Economic Policy Reforms 2023

South Africa

See more data for South Africa on the related dashboard.

Product and labour markets functioning

Performance gaps

• Regulatory policies remain restrictive and competition is low in many key network industries.

• South Africa compares unfavourably in most product market regulation indicators, in particular indicators assessing distortions induced by state involvement.

Recommendations

• Align sector regulators and the Competition Commission to strengthen competition policies and their enforcements.

• Privatise State-Owned Enterprises operating in competitive market segments, such as commercial banking, energy, and logistics.

Digital transition

Performance gaps

 Lagging telecommunication infrastructure, in particular the roll-out of fibre-optic cable, is slowing down digitalisation. Only 2.4% of inhabitants have access to high-speed internet. In addition, access to telecommunication services is highly unequal across the country.

Recommendations

• Take advantage of any public construction works to install open-access telecom infrastructure.

• Subsidise the expansion of the network outside city centres through grants, conditional on making the infrastructure openly accessible.

Inclusiveness, social protection, and ageing

Performance gaps

• Poverty remains high, despite an extensive and well-functioning means-tested cash-transfer system that provides support to the elderly, children, and people with disabilities. Unemployed and informal workers receive little support.

Recommendations

• Strengthen the social transfer system to cover unemployed individuals by, for instance, making permanent the Social Distress Relief grant introduced during the COVID-19 crisis.

• Consider the introduction of an additional means-tested benefit for households with income below the minimum subsistence line.

Climate transition

Performance gaps

• CO2 emissions per unit of GDP are high, reflecting in part the high-energy intensity of the economy, but also the elevated dependence on coal as a main energy source. 80% of electricity production still comes from coal.

Recommendations

• Progressively reduce exemptions to the carbon tax to increase its base.

• Increase and accelerate the procurement of renewable electricity from independent power producers.

Overall performance