South Africa’s uncompetitive economy has been hiding in plain sight for years, say many top industry leaders. However, the World Bank has released a new report, explaining exactly why South Africa is one of the least competition-friendly economies in the world to do business in.
However, it’s not all doom and gloom for South Africa, as the bank also lists all the things that have improved drastically over the last twelve months. In its ‘Driving Inclusive Growth in South Africa’ report, the bank says the country is, in fact, far better off than in 2024, thanks to improved electricity supply and various structural reforms.
SOUTH AFRICA’S UNCOMPETITIVE ECONOMY
Nevertheless, the World Bank still thinks South Africa is beset by several onerous regulations that make it an uncompetitive economy in which to do business:
- For example, the new Employment Equity quotas that come into effect on 1 September 2025 will further burden business.
- Moreover, South Africa’s uncompetitive economy suffers from poor business dynamism and minimal job creation.
- This, in turn, leads to a lack of competition within the economy and an over-reliance on social welfare, which acts like a handbrake on economic growth.
- As such, the World Bank believes ‘short-term wins’ will create momentum and start to achieve a successful economic transformation.
- Key to strengthening South Africa’s uncompetitive economy is easing various regulatory burdens on businesses.
- There are only ‘one-third of the new business ventures in South Africa,’ compared with other typical middle-income countries.
- A such, no enough new businesses – whether small, medium or large – are being created. Therefore, there are no new employable South Africans contributing to the economy.
WHAT CAN BE DONE?
Therefore, the World Bank says increased market competition will boost an uncompetitive economy and promote innovation. It says South Africa must, “Rebalance its economic model by making it easier for investors and young workers to enter the market.”
One way to achieve this is to reduce state-owned enterprises. These currently operate like monopolies in South Africa and are highly inefficient and wasteful of taxpayer money, reports Daily Investor. In conclusion, the bank says there’s no obvious reason why such an approach, coupled with smart regulations, cannot be applied to help kickstart South Africa’s uncompetitive economy.
WHAT DO YOU THINK CAN BE DONE TO KICKSTART SOUTH AFRICA’S JOB MARKET?
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