than business-grade access in trading precincts. The City of Cape Town owns an open-access fibre network and sets the wayleave rules that determine whether anyone else can trench." 

"So the levers exist; they are just held by three different spheres, and none of them has small business connectivity as an explicit mandate. If I had one ask for each, it would be this: finalise the rapid deployment regulations nationally, extend the provincial network from citizen access to enterprise access, and get the City publishing its wayleave turnaround times so the bottleneck is visible," Moolman said.