South Africa Economy

South Africa Economy


  • Basic data
  • Public finances and the state budget
  • Banking system
  • Tax System

Basic data

Slow GDP growth is a long-term problem that the South African government is failing to address. It can be expected that in the next three years the average growth of the South African economy will not exceed 1.8%. This is a significantly lower projection than comparable so-called emerging economies. However, if we leave aside the unprecedentedness of the past two years, already in the decade preceding the pandemic, the average GDP growth rate of South Africa was lower than 1%. This is a long-term problem that the South African government is unable to solve. According to, this is closely linked to unemployment in South Africa, which already exceeds 35% and is thus the highest in the world, which is related, among other things, to the fact that, according to the so-called Gini coefficient, South Africa is also the country with the greatest social differences. South Africa is currently facing significant inflationary pressures, mainly due to the globally increased price of fuel, food and energy.

Despite the high degree of diversification of the South African economy and the relative development of its industrial sectors, the extraction and export of mineral resources has played a crucial role, especially in the last two years, thanks to their globally increased price level, which has already resulted in higher than the expected revenues of the state treasury. On the other hand, however, the export of mineral wealth makes the South African economy vulnerable to external shocks in the area of ​​the global market for mineral raw materials, as well as to the ongoing monetary restrictive policies of the central banks of Western powers, especially the USA. However, a shift away from the focus on this primary economic sector has been visible since the 1990s, and the economic growth of South Africa is primarily ensured by the tertiary sector, such as retail, financial services, tourism and telecommunications.

Pointer 2019 2020 2021 2022 2023
GDP growth (%) 0.2 -7 4.9 2.1 2.5
GDP/population (USD/PPP) 13,340.60 13,685.00 14,630.00 15,390.00 15,980.0
Inflation (%) 4.1 3.2 4.6 4.8 4.6
Unemployment (%) 28.7 29.2 34.8 35.1 35.2
Export of goods (billion USD) 89.7 85.7 123.4 114 110.4
Import of goods (billion USD) 88.1 68.9 93.3 97.3 99
Trade Balance (Billion USD) 2.7 17.8 29 15.8 10.6
Industrial production (% change) -0.9 -11.3 6,7 2.5 3.5
Population (millions) 58.6 59.3 60 60.8 61.5
Competitiveness 56/63 59/63 62/64 ON ON
OECD export risk 04.VII 04.VII 04.VII ON ON

Source: EIU, OECD, IMD

Public finance and state budget

Public finance 2021
State budget balance (% of GDP) -7.3
Public debt (% of GDP) 73
Current account balance (billion USD) 13.2
Taxes 2022
AFTER 28% (27% from 1/4/2023)
F.O 18 – 45%
VAT 15%

As a rule, the largest amount of state budget funds was also allocated to education this year, namely 23%. In order, the second highest item of the state budget is also traditionally represented by social security expenses, which account for 17% of expenses. It should be mentioned here that currently in South Africa more than 30 million people, i.e. approximately half of the population, receive income from the state. This includes approximately million civil servants as well as all forms of social benefits and contributions. Just for comparison, the private sector in South Africa employs roughly 12 million people. In other words, there are already two people receiving benefits or contributions for one working person. In the third place of state budget expenditures is the ever-increasing state debt management, which accounts for 17% of the budget expenditures of the Republic of South Africa.

Higher than expected revenues of the South African state coffers due to the global increased demand and the price of mineral raw materials, which are its most important export item, currently make it possible to reduce the deficit of its state budget, while this trend is also expected in the next 2-3 years. As for the debt-to-GDP ratio, it is currently around 70%, while its growth should stop in the 2024/25 budget year at a value of 75.1% of GDP. However, the real indebtedness of the Republic of South Africa is at least 10% higher, as the stated values ​​refer only to the so-called debt of the central government and do not include the state-guaranteed debts of (semi-)state-owned enterprises (SOEs). Directly related to this is the increasingly expensive management of the state debt, which accounts for 17% of the JAR budget expenditures and is thus the third largest expenditure item of the JAR budget.

Banking system

South Africa has historically had a very well developed financial and banking system. Founded in 1921, the South African Reserve Bank (SARB) is a private limited company governed by a fifteen-member bank board. The governor and three vice-governors are appointed by the president of the republic. On the SARB website, you can find an up-to-date list of banking institutions in South Africa, including branches of foreign banks, as well as the current interest rate and other macroeconomic or market indicators. Over 80% of the South African financial market is controlled by banking companies Standard Bank Group, FirstRand Group (FNB), Barclays Africa Group (ABSA Bank) and Nedbank Group. In 1983, the Development Bank of Southern Africa was established. The oldest bank is FNB, which was founded in 1838.

As regards letters of credit and other banking services connected with international business, services of this type are offered in the classic form by all the above-mentioned domestic banks and also by branches of international banks such as Citibank, BNP Paribas, Deutsche Bank or HSBC. Insurance is a significant part of the financial market in South Africa. More than three dozen insurance companies operate in the country. In the short-term insurance sector, which includes risks associated with business activity and the operation of motor vehicles, we can name, among others, Discovery Ltd, Old Mutual, OutSurance, Budget, MiWay, Affinity Health, Santam, Liberty Life, Hollard Commercial Insurance, 1st for women, etc. Overview insurance companies and commercial reinsurance companies is available on the South African Association of Insurance Companies website.

Tax system

All taxes are described in detail on the South African Revenue Service (SARS) website. The types of taxes and applicable rates for the current financial period are also summarized in the so-called Tax Pocket Guide. Roughly a third of the state budget’s income is generated by indirect taxes, mainly VAT (uniform rate of 15%). The main part of the income of the state budget is income tax, which is regulated by the Income Tax Act. Any income generated by a South African resident both domestically and abroad becomes subject to tax. For tax purposes, a South African resident is any natural person who has spent more than 549 days in South Africa in three consecutive years, with the minimum number of days spent in one year not being less than 91.

Personal Income Tax is divided into 6 tax bands depending on the amount of income, is progressive in nature and consists of two parts – flat rate and percentage (calculated from the tax base). The lowest rate is 18% and the highest is 45%. Corporate Income Tax has a fixed rate of 28%. There are reduced rates for small and medium-sized companies. In addition, 20% tax on dividends, 15% tax on transfers (royalties), gift tax (20% and 25% if the value of the gift is greater than 30 million rand) and property tax of 20% apply in South Africa. The income of the state obtained in this way is redistributed for the most part through the so-called Sector Education and Training Authority (SETA), more also on the website of the Ministry of Labor (Department of Labour). Both employees and employers pay mandatory unemployment insurance contributions (so-called Unemployment Insurance Contributions).

The South African tax system can be considered stable, although it represents a significant burden for domestic entities, especially with regard to the FO income tax, which has a strongly progressive character. Therefore, no significant changes can be expected in the foreseeable future.

South Africa Economy