South Africa has ranked 64th out of 69 countries in the IMD World Competitiveness Rankings for 2025, highlighting ongoing challenges with governance, infrastructure, and job creation.

According to the report, South Africa continues to struggle with high unemployment rates and lack of employment opportunities, as well as corruption and poor government effectiveness.

The report also cites poorly located and inadequate infrastructure that limits social inclusion and economic growth, along with rising public debt levels amid a shrinking fiscal space as key challenges. This is the lowest ranking for South Africa since 2021.

Reacting to the ranking, economist Dawie Roodt said the core issue is not economic but political. “The main reason behind all of this is an ineffective government, a corrupt government with the wrong ideologies and policies. So the reason why we keep on slipping is because, let’s call it by name, is because of the ANC,” he said.

He added that the biggest barrier to investment is “a lack of confidence in the South African government, a lack of confidence in South Africa’s economic future.”

On balancing developmental policies with investor confidence, Roodt said, “That’s the wrong approach. It’s not the one or the other, it’s both combined. By developing the economy, you will also address some other social imbalances.”

Economics professor Waldo Krugell, from the North-West University, also said sentiment plays a key role. “There was a lot of optimism when the GNU (Government of National Unity) initiated last year, but a lot of that momentum has been lost,” he said. “When it comes to sentiment, that’s where we’re struggling at the moment; the reform process is too slow.” Krugell said regulatory reform is critical.

“You can make these regulatory reforms without increasing taxes or increasing borrowing. When it’s easier and cheaper to do business, we should see a boost in confidence, followed by increased investment, and ultimately growth and job creation.” He said: “The biggest barrier at this stage to attracting more domestic and foreign investment is the cost of doing business,” and that policy uncertainty was also a significant problem.

Professor Bonke Dumisa, an independent economic analyst, said South Africa’s poor competitiveness ranking is largely due to “no political will for those who are in political power to make sure that the economy grows faster than the population growth rate.”

He criticised regulatory reform efforts as being compromised by “politicians and bureaucrats who are involved in the issuing of those licenses.”

Dumisa added that many domestic investors are “on strike” and unwilling to reinvest locally, choosing instead to send profits abroad, which worsens inequality. “They want to make lots of money with very little compliance and send it abroad, without the South African economy benefiting from that.” He stressed that meaningful reform must go beyond “big words used by politicians” and must deliver transparent, inclusive economic growth.

DA MP and party spokesperson on Trade, Industry & Competition Toby Chance said South Africa’s competitiveness crisis “demands urgent regulatory reform.” He said policies like the Employment Equity Amendment Act, Expropriation Act, and BBBEE Act are “anti-growth” and argued that “this economy must grow for jobs to be created.”

“The Organisation for Economic Co-operation and Development, in its latest report on SA, finds our regulatory environment is the most restrictive of the countries surveyed.” He added that the Department of Trade, Industry and Competition is expected to table an Omnibus Bill that aims to reform multiple economic laws. “This bill, to be effective, must reduce red tape and the legislative and regulatory impediments in these laws that undermine competitiveness and add to the cost of doing business,” Chance said.

THE MERCURY

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