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Sep 05, 2012

SA remains region’s most competitive, ranked third among Brics

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South Africa remains the most competitive economy in sub-Saharan Africa, despite its global ranking slipping in the World Economic Forum’s (WEF’s) latest global competitiveness report.

The country is ranked 52nd this year, down from 50th in 2011, and is placed third among the Brazil, Russia, India, China and South Africa (Brics) economies. Last year, South Africa was ranked second among the Brics nations, but was overtaken by Brazil this year.

The 2012/13 report added Liberia and Seychelles to its list, bringing the total number of countries considered to 144.

Switzerland and Singapore retained their positions as first and second most competitive countries, while Finland replaced Sweden in third place, moving up from fourth place last year.

But despite remaining the highest-ranked in region, the WEF pointed out that South Africa would need to address some weaknesses, such as labour, to further enhance its competitiveness.

The country’s labour-market efficiency ranking fell 18 places from last year to 113th, with rigid hiring and firing practices (143rd), a lack of flexibility in wage determination by companies (140th), as well as tensions in labour-employer relations (144th).

The WEF stated that efforts should also be made to increase the local university enrolment rate to better develop South Africa’s innovation potential.

“Combined efforts in these areas will be critical in view of the country’s high unemployment rate of almost 25% in the second quarter of 2012,” the report read.

Further, the index found that South Africa’s infrastructure, although good (63rd) by regional standards, required upgrading.

The poor security situation remained another important obstacle to doing business in South Africa, while the high business costs of crime and violence (134th) and the sense that the police force were unable to provide sufficient protection from crime (90th) did not contribute to an environment that fostered competitiveness.

The health of the workforce, which ranked 132nd out of 144 economies, was also found to be another point of concern.

The WEF pointed out that South Africa performed particularly well in the ‘financial market development’ pillar, ranking third. This indicated high confidence in the country’s financial markets when trust is returning slowly in many other parts of the world.

Africa’s largest economy also fared well on the quality of its institutions and on factor allocation, such as intellectual property protection (20th), property rights (26th), the accountability of its private institutions (2nd) and its goods market efficiency (32nd).

Further, South Africa performed reasonably well in more complex areas such as business sophistication (38th) and innovation (42nd), benefiting from good scientific research institutions (34th) and strong collaboration between universities and the business sector in innovation (30th).

More generally, sub-Saharan Africa had significant growth over the last 15 years, registering growth rates of over 5% in the past two years. The WEF noted that the region continued to exceed the global average and to exhibit a favourable economic outlook.

The region has recovered rapidly from the global economic crisis, when gross domestic product growth dropped to 2.8% in 2009.

However, the report stated that sub-Saharan Africa still lagged behind the rest of the world in terms of its competitiveness, requiring efforts across many areas to place it on a firmly sustainable growth and development path going forward.

Although growth in middle-income countries in the region, such as South Africa, seemed to have followed the global slowdown more closely, lower-income and oil-exporting countries have been largely unaffected. These regional variations were reflected in the latest rankings.

Mauritius retained its placing at 54th, the second-highest ranked country in sub-Saharan Africa.

Rwanda’s moved up seven places to 63rd position, continuing to place third in the region.

The Seychelles entered the index for the first time, at 76th overall and 4th in the region.

Botswana improved slightly, up one place to 79th and is one of the top five economies in the region.

However, Namibia continued its downward trend and fell nine places to 92nd place, with weakening across most areas measured by the index.

Ghana was ranked 103rd, moving up by 11 places since last year, while Kenya came in at 106th, showing a relatively steady performance.

Liberia also entered the rankings for the first time and achieve 111th place, and Nigeria improved to the 115th place after some deterioration over recent years.

Further, Tanzania and Zimbabwe remained stable at 120th and 132nd respectively, while Mozambique fell to 138th from 133rd last year.

Edited by: Mariaan Webb
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