OECD Economic Surveys: South Africa

Frequency :
Irregular
ISSN :
2218-614X (online)
ISSN :
2218-6131 (print)
DOI :
10.1787/2218614x
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OECD's periodic reviews of South Africa's economy.  Each review examines recent economic developments, policy and prospects, and presents a series of recommendations.
Also available in: French
 
OECD Economic Surveys: South Africa 2015

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Author(s):
OECD
17 July 2015
Pages :
131
ISBN :
9789264236424 (PDF) ; 9789264236431 (EPUB) ; 9789264236370 (print)
DOI :
10.1787/eco_surveys-zaf-2015-en

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This 2015 OECD Economic Survey of South Africa examines recent economic developments, policies and prospects. Special chapters cover infrastructure and business regulation; tax policy and inclusive growth.

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  • Basic statistics of South Africa, 2014

    This Survey was prepared in the Economics Department by Jens-Christian Høj and Christine Lewis under the supervision of Andreas Wörgötter. The draft has benefited from valuable background research by Theresa Alton and Boipuso Modise, seconded from the South African National Treasury. Research assistance was provided by Corinne Chanteloup and secretarial assistance by Heloise Wickramanayake and Mercedes Burgos. The draft also benefited from valuable background research by Reinhard Schiel and Murray Leibbrandt from SALDRU at the University of Cape Town, Lawrence Edwards from the University of Cape Town, Neil Rankin from Stellenbosch University, Chris Darroll from SBP and Zavareh Rustomjee. Falilou Fall contributed to the finalisation of the draft for publication.The Economic Survey of South Africa was discussed by the Economic Development and Review Committee on 27 May 2015, with participation of representatives of the South African government and representatives of Brazil and the Czech Republic as lead speakers.This Survey is published under the responsibility of the Secretary-General of the OECD.The previous Economic Survey of South Africa was issued in March 2013.Information about the latest as well as previous Surveys and more information about how Surveys are prepared is available at www.oecd.org/eco/surveys.

  • Executive summary

    Since 1994 South Africa has made great progress in reducing absolute poverty by rolling out social grants for pensioners, the disabled and children. Access to education, housing, water, electricity and other services has been greatly broadened. As a result, well-being has increased substantially. A sound macroeconomic framework with a stable fiscal position, inflation targeting, a floating exchange rate and largely unimpeded international capital flows underpinned this progress and has earned South Africa the confidence of financial markets.

  • Assessment and recommendations

    Since the early 1990s, South Africa has gone through a democratic transition with the development of broad-based consultation in the policy formation process, a sound macroeconomic policy framework, and strong institutions to protect the rule of the law. Social progress has been achieved with redistributive grants and wide access to key public services, notably education, health, housing, water, sanitation and electricity. These services account for 60% of government spending (Statistics South Africa, 2014).

  • Progress in main structural reforms

    This annex summarises key recommendations made in previous Surveys and actions taken since the OECD Economic Survey of South Africa published in March 2013.

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  • Expand / Collapse Hide / Show all Abstracts Thematic chapters

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    • More effective infrastructure and business regulation

      Growth has been insufficient to lower the persistently high level of unemployment, particularly among black low-skilled workers. Achieving a sustained increase in growth requires a stronger performance of the business sector. This chapter analyses how such a stronger performance can by supported by better infrastructure and business regulation. Infrastructure investment is being increased to address bottlenecks in many network sectors. However, a lack of an integrated planning approach may hamper optimal project selection. Moreover, there seems to be little focus on applying economic instruments to use infrastructure more effectively. Small and medium sized enterprises are key to raise private sector employment. However, they are faced with a large range of barriers that hinders their creation and expansion, including high levels of regulation and skill shortages. In addition, their growth potential is hampered by spatial use of land that limits economic opportunities and induces high commuting costs, particularly for low-wage workers, which reduces access to jobs.

    • How can the tax system meet revenue raising challenges?

      Reforms over the past two decades have produced a well-balanced, modern tax system. However, considerable revenues will be needed in the years ahead to expand social spending and infrastructure in order to raise growth and well-being. The challenge is to generate these revenues without penalising growth or exacerbating inequality. Income taxes represent around half of total tax revenue but are levied on small tax bases, partly reflecting the distribution of income. A revenue source less detrimental to growth is consumption taxes, which are mostly raised by the relatively broad value-added tax. Nonetheless, there is some scope to raise further revenue, particularly through broadening the base of these taxes. Revenues from property taxation are currently limited by the inefficient municipal rates system, which does not function well. An important additional source of revenue is environmentally related taxes. In the design of the tax system, consideration should also be given to the appropriate taxation of the natural resources sector, which remains an important issue for a resource-rich country like South Africa.

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