South Africa has fallen from its position of 93 last year in the Economic Freedom of the World Annual Report, released by the Free Market Foundation (FMF) and Canada’s Fraser Institute, to 99 this year.

This marks a further fall from the country’s best ranking of forty-seventh in 2000.

FMF director Eustace Davie attributes South Africa’s worsening ranking among 165 jurisdictions monitored, to the deterioration of economic activity in the country, including its high unemployment rate.

Fraser Institute resident fellow and coordinator of the Economic Freedom Network Fred McMahon adds that, when jurisdictions increase taxes and regulations, the public become less economically free, which means even slower economic growth and less investment.

In particular, South Africa has declined from a score of 5.99 to 6.14 in terms of size of government, while the legal system and property rights score improved to 5.95 from 5.09 the previous year.

On the access to sound money aspect, South Africa declined from a score of 8.21 to 8.24, and from 5.8 to 6.6 in terms of freedom to trade internationally.

South Africa’s score on regulation of credit, labour and business has also declined to 6.78 this year, from 7.16 in the prior year.

On the other side of the spectrum, Hong Kong and Singapore have maintained their rankings atop the index, at first and second place, respectively, while Switzerland, New Zealand, Denmark, Australia, the US, Estonia, Mauritius and Ireland make up the remainder of the top ten.

The Economic Freedom report was launched in 1996 to measure the ability of individuals to make their own economic decisions. FMF analyses several indicators such as regulation, size of government, property rights, government spending and taxation to produce its findings.

This year’s report captures 2020 data and, therefore, the effect of Covid-19-related restrictions.

Among the ten lowest-rated countries are the Democratic Republic of Congo, Algeria, Congo-Brazzaville, Iran, Libya, Argentina, Syrian Arab Republic, Zimbabwe, Sudan and Venezuela.

This year, South Africa ranks lower than its counterpart India, at ninetieth, but better than other counterparts Russia, which ranked ninety-fourth, Brazil, ranking at 114 and China, at 116.

Moreover, McMahon says, where people are free to pursue their own opportunities and choices, they lead more prosperous, longer and healthier lives, with more political and civil liberties to boot. 

FMF associate Neil Emerick says that, while South Africa is a lively destination for investment, its large government, closed economy and overregulation are holding it back from realising this potential.

Business and macroeconomic analyst Phumlani Majozi says South Africa’s government continues to believe it can solve the country’s problems by spending more. This while State-owned entities keep receiving billions of rands of bailouts.

“We need government intervention in health, transport and energy infrastructure development, and for it to allow for the conducting of business easily and competitively,” he notes.  

Davie concludes that there is no reason why South Africans should not be as economically free or even more free than people living in Estonia, Mauritius or Ireland.

“The people of South Africa should demand that their country set out to become one of the freest in the world, just as Mauritians set out to do and achieved in 20 years.”