South Africa falls in economic freedom rankings - CNBC Africa

South Africa falls in economic freedom rankings

Southern Africa

by Tendai Dube 0

South Africa has ranked 96 out of 157 countries on its score of economic freedom. Photo: FreeTheWorld.com

South Africa slid on the economic freedom rankings. According to the 2015 Economic Freedom of the World report, released by The Free Market Foundation (FMF) and Canada’s Fraser Institute it fell to 96 of 157 countries. Last year, it ranked 89 and in 2000 the country sat at 42, South Africa scored 6.74 out of 10 while the global average economic freedom score is 6.86.

"Economic freedom is very important of course because the study itself demonstrates the correlation between economic freedom and economic growth. We know that from high economic growth rates we get high employment levels, and the sort of things that collectively define a good quality life,” said Temba Nolutshungu, FMF director.

Nolutshungu says government policies are to blame as they have a tendency of impacting negatively on the economic freedoms and rights of people, that the policies have unintended effects on the economic freedom of the private sector.

“The decline in economic freedom is the result of government’s insistence on dominating the economy and crowding out the private sector, which has a negative impact on growth, employment, poverty reduction and individual liberty,” said Nolutshungu

He explains how labour policies are inflexible and rigid, making it difficult for employers to consider employing new members whether they need to or not because they fear they won't be able to lay them off if the need arises.

EFvs EG“Economic freedom breeds prosperity, and the most economically free countries offer the highest quality of life while the lowest-ranked countries are usually burdened by oppressive regimes that limit the freedom and opportunity of their citizens,” said Fred McMahon, Dr. Michael A. Walker Research Chair in Economic Freedom with the Fraser Institute

Hong Kong has the highest level of economic freedom worldwide, with a score of 8.97 out of 10, followed by Singapore (8.52) and New Zealand (8.19),

“Hong Kong is still number one, but because democracy is the best safeguard of freedom, if China, which ranks low in economic freedom, encroaches on Hong Kong, we can expect Hong Kong’s ranking to fall,” added Fred McMahon.

Despite South Africa’s vast decline, it still performed mildly better than its BRICs partners, with Russia (6.69), China (6.44) and India (6.43).

According to Eustace Davie of FMF, South Africa used to be regarded as the place where the sky was the limit, but increasingly he has noticed investors looking at economic freedom as a scale of measurement and when they see the downward direction South Africa has been taking they find South Africa unattractive for investment because of the decisions being made in the country.

"I look at the people that are in charge of public policy and I say to myself, are they going to undergo a paradigm shift from with policies that interfere with the private sector, We can't have a situation where all the neighbours are posting high economic growth levels and we are going into negative territory, on the brink of a recession, it doesn't make sense.”

He reckons if policies were made by someone like former President Nelson Mandela, we would be in a better position because he was pragmatic and humble compared to the “arrogance” policy makers possess today.  

“I know the humble man that he was, he would have said what needs to be done and he would have looked at countries that score high growth levels and ask himself what explains that and he would have delved into that study,” said Nolutshungu

The 10 lowest-ranked countries are Angola, Central African Republic, Zimbabwe, Algeria, Argentina, Syria, Chad, Libya, Republic of Congo, and Venezuela.

Economic Freedom of the World measures the degree to which the policies and institutions of countries support economic freedom; the report is based on the most recent available data from, which is 2013.

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