South Africa disappoints in another important global ranking
South Africa has once again failed to improve its position in the latest Global Economic Freedom of the World report, ranking 83rd out of 165 countries.
According to Neil Emerick, Deputy Chairman of the Free Market Foundation (FMF), the result is a sobering position in the middle that underscores the country’s lack of meaningful progress.
“South Africa is once again ranked 83rd in the world for economic freedom, unchanged from last year and far behind the countries that are pulling ahead in growth, jobs, and prosperity,” Emerick said.
“Unless we tackle the size of government, secure property rights and open ourselves to trade, we’re condemning ourselves to stagnation.”
The FMF argued that the index, compiled by Canada’s Fraser Institute, provides hard evidence about the consequences of policy choices.
“The debate between socialism and capitalism has been raging for 150 years, but in the 1980s economists decided to see if they could put a number on it,” Emerick explained.
“What’s happened in the last 30 years is that the index has been compiled from a variety of statistical reports and surveys.”
“These range from taxes to investment, law and order, inflation and trade, and are combined into a score. It really gives us a quantitative way of answering what makes countries freer and more prosperous,” Emerick added.
He noted that the data consistently show that the freer you are, the more opportunities you have to flourish.
He added that in freer economies, both consumers and producers enjoy more choices, while entrepreneurs, unlike governments, can respond quickly to information and innovate efficiently.
“Free markets are just going to produce better and higher quality outcomes than governments are able to do,” he said.
The report also challenged common perceptions about inequality. “If the index had one role as a myth-buster, it would be this one,” Emerick argued.
“The evidence shows that the share of income going to the bottom 10% is basically unrelated to freedom, but the level of income is far higher in freer societies.”
According to him, the poorest 10% of people in free economies earn on average about $7,500 (R128,916) a year, compared to under $1,000 (R17,188) in unfree economies.
“That’s a ninefold difference, and we know it’s true because we only need to see which direction the boats travel. People flee unfree societies for freer ones because life is better.”
South Africa’s weak points
Despite South Africa’s average score, the country has glaring weaknesses. The report showed that South Africa has done quite well in terms of sound money, has lower inflation, and a central bank that isn’t printing money to pay debts.
The country also performed reasonably well in areas such as trade freedom and private banking. However, it was weak in the size of government.
“Our government consumption is high, our top marginal tax rates are among the worst in the world, and that discourages our top taxpayers from staying,” said Emerick.
Another critical area is law and order. “We do quite well in the courts, but we score 138th in policing and law enforcement.”
“That’s hugely important because if you fail on property rights and contract enforcement, nothing else matters. You can’t have a functioning market without those basics,” he warned.
Labour regulation is another stumbling block. The country still has very poor rankings in hiring and firing, and work restrictions, ranking 140th in the world.
“The index is essentially pointing to the same problems South Africans read about in the newspapers every day. We know what we need to fix – we just need to get around to fixing it.”
For Emerick, the most compelling takeaway is that economic freedom is not just about growth statistics but about human well-being.
“People in freer societies are healthier, live longer, and report greater life satisfaction. If South Africans can connect the dots between freedom and their own daily lives, they might start demanding the reforms that will actually improve their prosperity,” he said.
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