SA's economic freedom ranking stalls amid policy questions

South Africa sits 87th of 165 countries in the Economic Freedom of the World 2026 annual report, a middling position it has held for several years. The report, drawing on independently published data to measure government policy across five categories, assigns the country an absolute score of 6.63 out of 10. That figure allows comparison across time, and the comparison is unflattering. Since the score peaked in 2000, the overall rating has drifted slowly downward. South Africa is less economically free today than it was at the turn of the century, and the report attributes that decline squarely to the choices of those who hold public power.

The index is built from five areas: size of government, legal system and property rights, sound money, freedom to trade internationally, and regulation. Each is a manifestation of government policy, which is what makes the findings a matter of accountability rather than mere economics. Of the five, only sound money scores higher than it did 25 years ago. Even that relative bright spot carries caveats, since inflation and currency weakness remain live problems.

In effect, the report reads as an audit of the state’s performance against its own essential mandates. It identifies high crime, precarious property rights, mismanagement of government resources, barriers to international trade and financial transactions, and heavy business regulation, particularly around labour relations. None of these are private-sector failures. Each traces back to decisions made by government, and the report’s authors argue that the numbers offer policymakers a clear indication of where their priorities should lie if prosperity and civility are the goal.

The weakest area, and the one with the greatest consequences for productivity and living standards, is the legal system and property rights. The report treats these as foundational: without secure private property rights, it argues, there are no other rights. The author, Richard J Grant, professor of finance and economics at Cumberland University and a senior associate at the Free Market Foundation, goes further. Invoking human rights while attacking private property rights, he contends, amounts to intellectual fraud that feeds authoritarianism in government and the mob alike. In his framing, the individual without property rights has no standing against government oppression.

The report is equally pointed about the state’s failure to discharge its core functions. Grant’s central critique of government is not that it does too much, but that it fails to provide the few services and protections regarded as essential. Where a government cannot deliver a reasonable quality of police protection and hinders citizens’ ability to protect themselves from ubiquitous crime, he writes, it becomes unseemly for it to rationalise spending resources on other activities. As a government grows beyond its competence, its legitimacy dissipates. A failure to provide impartial courts and a legal system of integrity, the report adds, breeds disrespect for the law generally, and that disrespect can erode individual self-restraint to the point where policing becomes increasingly futile. Proliferating laws and regulations that detract from a citizen’s ability to lead a peaceful and productive life deepen the problem.

Monetary governance receives its own scrutiny. When the inflation target is 3% rather than zero, the currency is programmed to lose value and serves as a less reliable unit of account. With inflation currently running above 4%, disproportionately above target, problems across the economy are exacerbated. While inflation problems are always central bank problems, the report looks beyond the Reserve Bank for their sources. General government spends over a third of final production as measured by GDP, yet spending exceeds the government’s willingness or ability to raise tax revenue. Government debt has been rising annually by more than 5% of GDP in recent years, and pressure on a central bank to monetise that debt has always been a powerful motivation to inflate the currency.

The fiscal consequences compound. Higher inflation pushes market interest rates upward, worsening economic activity generally, while larger budget deficits put the state in competition with businesses and individuals for loanable funds. That reduces the capital available for private investment and operations. As government grows, it becomes harder to argue that borrowed funds will be put to higher-value uses than those forgone in the private sector.

Meanwhile, on regulation, the report identifies broad regulatory overreach that hampers business activity and destroys the labour market. When people are not free to start and run businesses, hire the best employees, or seek the most beneficial work, the result is an anaemic economy in which a third of the labour force is officially unemployed.

The historical record cited in the report is unambiguous: countries with greater economic freedom are more prosperous, with higher average incomes and lower poverty rates. Economic freedom is not the same as political freedom, but the two are highly correlated, and the highest-ranking countries tend to score highest on personal freedom as well. The benefits transcend culture and political structure. Whatever the culture, societies that allow greater economic freedom are more prosperous and harmonious, have cleaner environments, and are less corrupt than they would otherwise have been. Governments cannot create lasting prosperity, the report concludes, but they can create the conditions in which lives and property are respected and people can work and build in safety. Whether South Africa’s office-holders will treat the declining score as a mandate to do so remains the open question.