South Africa – Challenging Times Ahead

16 March 2021 – South Africa’s Country Risk Report 2021

Rating: C3 – Sensitive risk for enterprise


  • Rich natural resource base (gold, platinum, chrome, manganese, vanadium, coal and diamonds)
  • Key strategic economic and political player in the region
  • Judicial and business environments aligned with advanced standards
  • Exchange rate flexibility helps to cushion external shocks and the central bank has an established track record of proactive and credible policy stance
  • Deep financial markets and a sound banking sector (overall ample liquidity, good asset quality, satisfactory capitalisation)


  • Dramatic deterioration of public debt ratios because of the activation of state guarantees to SOEs
  • Large budget deficit because of growing wage bill, public debt interest payments and transfers to loss-making SOEs
  • Structural issues weigh on potential growth (low productivity, public sector inefficiencies, skilled human capital shortages, weak competitiveness) while product and labour markets remain highly rigid
  • High dependence on volatile portfolio investment flows to finance the current account deficit
  • Underinvestment and aging infrastructure (energy and transport) limit the development of a diversified industrial base
  • High poverty, income inequality and unemployment (above 30%) are sources of social tensions

Source (Euler Hermes)