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Cape Town - According to the latest Economic Freedom of the World Report, South Africa has too much red tape for potential international investors.
Temba Nolutshungu of the Free Market Foundation, who presented the report to the media over the weekend, said that such red tape causes investors to take their money elsewhere.
“In terms of our rating on exchange controls in the world, we also scored very low. And at the end of the day they cost us in terms of economic freedom. This sends a negative signal to potential investors and it means less foreign investment is flowing into the country.
“South Africa is on the brink of a recession where Ethiopia scored a growth rate of 10%, Mozambique 7.4%, Rwanda 7%, and Tanzania 7% in 2014. We are no longer the biggest economy on the African continent. When we stopped Mark Shuttleworth from taking his money out of the country we violated his economic rights,” he said.
Taxes and visas a deterrent
He further explained that to keep foreign investment attractive, taxes must also be kept low. “South Africa’s tax system is unfriendly and it does not work for business. And state-owned enterprises are not subjected to the same rules as the private sector. The country has too many regulations which impede business,” Nolutshungu said.
Richard J Grant, a professor of finance and economics at Lipscomb University, also explained that economic freedom is the key ingredient “which characterises those countries that have the most vigorous economies".
Over time they have high economic growth.
Grant also highlighted that in the category ‘Freedom to Trade Internationally’ controls on the movement of capital have also worsened. "New visa regulations restrict the freedom of foreigners to visit,” Grant said.
