2020 Index of Economic Freedom

South Africa

OVERALL SCORE58.8
WORLD RANK106
Rule of Law

Property Rights58.4

Judicial Effectiveness38.0

Government Integrity46.6

Government Size

Tax Burden63.7

Government Spending67.4

Fiscal Health64.0

Regulatory Efficiency

Business Freedom62.0

Labor Freedom58.8

Monetary Freedom75.9

Open Markets

Trade Freedom75.8

Investment Freedom45.0

Financial Freedom50.0

Create a Comparison Chart

See how South Africa compares to another country using any of the measures in the Index.

vs
Close
Download PDF
Quick Facts
  • Population:
    • 57.7 million
  • GDP (PPP):
    • $789.4 billion
    • 0.8% growth
    • 1.1% 5-year compound annual growth
    • $13,675 per capita
  • Unemployment:
    • 27.0%
  • Inflation (CPI):
    • 4.6%
  • FDI Inflow:
    • $5.3 billion

South Africa’s economic freedom score is 58.8, making its economy the 106th freest in the 2020 Index. Its overall score has increased by 0.5 point due to a higher government integrity score. South Africa is ranked 12th among 47 countries in the Sub-Saharan Africa region, and its overall score is well above the regional average and slightly below the world average.

The South African economy fell back into the mostly unfree category in 2019 after 24 years in the ranks of the moderately free. It remains mostly unfree in 2020. GDP growth has been anemic for the past five years.

To turn the trajectory of economic freedom positive again in South Africa and achieve its goals of economic growth and job creation, the government needs to confront persistent labor market rigidities and pursue stricter application of rules against anticompetitive behavior. The progressive politicization of economic decision-making is a threat to the private sector and long-term development.

Close

Background

The African National Congress (ANC) has dominated politics in South Africa since the end of apartheid in 1994. Corruption scandals forced two-term president Jacob Zuma to resign in 2018. He was replaced by current President Cyril Ramaphosa, who secured his own five-year term when the ANC won the May 2019 elections with 57 percent of the vote, the lowest percentage in ANC history. A radical leftist party pushing land expropriation received 10 percent of the vote. South Africa has a highly developed economy and advanced infrastructure. One of the world’s largest exporters of gold, platinum, and other natural resources, it also has well-established financial, legal, communications, energy, and transport sectors as well as the continent’s largest stock exchange. Rates of formal-sector unemployment and crime are high.

Rule of LawView Methodology

Property Rights 58.4 Create a Graph using this measurement

Judicial Effectiveness 38.0 Create a Graph using this measurement

Government Integrity 46.6 Create a Graph using this measurement

Property rights are relatively well protected, and contracts are generally secure, but economic growth and food security are threatened by a highly charged land reform debate and proposals to redistribute land rights. South Africa benefits from a robust legal framework and courts that process judicial cases reliably and competently. There is a robust anticorruption framework, but the laws are inadequately enforced, and public-sector accountability is low.

Government SizeView Methodology

The top personal income tax rate is 45 percent, and the top corporate tax rate is 28 percent. Other taxes include value-added and capital gains taxes. The overall tax burden equals 28.6 percent of total domestic income. Government spending has amounted to 33.0 percent of the country’s output (GDP) over the past three years, and budget deficits have averaged 4.3 percent of GDP. Public debt is equivalent to 56.7 percent of GDP.

Regulatory EfficiencyView Methodology

Policy uncertainty, weaknesses in regulatory oversight, violent crime, labor unrest, and unprofitable state-owned enterprises have a negative effect on business activity. Labor market rigidity has contributed to extremely high unemployment rates. The government has abolished price controls on all but a handful of items, such as coal, petroleum and petroleum products like diesel and paraffin, and utilities.

Open MarketsView Methodology

The total value of exports and imports of goods and services equals 59.8 percent of GDP. The average applied tariff rate is 4.6 percent, and 175 nontariff measures are in force. Private investment continues to be hindered by nontransparent laws, and foreign investments face additional restrictions that breed inefficiency. The financial sector has undergone modernization, and the banking sector is regarded as resilient and sound.

Country's Score Over Time

View Chart of Scores over Time

Regional Ranking

RANK COUNTRY OVERALL CHANGE
1Mauritius74.91.9
2Rwanda70.9-0.2
3Botswana69.60.1
4Seychelles64.32.9
5Cabo Verde63.60.5
6Tanzania61.71.5
7Namibia60.92.2
8Madagascar60.53.9
9Côte d'Ivoire 59.7-2.7
10Uganda59.5-0.2
11Ghana59.41.9
12South Africa58.80.5
13Senegal581.7
14Nigeria57.2-0.1
15Burkina Faso56.7-2.7
16Gabon56.70.4
17Guinea56.50.8
18The Gambia56.33.9
19São Tomé and Príncipe 56.22.2
20Mali55.9-2.2
21Mauritania55.3-0.4
22Eswatini55.30.6
23Kenya55.30.2
24Benin55.2-0.1
25Niger54.73.1
26Lesotho54.51.4
27Togo54.13.8
28Comoros53.7-1.7
29Cameroon53.61.2
30Ethiopia53.60.0
31Zambia53.5-0.1
32Guinea-Bissau53.3-0.7
33Djibouti52.95.8
34Malawi52.81.4
35Angola52.21.6
36Central African Republic50.71.6
37Mozambique 50.51.9
38Chad50.20.3
39Democratic Republic of Congo49.5-0.8
40Liberia49-0.7
41Burundi490.1
42Equatorial Guinea48.37.3
43Sierra Leone480.5
44Sudan45-2.7
45Zimbabwe43.12.7
46Republic of Congo 41.82.1
47Eritrea38.5-0.4
See Entire Region List ›

View all countries ›

Back to Top