South Africa's Next Steps for Trade Liberalization - Case Study

The COVID-19 lockdowns that started in March 2020 (at time of writing, South Africa is at Level 1 of lockdown) devastated an already weak economy. Before the pandemic, more than 10 million people were unemployed – now it is more than 11 million. Using the expanded definition, the unemployment rate is over 42%. The pandemic and lockdowns served to expose the extent to which the ill-considered ideological and policy positions of the government had hobbled people's economic fortunes.

The country's economic prospects are brittle at best. In early April 2021, the International Monetary Fund forecast that the global economic growth rate will be 6%. South Africa's economy is projected to experience growth of 3.1% in 2021, and 2% in 2022. This falls short of sub-Saharan Africa's 3.4% for 2021

and 4.0% for 2022. All emerging market and developing economies will attain 6.7% growth in 2021 and 5.0% in 2022.

With the South African government on the verge of adopting a controversial amendment to the country's Constitution to enable government to confiscate property without compensation, it is likely that even these negligible growth projections will not be achieved as international and domestic investors scamper to safeguard their assets.

South Africa bears the legacy of colonial exploitation and the ravages of Apartheid; ignoring the policy failures of the government since 1994 however will only ensure that economic hardship and poverty endure. One of the vital areas in which the country needs to shift and improve its policy framework is trade. With the potential offered by the Africa Continental Free Trade Area (AfCFTA), there exists momentum for South Africa and its African peers to pursue reforms and policies that will ease the flow of goods, services, and most importantly intellectual capital, across borders.

Chris Hattingh

Chris Hattingh is Deputy Director at the Free Market Foundation. He sits on the Foundation's Executive Committee and Health Policy Unit. He is a member of the advisory council of the Initiative for African Trade and Prosperity, as well as a Senior Fellow at African Liberty.

Publish date: 26 October 2021
Views: 31 451

Chris Hattingh, trade, innovation, growth, liberalisation, Trade and Innovation

The views expressed in the article are the author’s and are not necessarily shared by the members of the Foundation. This article may be republished without prior consent but with acknowledgement to the author.

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