The South African economy prior to 1994 combined the characteristics of a colonial economy with some of the features of a Soviet bloc country. Sanctions imposed a form of autarky on the economy. Much of industry was heavily protected and insulated from global competition. The black population was dispossessed, deprived of its land and excluded from high-wage employment and opportunities to accumulate capital. There were rigorous controls over labor mobility and job allocation. At the end of apartheid, South Africa had a highly deformed economy and faced a daunting task of destroying internal colonialism while reintegrating the country into the global economy.

Compare South Africa with Tunisia, a former French colony at the opposite end of the African continent. Both have a per capita income of about $5,000 (in purchasing power parity terms). Yet male life expectancy in Tunisia is 68 years compared to only 61 years in South Africa. The infant mortality rate in South Africa is 50 per thousand live births, whereas it is only 39 per thousand in Tunisia. Both countries have an unequal distribution of income, but the Gini coefficient in South Africa is an extraordinarily high 58.4 as compared to Tunisia's 40.2. High inequality in South Africa is a cause of a high incidence of poverty. Using the World Bank's poverty threshold of $1 per capita per day, the head count index of poverty in South Africa was 23.7 percent in 1993, whereas in Tunisia in 1990 it was only 3.9 percent.