2016 Index of Economic Freedom

South Africa

overall score61.9
world rank80
Rule of Law

Property Rights50.0

Freedom From Corruption44.0

Limited Government

Government Spending69.9

Fiscal Freedom70.1

Regulatory Efficiency

Business Freedom69.7

Labor Freedom58.7

Monetary Freedom74.6

Open Markets

Trade Freedom77.0

Investment Freedom45.0

Financial Freedom60.0

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Quick Facts
  • Population:
    • 54.0 million
  • GDP (PPP):
    • $704.5 billion
    • 1.5% growth
    • 2.4% 5-year compound annual growth
    • $13,046 per capita
  • Unemployment:
    • 25.1%
  • Inflation (CPI):
    • 6.1%
  • FDI Inflow:
    • $5.7 billion
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South Africa’s transition to a more open economic system has been facilitated by relatively competitive trade and investment regimes, but structural reforms to diversify the economic base have been only marginally successful. Social instability is exacerbated by violent strikes and a lack of employment opportunity.

Economic Freedom Snapshot

  • 2016 Economic Freedom Score: 61.9 (down 0.7 point)
  • Economic Freedom Status: Moderately Free
  • Global Ranking: 80th
  • Regional Ranking: 7th in Sub-Saharan Africa
  • Notable Successes: Trade Freedom and Monetary Freedom
  • Concerns: Rule of Law and Management of Public Finance
  • Overall Score Change Since 2012: –0.8

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Background

Jacob Zuma of the African National Congress was elected president by the National Assembly in 2009 and reelected by an ANC-dominated parliament for another five years in May 2014. The ANC has dominated politics since the end of apartheid in 1994. South Africa is Africa’s second-largest economy and one of the world’s largest producers and exporters of gold and platinum, although strikes in 2014 brought platinum mining to a halt. Mining, services, manufacturing, and agriculture rival similar sectors in the developed world. Yet many South Africans are poor. Rates of formal-sector unemployment and crime are high, and the quality of public education is low. Access to infrastructure and basic services is lacking. In 2012, the government completed a National Development Plan that aspires to end poverty and reduce inequality by 2030.

Rule of LawView Methodology

Property Rights 50.0 Create a Graph using this measurement

Freedom From Corruption 44.0 Create a Graph using this measurement

Allegations of corruption among civil servants persist at all levels despite an excellent anti-corruption regulatory framework. The process for tendering public contracts is often politically driven and opaque. Responding to criticism of courts by government ministers in 2015, the chief justice and other key judges staunchly defended judicial independence. Property rights are relatively well protected, and contracts are generally secure.

Limited GovernmentView Methodology

The top personal income tax rate is 40 percent but will be 41 percent for 2016. The top corporate tax rate is 28 percent. Other taxes include a value-added tax and a capital gains tax. The overall tax burden equals 24.7 percent of total domestic income. Government spending amounts to 31.7 percent of GDP, and the budget is in deficit. Public debt equals about 46 percent of annual domestic output.

Regulatory EfficiencyView Methodology

Establishing a business involves five procedures, and no minimum capital is required, but obtaining necessary licenses still takes over two months. Labor regulations are not applied effectively, and the labor market lacks flexibility. Although the government has eliminated most price controls, it has implemented capital controls and housing subsidies in an attempt to gain more control of the domestic economy.

Open MarketsView Methodology

South Africa’s average tariff rate is 4 percent. Imports of some agricultural products face additional barriers. State-owned enterprises operate in several sectors of the economy. Non-transparent laws continue to hinder private investment, and foreign investment faces additional restrictions that impede efficiency. The financial system has gradually been evolving, and the resilient banking sector remains relatively sound.

Country's Score Over Time

Bar Graph of South Africa Economic Freedom Scores Over a Time Period

Country Comparisons

Bar Graphs comparing South Africa to other economic country groups Download Charts

Regional Ranking

rank country overall change
1Mauritius74.7-1.7
2Botswana71.11.3
3Cabo Verde66.50.1
4Rwanda63.1-1.7
5Ghana630.0
6Seychelles62.24.7
7South Africa61.9-0.7
8Namibia61.92.3
9Madagascar61.1-0.6
10Côte d'Ivoire 601.5
11Swaziland59.7-0.2
12Benin59.30.5
13Uganda59.3-0.4
14Burkina Faso59.10.5
15Gabon590.7
16Zambia58.80.1
17Tanzania58.51.0
18Senegal58.10.3
19Kenya57.51.9
20Nigeria57.51.9
21The Gambia57.1-0.4
22São Tomé and Príncipe 56.73.4
23Mali56.50.1
24Djibouti56-1.5
25Mauritania54.81.5
26Niger54.3-0.3
27Cameroon54.22.3
28Burundi53.90.2
29Togo53.60.6
30Guinea53.31.2
31Mozambique 53.2-1.6
32Comoros52.40.3
33Sierra Leone52.30.6
34Liberia52.2-0.5
35Guinea-Bissau51.8-0.2
36Malawi51.8-3.0
37Ethiopia51.50.0
38Lesotho50.61.0
39Angola48.91.0
40Democratic Republic of Congo46.41.4
41Chad46.30.4
42Central African Republic45.2-0.7
43Equatorial Guinea43.73.3
44Republic of Congo 42.80.1
45Eritrea42.73.8
46Zimbabwe38.20.6
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