Digital Transformation Capacity and Sustainable Development in South Africa’s Fintech Entrepreneurial Ecosystem: A Critical Realist Framework

Digital transformation is widely presented as a pathway to financial inclusion, entrepreneurial growth, and sustainable development, yet its developmental effects remain uneven in emerging economies. This tension is particularly evident in South Africa’s fintech entrepreneurial ecosystem, where a relatively sophisticated financial sector and expanding digital innovation coexist with persistent inequality, skills shortages, fragmented institutional support, and regulatory complexity. Existing digital transformation research has largely focused on firm-level adoption, business model innovation, and technology-enabled change, offering limited explanation of how broader ecosystem conditions shape sustainable development outcomes in contexts such as South Africa. In response, this article develops a Critical Realist Digital Transformation Capacity Framework to explain how digital transformation may contribute to sustainable development within South Africa’s fintech entrepreneurial ecosystem. Drawing on digital transformation theory, capacity development theory, entrepreneurial ecosystem scholarship, and critical realism, the article argues that digital transformation is not a self-executing technological process but a contextually mediated and capacity-dependent phenomenon. It identifies institutional capacity, human capacity, and policy capacity as the key generative mechanisms through which digital technologies may support financial inclusion, ecosystem resilience, entrepreneurial participation, and broader economic development. By integrating these literatures, the article extends global information technology scholarship beyond technology-centric and firm-level accounts and offers an African-centred, mechanism-based explanation of digitally enabled development. The framework provides a conceptual foundation for future empirical research and a diagnostic lens for policymakers, regulators, and ecosystem actors in South Africa and other emerging-market settings. The study contributes to information systems theory by introducing Digital Transformation Capacity as a higher-order theoretical construct that explains how institutional, human, and policy capacities mediate the relationship between digital transformation and sustainable development.