South Africa is ranked at 44 on the Property Rights Alliance (PRA)’s 2021 Trade Barrier Index (TBI) which is researched and published by the Tholos Foundation. This represents a drop in the country’s ranking from 42nd in the 2019 index.
The index, which was first published in 2019, identifies the most direct and indirect trade barriers of 90 countries, representing 84% of the global population and 95% of the world GDP. The average TBI score in 2021 is 4.01 on a 10-point scale, with 10 indicating the highest use of trade barriers. Although the median score remains low, it highlights the fact that the heavy implementation of trade barriers is generally an exception.
South Africa’s score was 3.87 with neighboring Botswana scoring 4.37 and Zimbabwe 5.37.
In order to improve its standing on the index, FMF Deputy Director, Chris Hattingh, who contributed a South African case study to the 2021 TBI, notes that South Africa should:
1️⃣ Abandon any notion of diluting all citizens’ property rights through confiscation or expropriation without compensation, thereby strengthening said rights and sending the signal to internal – and most importantly external – businesses and investors that they should come to the country to build and grow for the long term;
2️⃣ Immediately release high-frequency spectrum to facilitate the ease of e-commerce activity, especially mobile payments and connectivity in semi-rural to rural areas;
3️⃣ Remove local barriers to trade, specifically protectionist measures that portend to ‘prioritize’ local companies in the area of medical equipment and pharmaceutical drugs. This will accelerate access to, amongst others, COVID-19 vaccines and COVID-19 treatment equipment such as ventilators. And, when the next pandemic arrives, where fewer barriers are present, citizens will have easier access to lifesaving, relatively cheaper equipment, services, and drugs; and
4️⃣ Introduce a tax exemption to those businesses, less than five years old in existence, that use an e-commerce platform as their primary customer-facing method.
He further emphasised that South Africa’s ports and rail infrastructure should be improved, referring to the country’s poor performance on the World Bank’s Container Port Performance Index.
Hattingh added, “Such improvements must take place within the context of labor market reforms, electricity generation and distribution liberalization, and the protection of property rights.”
Instead, he suggests in the case study that South Africa needs to conscientiously adopt the Africa Continental Free Trade Area and acquire the necessary goods, services, and skills from abroad that it needs in order to become a competitive economy.
“We need to implement pro-growth and job creation trade reforms – such as lowering tariffs, and eliminating corruption at ports of entry – and resist the temptation of protectionist, anti-poor policies such as government-enforced localisation,” Hattingh said.
The top three countries on the TBI are Singapore, New Zealand, and the Netherlands. Mauritius came in top in the Tariff-Free Trade section, ranking higher than Hong Kong, Singapore, and Canada.
