South Africa’s domestic resource mobilization position: is it good or bad and why

This paper presents a case study on South Africa’s resource mobilisation. Domestic resource mobilisation is defined as the generation of savings from domestic resources and encouragement of investments from foreign investors to create a big domestic resource pull and the allocation of resources to economically and socially productive sectors. In South Africa, government fiscal policy and the monetary policy as well as the expenditure systems are well developed. The government lead institutions in the domestic resource mobilisation include, and not limited to, National Treasury, South African Receiver of Revenue (SARS), South African Reserve Bank (SARB), Fiscal and Financial Commission (FFS), and Statistics South Africa. The market oriented financial system of South Africa implies minimum state interventions as market mechanism is assumed to achieve the highest efficiency in terms of resource allocation. However, government acknowledge that market imperfections do occasionally arise and that intervention by way of regulation is sometimes justified. The government therefore promulgates legislation and creates regulatory authorities and authorise them to influence the economy according to government policy. South Africa has put in place strong administrative measures to ensure efficient tax collection process, however, the country still experiences large loses in the form of illicit financial flows. It is estimated that the country lost over US$ 24 billion in the last decade. South Africa’s domestic resource mobilisation status has been very good, however, recently a number of variables that are used to measure the healthy nature of this are going the opposite direction.