South Africans now enjoy almost as little economic freedom as in the early 1990s, when severe sanctions due to apartheid limited South Africa’s economic activities.
According to the latest data from the Economic Freedom of the World (EFW) index, South Africa has once again moved down from 93rd to 94th out of 165 countries.
“South Africa’s long march away from economic freedom continues in 2023,” says David Ansara, chief executive officer of the Free Market Foundation. In 2019, South Africa ranked 92nd and in 2008 the country was 73rd. South Africa was apparently best off in 2000, when he was 47th on the list.
There is a two-year delay in the available data, which means that this year’s report uses data from 2021.
Here’s how countries’ economic freedom looked in 2021, with the top quartile (green), second quartile (blue), third quartile (orange) and least free countries (red):
The report, released annually by the Fraser Institute in Canada, ranks countries based on the following criteria:
- Size of Government (South Africa: 119)
- Legal system and property rights (South Africa: 59)
- Sound financial matters (South Africa: 95)
- Freedom to trade internationally (South Africa: 103)
- Regulation (South Africa: 91)
“The report shows that South Africa’s latest (ranking) is the lowest ever, and its score of 6.53 (out of 10) is the second lowest since the 1994 transition,” said Richard Grant, professor of finance and economics. at Cumberland University and senior consultant for the Free Market Foundation, wrote in the annual report.
“This means that South Africans have lost economic freedom in absolute terms, but also in relation to most other countries,” says Cumberland.
The constant decline is a clear result of the government’s unbridled, suffocating desire for economic control, Ansara believes.
Although South Africa has fallen considerably in position, the country’s points allocation has not changed terribly. Where the world has become more economically free on average over the past decades, South Africa has therefore deteriorated.
Economic freedom worldwide
However, South Africa is not the only country that is doing badly. A decade of growth in economic freedom was wiped out in 2020 by governments worldwide’s drastic interventions due to the Covid-19 pandemic. The global rating is now as low as it was last in 2009, when a giant recession hit the world.
According to the 2023 report, there is a clear link between human progress and prosperity and economic freedom. The EFW shows that the poorest 10% of people in first quartile countries earn an income of approximately US$14,204 (approximately R268 600) per year.
In the fourth quartile (the least economically free states), the poorest 10% earn a paltry US$1,736 (about R32,800) per year.
The third quartile, in which South Africa falls, has an average income of US$2,641 (about R49 900) among the poorest 10%.
In a nutshell, this means that the poorest 10% in economically free countries earn eight times more than the poorest 10% in countries with the least economic freedom.
“Venezuela and Zimbabwe – rather than Singapore or Switzerland – are unfortunately the states that the current South African government most wants to emulate,” says Martin van Staden, head of policy at the Free Market Foundation.
Other major countries’ performance looks like this: Taiwan (11th), Japan (20th), Germany (23rd), Korea (42nd), France (47th), Italy (53rd), Mexico (68th), India (87th), Russia (104th), Brazil (90th), and China (111th).
