Ekonomske analize
South Africa

South Africa

Population 56.5 millions
GDP 6,180 US$
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Business Climate
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major macro economic indicators


  2016 2017 2018 (e) 2019 (f)
GDP growth (%) 0.6 1.3 0.8 0.5
Inflation (yearly average, %) 6.3 5.3 4.7 5.4
Budget balance (% GDP)* -3.8 -4.4 -4.3 -4.4
Current account balance (% GDP) -2.8 -2.4 -3.7 -3.5
Public debt (% GDP)* 50.6 52.7 55.8 56.2

(e): Estimate. (f): Forecast. *Fiscal year from 1st April - 31st March. 2019 data: FY18/19.


  • Regional/continental economic and political powerhouse
  • Rich in natural resources (gold, platinum, coal, chromium)
  • Advanced services sector (particularly financial)
  • Legislative environment protects investors


  • Poverty and inequalities are sources of social risk (crime, strikes and demonstrations)
  • High unemployment (over 27%) and shortage of skilled labour
  • Ageing infrastructure (transport, energy)
  • Dependent on volatile flows of foreign capital


Activity to accelerate but subject to multiple constraints

Growth is expected to pick up in 2019, but will remain relatively weak. In particular, investments should make a more positive contribution: the adoption of a new mining charter in September 2018, after several years of debate, brings more certainty to investors in the sector. However, private investment growth will remain cautious as the 2019 general elections approach, and uncertainties about land reform, which could allow expropriations without compensation, will continue to be a cause for concern. Public investment should benefit as budgets shift towards upgrading infrastructure. Nevertheless, as with public consumption, its contribution will be restricted by budgetary constraints. As a result, the construction sector, which will also continue to suffer from the recurring difficulties affecting state-owned enterprises, is not expected to experience a significant rebound. Exports could benefit from the weaker rand and provide support to the mining, agriculture and automotive sectors. However, structural difficulties in these sectors – namely high production costs, exposure to climate shocks and weak domestic demand respectively – will continue to dampen their expansion. Constrained in particular by the VAT increase in 2018, private consumption could rebound, thanks to the introduction of the minimum wage, which is expected to support trade activities. However, monetary policy tightening (set in train in November 2018), weak credit growth, high unemployment and inflationary pressures will further stymie growth in consumption.


An economy exposed to twin deficits

The budget deficit is expected to remain high in fiscal year 2019/20. As with growth, revenues are expected to rise only slightly, while no tax increases are expected. Indeed, after hiking VAT in 2018, the Treasury has said it plans to refrain from raising income and corporate taxes. The cost of debt service, which absorbs almost 14% of revenues, will further burden spending. With the country holding general elections, the likelihood of budget cuts is reduced. However, spending increases are expected to remain limited, while the economic stimulus and recovery plan presented in September 2018 will be financed by a revision of the budgetary guidelines. Despite the reforms, the financial situation of state-owned companies, particularly power utility Eskom, remains worrying and poses a risk to public finances. Ultimately, the sustainability of the debt, whose burden is set to continue to increase, could be threatened. South Africa will remain exposed to further credit rating downgrades, which would affect the cost of borrowing. However, the low proportion of foreign currency debt (about 10%) and short-term debt mitigates the risk. Exposure to the debt of state-owned entreprises could be a threat to the banking sector's health, but in a difficult economic environment, the sector continues to demonstrate strength.

In 2019, the current account will remain in deficit, mainly due to profit repatriation by foreign companies, which is affecting the income account. Payments to SACU partner countries will maintain the deficit in the transfer balance. The increase in the trade surplus, thanks in particular to rand depreciation, should allow the current account deficit to narrow slightly. Deficit financing will still largely depend on portfolio investment flows, which could be volatile in 2019. Domestic political uncertainty, weak growth, more negative market sentiment towards emerging countries and tighter US monetary policy could fuel capital flight. This would increase the pressure on the rand and foreign exchange reserves, which cover about 4.5 months of imports.


Land reform at the heart of the 2019 elections

Succeeding Jacob Zuma – who was forced to resign by his own party, the African National Congress (ANC) –, Cyril Ramaphosa became President in February 2018. Just over a year on, the ANC and Mr Ramaphosa will be judged at the ballot box during the 2019 general elections, which will probably be held in May. However, the enthusiasm that followed his appointment was quickly dampened as the new President struggled with the country's socio-economic challenges, including anaemic growth, endemic unemployment, persistent inequalities, and rising inflationary pressures. The President's efforts to restore the credibility of governance and anti-corruption efforts in the aftermath of the Zuma era, which was tainted by the State Capture inquiry, took a blow following the admission of questionable payments made to finance his campaign to lead the ANC. As a result, for the first time since the end of apartheid, the ANC could lose its majority. The campaign will be dominated by the divisive issue of expropriations without compensation to accelerate the redistribution of land to black owners. This issue will also be of concern to investors and could worsen the perception of the business climate if the proposals in this area infringe property rights. South Africa’s relatively favourable business environment has deteriorated, as evidenced by the fact that the country has slipped 48 places in the Doing Business ranking over the past decade and came 82nd out of 190 countries in the 2019 edition.


Last update: February 2019



Electronic Funds Transfers (ETF), including SWIFT payments and international transfers, are used for payments in foreign currencies. Cheques are rarely used, outdated, expensive to process, and vulnerable to fraud. Cheque payments are also subject to a clearing period of 10 working days. The majority of businesses no longer use them. Cash payments do still occur but have the same disadvantages. Letters of credit are issued between banks and serve as a guarantee for payments made to a specified person under specified conditions, including imports and exports. In most cases, irrevocable credits and confirmed irrevocable credits are issued. The terms and conditions can be onerous and should be fully understood before acceptance of these letters. Parties can sometimes secure payment on delivery via bank guarantee. Monies are deposited into a bank account, and the bank in turn issues a guarantee for payment on confirmation of delivery. This type of payment is mainly used in matters pertaining to property transfers.

Debt collection

Amicable phase

The National Credit Act states that the creditor must try to contact the debtor via a phone call, before issuing a formal letter of demand (outlining the outstanding obligation, and sent via email, registered post, or delivered by hand). Once this is done, the parties attempt to negotiate a settlement over an acceptable period of time. As creditors are not obliged to accept payment in instalments, they can opt to proceed with legal action to secure a full one-time payment. This phase is much less costly than immediately proceeding with legal action. This phase also provides greater insight for preparing for the litigation phase. Depending on the nature and value of the claim involved, it is sometimes possible to skip this phase and proceed immediately to litigation.


Legal proceedings

The administration of justice and application of law in South Africa is carried out by the civil and criminal courts. The ordinary courts are the district and regional magistrates’ courts, the provincial divisions of the High Court and the Supreme Court of Appeal. The Constitutional Court is the highest court for constitutional matters. Specialist courts have been established for various legal sectors, including Labour Courts, the Land Claims Court, Special Income Tax Courts, and the Electoral Court.

Determining whether to proceed in a lower court or in the High Court will depend on the type and value of the claim. Decisions of the lower courts can be passed for review or brought to appeal in the higher courts. Some types of cases can only be heard by the High Court, regardless of the quantum of the claim. As a general rule, a court will exercise jurisdiction on the basis that the defendant is resident or domiciled in the area of the court, or if the cause of action arose in that area.

Proceedings in the Magistrates and Regional Courts generally involve a trial (action) process. Motion (by way of affidavit) proceedings are limited to certain cases only. The High Court can hold both trial (action) and motion (application) proceedings. In action proceedings, the process commences with a summons and is concluded with a trial stage, where witnesses give testimonies. With application (motion) proceedings, the matter will be determined with reference only to written documents and, as a general rule, no oral evidence is permitted. Evidence is set out in affidavits and cannot be contested by cross-examination. Although motion proceedings were generally quicker and cheaper than actions, applications can now end up costing more than action proceedings. When the court is faced with an application in which it is evident that there is a material dispute of facts between the parties, it will then refer the matter to trial.

The alternative to court proceedings is to refer the dispute or claim to arbitration, although few parties are willing to agree the required costs. Arbitration can be faster than court processes and the costs of proceedings are divided equally between the parties. Disputes or decisions at the arbitration hearing can be reviewed through an application to court. Arbitrations can be made an order of court by application, for the purposes of execution.

Enforcement of a Legal Decision

The High Court deals extensively with execution against property, whether movable or immovable. The rules of the Court provide for the attachment and sale of property in order to satisfy the judgment made on the debt.

Foreign judgments are enforced in South Africa by way of provisional sentence proceedings. They are not directly enforceable. The courts which pronounced the judgment must have had the necessary jurisdiction required to entertain the case, according to the principles recognised by South African law on the jurisdiction of foreign courts.

Insolvency Proceedings

Creditor compromise procedure

A compromise can be initiated by a resolution of the board of directors, or by direction of a liquidator. They can propose a compromise to all creditors, or a specific class of, creditors and must notify the Companies and Intellectual Property Commission (CIPC) of the proposal. A receiver is appointed to supervise the process. The proposal must be approved by a majority of at least 75%, in value, of the relevant creditors or proxies present at the meeting. If the proposal is accepted, it can be presented to court for confirmation. Once confirmed, the order must be filed by the company with the CIPC within five days.


Business rescue

The objective of a business rescue is to allow financially distressed companies to restructure and reorganise, in order to avoid insolvency. A business rescue is initiated by a resolution of the company’s board, adopted by a simple majority. Supervision and control is conducted by a business rescue practitioner, appointed by the company and licensed by the CIPC. The process concludes when either:

  • the court sets aside the resolution or order that initiated the proceedings;
  • the court converts the business rescue into liquidation proceedings;
  • the practitioner files a notice of termination of business rescue proceedings;
  • the business rescue plan is rejected; or
  • the business rescue plan is adopted and a notice of substantial implementation is filed.

Liquidation proceedings for a company begin with either a court order on the request of any persons and on the grounds set out in the Companies Act 2008, a request for voluntary liquidation, or an application to court by the shareholders, the creditors, or the company for liquidation (when the company is insolvent). A liquidator is appointed to wind up the company. The liquidator collects all the assets and claims due to the company, sells them and distributes the proceeds amongst the creditors. It is essential that the creditor lodges its claim with the liquidator, regardless of whether it has a judgment or a court order. Once all the proceeds have been distributed, the liquidator files its final liquidation and distribution accounts and makes any payments set out within it. The liquidator then advises the Master of the High Court that the administration of the estate is complete.

South Africa
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