Economic studies
South Africa

South Africa

Population 57.9 millions
GDP per capita 6,354 US$
Country risk assessment
Business Climate
Change country
Compare countries
You've already selected this country.
0 country selected
Clear all
Add a country
Add a country
Add a country
Add a country


major macro economic indicators



  2017 2018 2019 (e) 2020 (f)
GDP growth (%) 1.4 0.8 0.5 -6.1
Inflation (yearly average, %) 5.3 4.7 4.1 4.6
Budget balance * (% GDP) -4.0 -4.2 -6.0 -6.7
Current account balance (% GDP) -2.5 -3.5 -3.6 -3.7
Public debt * (% GDP) 53.0 56.7 60.8 64.8

(e): Estimate. (f): Forecast. *Fiscal year from 1st April - 31st March. 2020 data: FY20/21.


  • Regional economic and political powerhouse
  • Rich in natural resources (gold, platinum, coal, chromium)
  • Advanced services sector (particularly financial)
  • Legislative environment protects investors


  • Poverty and inequalities are sources of social risk (crime, strikes and demonstrations)
  • High unemployment (over 29%) and shortage of skilled labour
  • Ageing infrastructure (transport, energy)
  • Dependent on volatile flows of foreign capital


Listless growth, despite a rebound

Curbed by drought conditions, power cuts, high unemployment and fiscal pressures, activity is expected to pick up modestly in 2020. Despite monetary policy easing, which may support consumer credit, the record level of unemployment (almost 30% of the workforce) will continue to weigh on household confidence, limiting the contribution of private consumption. Weak domestic demand is expected to continue to inhibit the manufacturing and mining sectors. The risk of additional power cuts, which would further harm the contribution of these sectors, cannot be ruled out in 2020. Manufacturing and mining will also be exposed to softer external demand, particularly in China. In addition, the review of the country’s eligibility for the United States’ Generalised Preference System, which exempts exports to the US market from certain customs duties, threatens exports, particularly in the automotive sector. Limited domestic demand, which will constrain imports, should nevertheless allow foreign trade to make a positive contribution to growth. Difficulties at the fiscal level and at state-owned companies, which are the drivers of infrastructure investment, will remain obstacles to public investment, hindering construction. Private investment will remain hesitant in the face of recurrent social movements, high operating costs and the polarising issue of land reform, which could allow expropriations without compensation.

Inflation is expected to go up in the wake of rising electricity, food and fuel prices, but weak domestic demand should prevent a sharp increase.


Deteriorating public accounts, fragile external accounts

The budget deficit is expected to widen in FY2020/2021. Listless activity will impact revenue growth, which will remain modest as a result. On the expenditure side, the agreement on wage indexation above inflation will probably prevent the size of the wage bill from being lowered. Additional spending pressures will arise from support to state-owned enterprises, including Eskom, the state utility company, which is in serious financial difficulty. Interest payments will also continue to be felt, absorbing almost 15% of revenues. This is a consequence of the increase in public debt, of which the ratio to GDP has already doubled over the past decade, with this trend expected to continue. The risk of debt distress is mitigated by the composition of debt. It consists mainly of long-term rand-denominated securities from domestic sources, but it is held at almost 40% by foreigners. The debt developments also expose South Africa’s credit rating to a further downgrade by the credit rating agency Moody’s, which would mean loss of investment grade status, leading to capital outflows.

However, portfolio investment and, to a lesser extent, FDI are essential to finance the current account deficit. In 2020, the deficit is expected to remain virtually unchanged, mainly due to the income deficit, which is maintained by profit repatriations by foreign companies, while also being affected by the increase in interest payments. The balance of transfers will continue to show a deficit, due to payments made to SACU partner countries. The small trade surplus should be safeguarded thanks to the small increase in imports. However, exports will also rise modestly: while they could benefit from a depreciation of the rand, they will be depressed by weak external demand and low mineral export prices. Freight services are expected to continue to generate a small deficit in services. Possible difficulties in financing the current account deficit could put pressure on the rand and foreign exchange reserves, which cover about 5 months of imports.


Increasingly pressing socio-economic challenges

Cyril Ramaphosa became President in 2018 following Jacob Zuma’s resignation and was elected at the ballot box in May 2019, after the African National Congress (ANC) took 57% of the vote. Although this result allowed the party, which has ruled since the end of apartheid (1994), to hold onto its majority, it was the lowest score in 25 years. Voter turnout, at 66%, was likewise at a 25-year low. Priorities include stimulating investment to support growth and create jobs, restructuring Eskom and resolving land reform issues. However, the social climate remains extremely tense, and could hinder the development of public policies. For instance, in 2019, the mining sector and state-owned companies were hit by a wave of strikes. Resistance from trade unions and some ANC factions could slow implementation of some reforms. In a tense social environment, where access to employment remains difficult, the security situation is strained, as illustrated by acts of violence against immigrant communities from other parts of Africa at the end of summer 2019. These attacks have created diplomatic tensions with other countries on the continent, particularly Nigeria. The business environment is relatively favourable but appears to be becoming less competitive, as evidenced by the 50-place drop in the Doing Business ranking over the last decade, mainly due to persisting regulatory constraints.


Last update: February 2020


Electronic Funds Transfers (ETF), including SWIFT payments and international transfers, are used for payments in foreign currencies. Cheques are rarely used, outdated, expensive to process, and vulnerable to fraud. Cheque payments are also subject to a clearing period of 10 working days. The majority of businesses no longer use them. Cash payments do still occur but have the same disadvantages. Letters of credit are issued between banks and serve as a guarantee for payments made to a specified person under specified conditions, including imports and exports. In most cases, irrevocable credits and confirmed irrevocable credits are issued. The terms and conditions can be onerous and should be fully understood before acceptance of these letters. Parties can sometimes secure payment on delivery via bank guarantee. Monies are deposited into a bank account, and the bank in turn issues a guarantee for payment on confirmation of delivery. This type of payment is mainly used in matters pertaining to property transfers.

Debt collection

Amicable phase

The National Credit Act states that the creditor must try to contact the debtor via a phone call, before issuing a formal letter of demand (outlining the outstanding obligation, and sent via email, registered post, or delivered by hand). Once this is done, the parties attempt to negotiate a settlement over an acceptable period of time. As creditors are not obliged to accept payment in instalments, they can opt to proceed with legal action to secure a full one-time payment. This phase is much less costly than immediately proceeding with legal action. This phase also provides greater insight for preparing for the litigation phase. Depending on the nature and value of the claim involved, it is sometimes possible to skip this phase and proceed immediately to litigation.


Legal proceedings

The administration of justice and application of law in South Africa is carried out by the civil and criminal courts. The ordinary courts are the district and regional magistrates’ courts, the provincial divisions of the High Court and the Supreme Court of Appeal. The Constitutional Court is the highest court for constitutional matters. Specialist courts have been established for various legal sectors, including Labour Courts, the Land Claims Court, Special Income Tax Courts, and the Electoral Court.

Determining whether to proceed in a lower court or in the High Court will depend on the type and value of the claim. Decisions of the lower courts can be passed for review or brought to appeal in the higher courts. Some types of cases can only be heard by the High Court, regardless of the quantum of the claim. As a general rule, a court will exercise jurisdiction on the basis that the defendant is resident or domiciled in the area of the court, or if the cause of action arose in that area.

Proceedings in the Magistrates and Regional Courts generally involve a trial (action) process. Motion (by way of affidavit) proceedings are limited to certain cases only. The High Court can hold both trial (action) and motion (application) proceedings. In action proceedings, the process commences with a summons and is concluded with a trial stage, where witnesses give testimonies. With application (motion) proceedings, the matter will be determined with reference only to written documents and, as a general rule, no oral evidence is permitted. Evidence is set out in affidavits and cannot be contested by cross-examination. Although motion proceedings were generally quicker and cheaper than actions, applications can now end up costing more than action proceedings. When the court is faced with an application in which it is evident that there is a material dispute of facts between the parties, it will then refer the matter to trial.

The alternative to court proceedings is to refer the dispute or claim to arbitration, although few parties are willing to agree the required costs. Arbitration can be faster than court processes and the costs of proceedings are divided equally between the parties. Disputes or decisions at the arbitration hearing can be reviewed through an application to court. Arbitrations can be made an order of court by application, for the purposes of execution.

Enforcement of a Legal Decision

The High Court deals extensively with execution against property, whether movable or immovable. The rules of the Court provide for the attachment and sale of property in order to satisfy the judgment made on the debt.

Foreign judgments are enforced in South Africa by way of provisional sentence proceedings. They are not directly enforceable. The courts which pronounced the judgment must have had the necessary jurisdiction required to entertain the case, according to the principles recognised by South African law on the jurisdiction of foreign courts.

Insolvency Proceedings

Creditor compromise procedure

A compromise can be initiated by a resolution of the board of directors, or by direction of a liquidator. They can propose a compromise to all creditors, or a specific class of, creditors and must notify the Companies and Intellectual Property Commission (CIPC) of the proposal. A receiver is appointed to supervise the process. The proposal must be approved by a majority of at least 75%, in value, of the relevant creditors or proxies present at the meeting. If the proposal is accepted, it can be presented to court for confirmation. Once confirmed, the order must be filed by the company with the CIPC within five days.


Business rescue

The objective of a business rescue is to allow financially distressed companies to restructure and reorganise, in order to avoid insolvency. A business rescue is initiated by a resolution of the company’s board, adopted by a simple majority. Supervision and control is conducted by a business rescue practitioner, appointed by the company and licensed by the CIPC. The process concludes when either:

  • the court sets aside the resolution or order that initiated the proceedings;
  • the court converts the business rescue into liquidation proceedings;
  • the practitioner files a notice of termination of business rescue proceedings;
  • the business rescue plan is rejected; or
  • the business rescue plan is adopted and a notice of substantial implementation is filed.



Liquidation proceedings for a company begin with either a court order on the request of any persons and on the grounds set out in the Companies Act 2008, a request for voluntary liquidation, or an application to court by the shareholders, the creditors, or the company for liquidation (when the company is insolvent). A liquidator is appointed to wind up the company. The liquidator collects all the assets and claims due to the company, sells them and distributes the proceeds amongst the creditors. It is essential that the creditor lodges its claim with the liquidator, regardless of whether it has a judgment or a court order. Once all the proceeds have been distributed, the liquidator files its final liquidation and distribution accounts and makes any payments set out within it. The liquidator then advises the Master of the High Court that the administration of the estate is complete.

South Africa Insolvency trend