South Africa has dropped 10 places in the 2018 International Property Rights Index (IPRI), and no longer boasts the best property rights in Africa.
The Free Market Foundation and Property Rights Alliance, in co-operation with 113 think tanks across the world, has released the IPRI, measuring the strength of physical property rights, intellectual property rights, and the legal and political environments that contain them.
In the 2017 edition of the index South Africa was ranked 27th overall and first in the African region. However, South Africa’s score declined by 0.65 from 7.00 in 2017 to 6.35 in 2018. This is the largest decline by any country measured in the index. With the dramatic decline in its score, South Africa is now ranked 37th overall and second in the region behind Rwanda.
South Africa’s largest decline was recorded in the variable “Physical Property Rights” protection (-1.18). The data for this variable is derived from the World Economic Forum’s Executive Opinion Survey, which was compiled in April this year, shortly after parliamentarians backed a motion brought by the Economic Freedom Fighters (EFF) to establish a parliamentary ad hoc committee to “review and amend section 25 of the Constitution”.
While the rest of the world is improving their property rights protections (an increase in the average score of 0.25), South Africa is moving in the opposite direction. It is this direction of change that is most concerning and will have the entirely predictable consequence of deterring future investment and accelerating the rate of capital flight.
Worldwide, 6-billion people suffer from inadequate protection of their property rights. Only 758-million people, 13% of the world, enjoy adequate protections for their artistic works, inventions, and private property.
Three countries – Finland, New Zealand, and Switzerland (a quarter of one percent of the world) – have achieved the highest property rights protections – according to the 2018 International Property Rights Index.
For the first time the US fell from being first in the world for intellectual property protections to second, yielding to Finland, which also passed New Zealand to become first in the Index overall (8.69). The Index is also the first publication to utilise the recently updated Patent Rights Index developed by Professor Walter Park at American University.
Property rights are a key indicator of economic success and political stability. Economist Hernando de Soto said: “Weak property rights systems not only blind economies from realising the immense hidden capital of their entrepreneurs, but they withhold them from other benefits as evidenced through the powerful correlations in this year’s Index: human freedom, economic liberty, perception of corruption, civic activism, and even the ability to be connected to the internet, to name a few.”
Property rights are an essential component of prosperous and free societies. This year the report includes correlations with no less than 23 economic and social indicators, including nine specific to e-commerce which displayed some of the strongest relationships the Index has ever discovered – suggesting rights play an important role in addressing internet access issues.
Property rights are restricted by gender. Poor property rights protections are bad enough; however, the Gender Equality component of the Index reveals that several countries in the Middle East, North Africa and sub-Saharan Africa regions continue to limit property ownership based solely on gender.