Structural Reforms to Bolster South Africa’s Business Environment
Selected Issues Papers, March 6, 2026
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- Structural Reforms to Bolster South Africa’s Business Environment
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Bibliographic details
- Authors: Tidiane Kinda, Nasha Mavee
- Published: March 6, 2026
- Series: Selected Issues Papers
- DOI: https://doi.org/10.5089/9798229040563.018
Overview and purpose
- Authors: Tidiane Kinda, Nasha Mavee
- Publication date: March 6, 2026
- Purpose: To analyze how product market regulations affect firm growth and productivity in South Africa and to identify product-market reforms that could boost business dynamism and job creation.
Key empirical findings
- South Africa has one of the most restrictive business environments among peers, with particularly burdensome government regulations for licensing and permitting.
- Burdensome regulations, weak procurement practices, and limited competition:
- Pose risks to business confidence and investment.
- Stifle innovation and increase compliance costs.
- Disproportionately burden small firms, inhibiting job creation potential.
- Econometric analysis using cross-country firm-level data finds that product market regulations, notably licensing and permitting, hinder firms’ growth and productivity.
- The negative associations are especially pronounced for South African firms and for small firms in particular:
- High regulatory burden is associated with slower sales growth.
- High regulatory burden is associated with weaker employment growth.
- High regulatory burden is associated with lower productivity.
Policy implications and recommendations (as presented)
- The paper identifies specific product-market reforms that could help:
- Boost business dynamism.
- Support job creation.
- Contribute to addressing South Africa’s weak growth and high unemployment.
- Reform focus areas highlighted in the analysis include reducing regulatory burdens related to licensing and permitting, improving procurement practices, and enhancing competition—particularly measures that alleviate disproportionate burdens on small firms.
Subject classification and keywords
- Subject: Business environment, Economic sectors, Macrostructural analysis, Production, Productivity, Structural reforms, Total factor productivity
- Keywords: Africa, business environment, firm-level performance, Global, IMF country, IMF staff, issues paper, product market regulation, product market regulations, product-market reform, Productivity, South Africa, structural reforms, Total factor productivity
Content in this bundle
- Sipea2026017