South Africa's economic freedom ranking has taken another hit, according to the 2023 Economic Freedom of the World (EFW) report.
South Africa now ranks 94th out of 165 countries, a slight decline from its 93rd position last year.
Published annually by Canada's Fraser Institute, with the Free Market Foundation (FMF) as its local partner, the report paints a concerning picture of South Africa's economic trajectory.
The country's peak ranking was 47th in 2000, during what the FMF calls the “pro-business reforms of the Mandela and Mbeki eras”.
However, since then, a series of "misguided policies" have seen South Africa’s ranking consistently drop.
"These policies invariably seek to regiment economic activity in line with government’s ideological ambitions, rather than with the economic needs and demands of society as manifested in the market," the report noted.
Richard Grant, Professor of Finance and Economics at Cumberland University and senior consultant to the FMF, highlighted the gravity of the situation.
"South Africa’s latest EFW ranking of 94th is the lowest, and its score of 6.53 (out of 10) is the second lowest since the 1994 transition," he wrote.
David Ansara, FMF Chief Executive Officer, was forthright in adding: "The consistent decline is a clear consequence of the government’s unabated, stifling desire for economic control”.
The EFW report, which uses data from 2021, defines economic freedom as the ability of individuals to make economic choices without undue interference, provided they do not harm others.
The study also highlighted the link between economic freedom and prosperity.
For instance, the poorest 10% in the most economically free countries earn an average of US$14,204 (R268,944) annually, compared to just US$1,736 (R32,870) in the least free nations.
South Africa, in the third quartile, sees its poorest 10% earning an average of US$2,641(R50,005).
"In countries that have adopted free market economies, the income earned by the poorest portion of the population is 8.18 times greater than in countries that have opted for state-regimentation of the economy," Ansara added.
The top five countries in this year's index are Singapore, Hong Kong, Switzerland, New Zealand, and the United States.
In contrast, the bottom five are Venezuela, Zimbabwe, Syria, Sudan, and Yemen. FMF's Head of Policy, Martin van Staden said: "Venezuela and Zimbabwe – as opposed to Singapore and Switzerland – are regrettably the states that the present South African government seems most keen to imitate“.
The Fraser Institute evaluates countries based on five areas: size of government, legal system and property rights, sound money, freedom to trade internationally, and regulation. South Africa's worst performance is in the 'size of government' category, ranking a dismal 119th.
In response, the FMF has suggested a significant reduction in the number of ministers, proposing a cut from 30 to just 10.
Despite these challenges, South Africa remains in the top 10 economically free states in sub-Saharan Africa, ranking 10th. Mauritius leads the pack, followed by countries like Cabo Verde, Seychelles, and Botswana.