South Africa is the largest economy in the region with a large private sector and a growing private tax base. The government's economic policy is liberal economic with a focus on macroeconomic stability, financial discipline and an increase in foreign direct investments. The level of corruption in South Africa is not as pervasive as in other African countries, largely due to the country's relatively well-functioning government institutions. However, business surveys indicate that corruption still presents a substantial obstacle to business operations.

Positive developments in relation to corruption and investment:

• Compared to the Sub-Saharan regional average, companies in South Africa encounter simpler and less costly import/export procedures, simpler procedures related to starting and closing a company, and smoother interactions with tax officials.
• Dispute settlement and enforcement of commercial contracts is relatively easy and not as costly as in other countries in the region, which also reflects that companies operating in South Africa have greater confidence in the integrity of the judicial system.

Risks of corruption:

• Although the regulatory environment in South Africa is continuously being improved, some public services are still characterised by high levels of red tape - much to the disadvantage of companies.
• According to observers, corruption is rife in the granting of government contracts. Bribery thrives at the central government level, as exemplified by the high-profile procurement scandals that have been exposed within the last decade. Many companies also cite the procurement of goods for private companies as an activity likely to involve bribery.
• The Broad-Based Black Economic Empowerment (BBBEE) strategy, aiming at increasing the participation of black citizens in the economy, has been criticised for providing too much preferential treatment to wealthy black elites in relation to receiving government contracts, and for leading to increased procurement corruption.