Reasons for South Africa’s economic struggles

Reasons for South Africa's economic struggles
South Africa’s economy

Reasons for South Africa’s economic struggles

South Africa is the second largest economy in Africa. Though South Africa represents a good infrastructure, great scientific innovation capacity and sound financial system, its economy is currently in a poor state. This article highlights the reasons for South Africa’s economic struggles.

Reasons for the struggling South Africa’s economy

High crime rates

Severity of financial crimes and other forms of crimes is a reality that South Africa faces every day. Almost all forms of crimes exist within all the regions of South African society.

According to 2018 statistics, 57 people get murdered in a day in South Africa. High rate of crime in South Africa is a major deterrent to economic growth.

This very nature of crime in South Africa is also deterrent to conducting business with other countries. The nature of crime scares away potential investors within and outside South Africa.

Because of this, both local and foreign companies are less inclined to run businesses in South Africa. Firms spend huge amounts of cash on safety and security.

The state of insecurity is likely to put investors in a condition of almost not engaging in international business with South Africa in  future.

The large amount of money businesses spend  in safety of businesses translate to high cost of goods and services in South Africa.

Because of this, most South Africans feel that they all suffer the consequences of high rate of insecurity in their country.

Corruption in the country

Despite its great performances in various key measurements, South Africa suffers widespread corruption. The efforts of the country in fighting corruption are not helping. Actually, South Africa has a well developed anti-corruption framework.

The problem is that laws against corruption are not adequately enforced. Because of this, corruption is still a huge economic problem in the country.

Bribery is rampant in the central government. Public procurement is also prone to corruption. This is a threat to both public and private investors in the country.

Corruption in police service is a significant risk when operating in South Africa. Many South African citizens experience everyday bribes taken along traffic lines.

Police officials in South Africa sometimes take bribes to protect foreign business owners from xenophobic conflict.

Corruption is everywhere in South Africa. Because of this, many foreign investors are scared away from investing in the country. Countries trading with South Africa internationally are also drove away by this vice. This in turn affect the country economically and is one of the reasons for South Africa’s economic struggles.


South Africa has the worst statistical measure of wealth distribution in the world. There is high inequality in distribution of public resources in the country. Because of this, South Africa experiences unbalanced regional development.

In fact the most contributing factor of poverty in South Africa is inequality. This is because, inequality makes some regions richer than others. Not all regions in  South Africa have access to equal employment or education opportunities.

Corona Virus invasion in China

China is the biggest international trade partner of South Africa.

Because of corona virus invasion in China, South Africa’s exports to China are likely to be severely affected. There was a decline of 10% on exports to China last year. This has in turn, decreased South Africa’s GDP.


South Africa need to come up with ways of quickly dealing with their economy. There is a need to address cases of crime causing insecurity in the country.

There is a need to adequately enforce anti-corruption laws put in place. If these matters are resolved, the economic struggles shall be a well-forgotten story.



Related Posts