For SMMEs and SMEs with an annual payroll of more than R500,000, complying with the requirements of the Skills Development Act (SDA) is mandatory. But, it is also a low-cost opportunity to grow the business by strategically upskilling employees.
Sholina Durga, MD: distance learning and MBA at Richfield, says that the SDA should be viewed as a tool for businesses to develop expertise that propels them forward: “This Act is so much more than just a box to tick. By aligning workforce training with identified priority sectors and accredited tertiary education institutions, business owners can reclaim the costs of putting employees through undergraduate, graduate, and postgraduate programmes, and at the same time create real value for their operations.”
Yet, many small business owners are unsure how to leverage this legislation effectively.
The first step is to understand your obligations. Legally, any employer with an annual payroll exceeding R500,000 must pay a monthly Skills Development Levy (SDL) of 1% of total wages to the SA Revenue Service. Such businesses are also obliged to submit an annual Workplace Skills Plan and Training Report to their relevant Sector Education and Training Authority (SETA), detailing how at least another 1% of payroll is being invested in approved training programmes for employees, including accredited degrees and learnerships and skills programmes.
Failing to meet these obligations risks fines of up to 10% of payroll and forfeiture of grants, which are funded directly from the SDL pool and disbursed by SETAs to compliant employers for approved training.
Priority sectors and business impact
The National Skills Development Plan 2025/26 identifies priority areas where skills development grants can cover up to 100% of training costs. These key areas include IT, financial services, business services, engineering, healthcare, the green economy, and agriculture.
“This focus is intentional,” Durga explains. “These sectors are critical to national economic growth, yet many of them are scarce skills in South Africa. For employers, investing in education in these areas helps to ensure SDA compliance and can also provide both immediate business benefits and long-term competitiveness.”
BCom degrees falls squarely into these priority sectors, while a BSc IT programme will equip graduates with competencies in cybersecurity, data analytics, cloud computing, and business intelligence – skills in high demand across every industry.
Employees with business or IT degrees enable digital transformation and data-driven decision-making, which is especially relevant for small businesses seeking to scale. These graduates also bring enhanced analytical, strategic, and technological capabilities, enabling SMMEs to reduce operational bottlenecks, implement automated systems, and make more informed financial decisions.
Durga emphasises the importance of using a certified tertiary provider. Accredited qualifications from registered institutions ensure that employees gain recognised skills that SETAs will approve for grants. They also guarantee that learning is rigorous, relevant, and aligned with national standards.
“For SMMEs, the Skills Development Act is more than a statutory requirement. It is an opportunity – a practical, cost-effective way to grow talent, boost productivity, and future-proof operations. When you strategically invest in accredited business and IT qualifications, you are developing employees who can make immediate contributions to your company while positioning your business for growth,” says Durga.