How Could the South African Economy be Improved?

Every country in the world wants to drive economic progress, no matter how well off they are. Just look at the Netherlands, which is paving the way to a more substantial form of living – and China, where technological innovation is at the fore. South Africa is no different.

While the country has certainly moved on from its Apartheid past, its new democracy is seeing increased productivity and revenues from its principal sectors – with huge growth in financial services, tourism and gambling industries.

Let’s evaluate how South Africa could improve its economy further by lifting the restrictions that are holding back further progress.

Reverse controversial laws 

South Africa has a range of controversial laws and regulations that not only frustrates the population but often is the driving force of many protests and riots in the country.

For example, there’s a ban on outdoor smoking in public places. And when you do smoke outside, you must be at least 10 metres away from any public entrances. Retailers are also forbidden to display cigarettes publicly. While many people may think that the smoking laws are there to help decrease the negative impact of smoking on people’s health, others think that the laws take it too far.

Recently, President Cyril Ramaphosa activated the Protection of Investment Act, which “replaces bilateral investment treaties between South Africa and various countries”, including property rights. The law is reportedly “scaring off” foreign investors, with both the Netherlands and the US expressing concerns.

Gambling – the sleeping giant of South Africa’s economy

Gambling is a relatively new phenomenon in South Africa. Having been heavily restricted during the early years of European settlement, it was completely outlawed in 1965. Nevertheless, some 2,000 casinos defiantly remained in operation – chiefly in Bophuthatswana, Ciskei, Transkei and Venda, which since the 1970s has been home to native South Africans only.

It wasn’t until 1994 – when the new democratic government came to power – that things changed. The National Gambling Act of 1996 set out proper regulation, setting up the National Gambling Board to keep this burgeoning sector in check.

Today there are 38 regulated land-based casinos located in the country’s main metropolitan areas. Like gambling resorts the world over, they’re a huge attraction for tourists – with slot machines, multiple gaming rooms and restaurants.

This includes the immensely popular Sun City Casino, which opened in 1979 and attracts thousands of tourists each year. Sun City Casino is probably the most famous casino in South Africa – with an eye-catching design, dozens of table games and world-class facilities. It was good enough to house the so-called ‘golden generation’ of the England football team during the 2010 World Cup.

How online casinos could improve South Africa’s fortunes

However, unlike much of the rest of the world, South Africa hasn’t yet legalised online casinos. It’s not only illegal to own or operate an online casino in South Africa, but also to gamble in one. This rule, however, only relates to games that would usually be found at a casino – such as poker and bingo – to protect land-based operators.

Online gambling operators and ISPs can be fined R10 million, or face 10 years in jail, for providing virtual gambling services. With land-based casinos providing 70% of the total gambling revenue in South Africa, it stands to reason that the government would want to protect those interests. 

This state of play is potentially holding back a huge area of growth in the country – as evidenced by its meteoric rise in the UK. The UK has a heavy regulated gambling industry to prevent money laundering and problem gambling, with online and land-based casinos subject to the same rules.

As such, the online gambling industry has grown so massively it now provides one-third of all gambling revenues – according to the Gambling Commission. Online gambling gives players the freedom and convenience to play their favourite games from the comfort of their own home, or on the move, in an immersive environment that simulates an actual casino experience.

Attracted to the hugely appealing prospect of being able to play their favourite games from home, on any device, players are heading to online casinos in their droves. In addition to this, many online operators offer a live casino service that links up real-life croupiers with online gamblers through a high-quality video stream – bringing the much-needed human element which was previously lacking in the online world. To see why online gambling is so popular in the UK and across the world, you only have to look at 888 online casino – one of the industry leaders.

Despite all the benefits of online gambling, if anything it looks like South Africa could be taking a step back from this golden opportunity. Recently, Rob Davies – the Minister of Trade and Industry – set out new measures involving harsher rules and regulations for gambling in the country. New restrictions could see casinos having to cut back on pay-out machines and electronic bingo.

Some steps South Africa could take to boost its economy

There are many ways the country could improve its economy. Recently, it was revealed that the world’s largest air pollution hotspot is Mpumalanga in South Africa. This is mainly due to the large number of coal-fired power plants in the region, which also exposes millions of people to dangerous levels of pollution. In response, South Africa needs to fight against pollution by combating issues such as plastic waste and engaging in pollution control.

The South African government is currently facing mounting debt and a high unemployment rate. South Africa’s new finance minister isn’t sitting back and letting things get out of control for much longer, recently announcing that the country will be spending more on agriculture, infrastructure and job creation projects to help tackle each of these issues and “haul the economy out of a recession”. But for that to happen, it needs to raise the capital to provide these services.

The elephant in the room, however, is gambling. There’s clearly the demand for gambling in South Africa, and freeing up online casinos in the country could really pay dividends. In the UK, the tax these online operators pay gives the government more cash to spend on public services – such as building more hospitals and schools, as well as highway infrastructure. This could at least give the government more resources to make the changes it wants to.