## Structural Reforms to Bolster South Africa’s Business Environment

_Selected Issues Papers, March 6, 2026_

## Source details

**Canonical URL:** [Structural Reforms to Bolster South Africa’s Business Environment](https://www.imf.org/en/publications/selected-issues-papers/issues/2026/03/06/structural-reforms-to-bolster-south-africas-business-environment-574497)

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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

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### 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

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_Source: https://www.imf.org/en/publications/selected-issues-papers/issues/2026/03/06/structural-reforms-to-bolster-south-africas-business-environment-574497_