The International Monetary Fund published a Selected Issues Paper on structural reforms to improve South Africa’s business environment, concluding that South Africa is among peers with the most restrictive conditions for doing business. The analysis links product market regulations, particularly licensing and permitting requirements, to weaker firm growth and productivity, with the effects most pronounced for small firms. The paper highlights burdensome government regulations, weak procurement practices, and limited competition as factors that can undermine business confidence and investment, stifle innovation, and raise compliance costs. Using cross-country firm-level econometric evidence, it finds that higher regulatory burdens are associated with slower sales growth, weaker employment growth, and lower productivity for South African firms, especially smaller ones, and it sets out specific product-market reforms that could strengthen business dynamism and job creation.
International Monetary Fund 2026-03-06
International Monetary Fund research identifies South Africa’s licensing and permitting rules as a drag on firm growth and productivity
The International Monetary Fund published a paper on structural reforms to enhance South Africa's business environment, identifying it as one of the most restrictive among peers. The analysis links stringent product market regulations to weaker firm growth and productivity, particularly affecting small firms. It recommends specific reforms to boost business dynamism and job creation.