Estudios Económicos
South Africa

South Africa

Population 60.1 million
GDP 6,965 US$
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major macro economic indicators

  2020 2021 2022 (e) 2023 (f)
GDP growth (%) -6.3 4.9 2.0 0.1
Inflation (yearly average, %) 3.3 4.6 6.9 6.5
Budget balance (% GDP) -10.6 -5.5 -4.2 -4.3
Current account balance (% GDP) 2.0 3.7 -0.5 -1.7
Public debt (% GDP) 70.7 69.9 72.1 72.8

(e): Estimate (f): Forecast *Fiscal year from 1st April to 31st March. 2022 data: FY 22-23  **Fiscal year from April 1st to March 31st. 2022 data: FY 2022/23; excluding state guarantees on public enterprise debt (7% of GDP in 2020/2021)


  • Regional power with a large, youthful population
  • Rich in natural resources (gold, coal, rare metals etc.)
  • Developed financial market
  • Floating exchange rate regime, central bank independence
  • Healthy banking system
  • Public debt mostly in rand and long maturity
  • Solid institutions and independent judiciary


  • Major energy crisis due to the mismanagement of Eskom, a state-owned power utility
  • Poverty, growing inequalities, high unemployment, social risk (crime, strikes)
  • Inefficient public spending, corruption
  • Lack of foreign direct investment
  • Weak public accounts and state-owned companies
  • Ageing and inadequate infrastructure (transport, energy)
  • Dependence on volatile foreign capital
  • Added to the FATF “grey” list in 2023


Growth severely hampered by the energy crisis

In 2022, although economic activity slowed, it slightly outperformed expectations, mainly due to the resilience of agriculture and financial services. However, the outlook has considerably worsened, primarily because of the ongoing energy crisis resulting from the mismanagement of the state-owned power utility Eskom. Despite measures to address the crisis, President Cyril Ramaphosa declared a “state of national disaster” in February 2023. Still, load-shedding has significantly increased over the past five years, and is expected to worsen in 2023, with an expected equivalent of 200 full-day cuts compared with 157 in 2022 and 22 in 2019. This will have a broad-based impact on the economy, with electricity-intensive sectors such as mining, paper, metals, and retail being the most affected. In addition, inflation, which peaked at 7.8%, is slowly decreasing but is expected to remain high through most of 2023, as the main drivers (fuel, food, electricity) will remain hot. A weaker rand, as investors’ confidence is low, is likely to fuel inflationary pressures on imported goods, including food. Inflation, combined with the high unemployment rate (above 30%), will weigh on households’ disposable income, and thus on consumption (66% of GDP). To tame inflationary pressures, the South African Reserve Bank, has hiked its benchmark repo rate by 425 bps since November 2021, to 7.75% as of April 2023. While the pace of rate hikes is likely to slow in 2023, interest rates will remain high, limiting growth in investment. However, it is expected to remain positive, as public infrastructure projects are planned - mainly in transport, logistics, water and sanitation. Net exports’ contribution will remain negative in 2023, as the decline in imports due to lower domestic consumption will be offset by a larger drop in exports, amid lower demand from key export markets (China, EU, US,) and production capacity constraints. A strong rebound in China in the latter part of the year could nonetheless benefit exports. The country’s exposure to climate risks remains very high, and the occurrence of extreme events is on the rise (for instance, the floods in April 2022 and February 2023), of which the materialization can significantly alter the outlook, notably through the potential disruptions on transport networks and the effects on the agricultural sector.


Fiscal challenges remain high, the current account deficit returns to a deficit

The country’s public deficit kept narrowing in fiscal year 2022/23, thanks to the combination of fiscal consolidation efforts (focused mainly on limiting the public wage bill) and higher-than-anticipated revenue collection in corporate and personal income taxes, and customs duties. The policy stance in the 2023/24 budget remains restrictive and focused on reducing the deficit. However, the worsening economic situation is expected to weigh on revenue. In the absence of new major tax proposals, deficit reduction will rely on expenditure staying within target, which seems unlikely as pressures to increase fiscal spending will remain high due to elevated social pressure to increase wages, while the energy crisis could lead to additional emergency spending. South Africa’s debt is mostly domestic (nearly 80%), denominated in rand and with long maturity. This makes it less vulnerable to risks associated with interest rates increases and currency depreciation. However, debt-service costs are high, absorbing about 16% of expenditure (or 5.2% of GDP). Furthermore, total gross consolidated public debt, which includes non-financial and financial corporations is close to 120% of GDP, and direct support to ailing SOEs might further increase the debt burden. For instance, the government has proposed a debt relief arrangement of ZAR 254 billion for Eskom (USD 14 billion, or 3.8% of GDP) out of the ZAR 350 billion that is publicly guaranteed, to be implemented between FY23/24 and FY 25/26.

After two consecutive years in surplus, the current account switched back to a slight deficit in 2022. It is expected to widen further in 2023. The trade surplus should continue to decline, as exports should decrease both in value (due to lower mineral commodity prices) and volume, and import prices (particularly food and fuel) remain high. The services deficit is not expected to improve, as tourism will likely be impacted by the energy crisis and transport costs will weigh. The secondary income deficit will be sustained by SACU transfers and foreign workers’ remittances to neighbouring countries. Extraordinarily high dividend payments on direct investments of mining sector companies in 2022 are expected to fade, leading to a slightly smaller primary income deficit. In turn, this would limit the deterioration in the current account deficit. Financing of the current account deficit will depend mainly on volatile portfolio investment, as investor confidence remains fragile. Foreign exchange reserves covered around 5 months of imports in January 2023.


ANC under considerable pressure

While the African National Congress (ANC) remains the dominant political force, its popularity has been steadily declining over the past years, with recent polls indicating support below 50%. President Cyril Ramaphosa, who has been in office since 2018, survived the “Phala Phala” misconduct scandal and managed to secure the leadership of the ANC ahead of the 2024 elections. Reform implementation has been slow during his term due to the important divisions within the ANC. The Eskom crisis, the strikes at Transnet in 2022 or the inclusion of South Africa on the FATF’s grey list in February 2023, illustrate the governance issues that the country faces. This growing political fragility is compounded by the population’s frustration. In addition to structurally high unemployment, poverty, inequality and criminality, the population has had to deal with the erosion of their living standards due to high inflation and are also increasingly frustrated with regular power cuts (up to 12 hours of load-shedding a day). This could lead the ANC to lose its absolute majority in Parliament for the first time since 1994, although the opposition remains very fragmented. On the external front, South Africa can still count on stable relations with its neighbours, but the relations with the West are becoming more complex, as the government maintains a neutral stance in the Russia-Ukraine war. The joint naval exercises conducted with China and Russia in February 2023 have led to both domestic and international criticism from traditional partners such as France, the UK or the US, as it was perceived as a move towards closer ties with Russia. 


Last updated: April 2023


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 Insolvency trend
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