Cape Town – South Africa ranks last among 49 countries in the IMF’s ease of doing business index, highlighting excessive regulation and government inefficiencies that hinder economic growth.
According to Daily Investor, this was revealed by Stanlib chief economist Kevin Lings.
He suggested that the country could learn from the US approach under Donald Trump, which prioritised reducing government spending and regulatory burdens to stimulate private sector-led growth.
Last year, business leaders, including Standard Bank CEO Sim Tshabalala, urged the government to cut red tape and improve institutional efficiency.
They argued that excessive bureaucracy deterred both local and foreign investment, making it harder for businesses to operate and expand, the report said.
Significant regulatory hurdles
This is evident in sectors like telecommunications, where companies such as Elon Musk’s Starlink, which provides satellite-based internet services, face significant regulatory hurdles in entering the South African market.
While Starlink has expanded rapidly in other African countries like Nigeria and Kenya, South Africa’s strict licensing requirements have kept it out, limiting competition and innovation in the broadband sector.
According to Techcentral, Musk’s efforts to secure a Starlink licence in South Africa have stalled due to a requirement that telecom licensees allocate 30% of their equity to historically disadvantaged groups.
However, a recent IMF report notes that South Africa has an opportunity to address long-standing economic challenges such as declining income, high unemployment, and inequality.
South Africa can boost growth and prosperity by improving the business environment, strengthening governance, and reforming the labor market. Our new Country Focus article highlights why these are key to economic success. https://t.co/4hWbnstaSU pic.twitter.com/gSGlvHT3E0
— IMF Africa (@IMFAfrica) March 10, 2025
The country can boost growth and prosperity by improving the business environment, strengthening governance, and reforming the labour market.
The IMF highlights that the Government of National Unity (GNU), in power since June 2024, is advancing structural reforms initiated in 2020 to drive economic growth. These include increasing private-sector participation in electricity generation, freight rail, and port operations, as well as improving digital regulations and water licensing.
The IMF further recommends that South Africa enhance its business environment by reducing red tape, improving governance, and making labor market regulations more flexible — particularly for small and medium enterprises.
“By cutting excessive red tape and administrative requirements and ensuring that small and medium enterprises have fair access to markets— are essential to help support entrepreneurship, firm growth, and job creation,” the report says.
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Compiled by Betha Madhomu
