End of an era for Eskom and Transnet in South Africa

South Africa’s economic growth remains stunted by high levels of concentration, but recent trends point to a steady reduction of this across the economy.

This is according to the Competition Commission, who recently published their second Economy Concentration Tracker Report on 12 May 2026.

The Commission drew data from approximately 450,000 tax-registered companies across 228 economic sub-sectors of South Africa between the years 2017 to 2021.

The report revealed that by 2021, between 34% to 46% of these sectors were classified as having moderate to high levels of economic concentration, depending on the metric used.

However, positive trends showed improvements in the level of concentration, with the percentage of highly concentrated sectors dropping from 21.5% to 17% between 2017 and 2021.

The most highly concentrated sectors of the South African economy were manufacturing, transport and electricity, with 90% of the turnover share in these sectors belonging to just the top 10% of firms.

The Commission said this was to be expected in sectors which have historically been ruled by regulated monopolies, such as Transnet in the rail freight sector and Eskom in the electricity sector.

As sectors such as electricity generation have begun moving towards more open and competitive markets, their concentration levels have started to slowly decline.

“Electricity generation reforms have reduced concentration levels in electricity even though it remains highly concentrated and dominated by Eskom,” the Competition Commission said.

“Whilst this may reduce further consolidation, active regulation and reforms can play a significant role in sub-sector deconcentration.”

Similarly, the Commission pointed to a decline in railway transport concentration ratios, with the top 3 firms accounting for 87% of sector turnover in 2021, down from 91% in 2017.

These trends have likely continued in the years following the report’s cut-off period, as recent policies have attempted to encourage economic growth and job creation through deconcentration.

The country is steadily moving towards a wholesale electricity market, with independent power producers set to compete directly with Eskom for market share.

Meanwhile, Transnet has partnered with private rail operators through an open-access rail system to address logistical challenges and increase rail freight volumes.

MSMEs still have limited economic presence

Despite the slight improvements in market concentration across the country’s economic sectors, the Competition Commission said it is not yet enough.

One of the focal points of the report was assessing the level of economic participation currently afforded to micro, small and medium enterprises (MSMEs).

The report found that MSMEs comprised 97% of all the tax-registered firms, yet they made up only 22% of the total turnover across all sub-sectors.

This is well below the average for the 38 member countries of the Organisation for Economic Co-operation and Development, where MSMEs constitute between 50% to 60% of market value.

MSMEs are considered essential for job creation as they are more employment intensive than larger firms, accounting for 44% of  employment amongst tax-paying firms in 2021.

In an interview with 702, Competition Commission Chief Economist James Hodge said the removal of market access barriers for MSMEs was crucial to stimulating competition.

“What we’re recommending is to look at these barriers to market access, both regulatory and private corporate ones,” Hodge said. “We need to move with a little more urgency in resolving those.”

“Our regulatory review is trying to accelerate the red tape reduction objective of the government, by singling out low-hanging fruit that can be easily addressed because it’s a regulation or a practice.”

Following this, Hodge said a phased approach could be taken to address deeper issues revolving around market legislation.

He also pointed out that South Africa has a “missing middle” problem, where medium-sized enterprises only make up 4% of the country’s economy.

This effectively means it is much easier for small and micro-sized enterprises to enter into the South African marketplace than it is for them to scale and grow.

“We need to start backing successful entrepreneurs, even if they are large firms, that have demonstrated their capabilities to really scale, to challenge and to bring in new options,” Hodge said.