South Africa’s cost-of-living pressures are often framed as a fiscal and social challenge. They also have implications for how businesses operate, particularly in sectors that provide essential goods and services.
In these categories, affordability is becoming an increasingly key factor in shaping customer behaviour and competitive dynamics. Affordability is becoming a structural competitive factor.
Minister of Finance Enoch Godongwana’s 2026 Budget includes social grants and measures aimed at managing inflation, with the stated intention of supporting vulnerable households. These interventions provide important relief by helping households manage rising costs. They primarily operate on the income side of the equation. The structure of those costs, however, remains an important part of the broader challenge. However, income-side interventions cannot fully solve affordability.
Across South Africa, particularly in townships and rural areas, the cost of essential goods and services continues to place pressure on households. According to Statistics South Africa, the official unemployment rate remains above 30%, with youth unemployment exceeding 60% depending on the measure used. South Africa also remains one of the most unequal societies globally, with a Gini coefficient estimated at around 0.63, according to the World Bank. Many households operate within constrained cash flows, often purchasing goods in smaller quantities aligned with short-term or irregular income patterns.
One way to understand these dynamics is through cost-of-living innovation. This refers to efforts to redesign value chains, pricing models and delivery systems in ways that improve the affordability and accessibility, or predictability of essential goods and services. It complements income-based interventions by focusing on the cost structures that shape everyday consumption.
South Africa has already seen elements of this approach.
In the financial services sector, Capitec Bank demonstrated how a simplified and low-cost operating model can support scale.
By reducing fees, streamlining its product offering, and leveraging operational efficiency, it expanded access to banking services for millions of South Africans. Capitec reported more than 24 million clients in its 2025 financial results, making it one of the largest retail banks in the country.
Its growth indicates that affordability, alongside simplicity and accessibility, can support customer acquisition at scale.
In the retail sector, several pilot initiatives are testing alternative approaches to the retail of essential goods. One example is Skubu, a refill-based retail concept piloted in Diepsloot.
Developed through collaboration among private-sector partners, research institutions, and public stakeholders, the model allows customers to purchase flexible quantities of staple goods rather than fixed pack sizes. While still at an early stage, it illustrates how affordability challenges may be addressed through coordinated, system-level approaches.
When affordability is not addressed, the result is not only social strain but economic inefficiency. Demand remains hidden, value chains operate below potential, and growth becomes harder to sustain. This is why affordability is increasingly emerging as a structural economic variable rather than a narrow consumer issue.
For corporates operating across the food, retail, financial services and logistics ecosystem, this presents a potential opportunity. In some cases, improving affordability and access to goods and services may contribute to increased demand or customer reach. In others, margins, operational complexity and infrastructure constraints may limit the commercial viability of certain models.
South Africa’s broader economic context reinforces the relevance of these considerations. Markets constrained by affordability may reflect unmet demand. Revealing that demand typically requires a combination of pricing, distribution, financing and operational strategies, along with coordination across the value chain.
Several approaches are often discussed in this context.
Supply chain reconfiguration, including demand aggregation and more direct sourcing, may improve cost efficiency under certain conditions. Shared logistics and distribution models can also improve efficiency.
Pricing and packaging innovations, such as offering smaller or more flexible quantities, can better align products with how consumers earn and spend. This may reduce immediate cash barriers.
Financing innovation can also play a role. High-volume, low-margin environments are not always well-suited to traditional lending models. Inventory financing, supplier credit arrangements and alternative working capital approaches may support scale, although they require appropriate risk management.
These approaches are not universally applicable, and their effectiveness depends on context, scale and execution. However, they point to a broader set of considerations for organisations operating in constrained environments.
Established retailers, producers, financial institutions, and logistics providers remain central to South Africa’s economic ecosystem. Their scale, infrastructure and capabilities position them to play a role in improving access and efficiency, particularly where affordability can be integrated into existing models without compromising sustainability.
Addressing affordability at scale is often system driven. It typically involves coordination across producers, distributors, financiers, technology providers and policymakers. It also requires recognising that cost-of-living pressures are also a factor that can influence market dynamics.
This points to a broader shift in how complex economic challenges are approached. Affordability is not a problem that can be addressed through isolated interventions. It often involves interactions across business, government, and society. Progress depends on how effectively these actors align to support outcomes that are both economically viable and socially sustainable.
The 2026 Budget acknowledges the pressures facing households. For business, these pressures form part of the operating environment. Understanding how affordability influences customer behaviour, demand patterns, and access to essential goods and services is likely to remain an important consideration in the period ahead. Affordability shapes growth at the end.
• Ngoetjana is discipline lead: retail management at The DaVinci Institute, a private higher education institution focusing on management of technology, innovation, people and systems thinking
•Rapakgadi is executive: marketing, branding and communications at The DaVinci Institute
• Seroba is storytelling and communications lead at The DaVinci Institute
