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South Africa is fast losing ground to its emerging market peers in several critical areas of competitiveness and now has to make a series of strategic choices or risk being completely left behind in terms of growth and competitiveness, professional services firm Deloitte West Africa Advisory leader Mike Vincent has cautioned.
“Africa currently boasts 7 of the 12 fastest growing economies in the world and, although South Africa remains leading and dominant in a range of measures, it faces the risk of losing its competitive advantage in a number of areas,” he said in a statement on Monday.
He pointed to the emergence of Kenya, Ghana and Morocco as destinations of choice competing for “gateway to Africa” status, as well as the emergence of Nigeria, set to grow at 7% this year compared with South Africa’s 2%, as examples of how the country was “sliding down the competitiveness league table”.
He held that a country’s competitiveness was created and sustained through a coordinated, highly localised approach, adding that innovation was critical to ensuring its competitiveness in all industries.
“History, culture, values, economic instruments and institutions can all play their part. But it is incumbent on a nation to make some strategic choices about which industries to compete in and then to ensure that the supporting macro- and micro-structures are in place to support these choices,” he commented.
The analyst called for a consultative forum – similar to the negotiations that ushered in South Africa’s democracy – to discuss the country’s economic future, saying, “this would enable the clarification of what we should produce, how best to produce it and for whom to produce it”.
He asserted that, while South Africa was endowed with minerals and other resources and infrastructure, much of its labour force was equipped to undertake low-skilled economic activities.
“The challenges our country faces with regard to education exacerbates the situation. We should be enabling learners to create and pursue technologically complex careers in industries in which leading countries are actively competing,” he said.
Government, the private sector, unions and civil society had a “crucial” role to play in setting the country’s economic aspirations, which, Vincent said, should be more narrowly defined on an industry level.
“An example of a country that has successfully [focused chiefly on one industry] is Germany [in terms of its] motor manufacturing sector. Once we have decided where to play, we then have to decide how we win,” he said, adding that this required an integrated approach to national culture and work ethic, a pipeline of suitably skilled citizens, enabling legislation, structured incentive programmes and institutions that facilitated the achievement of national objectives.
Initially, this would most likely require a more responsive immigration policy to attract skilled foreign workers in the short term, while government would be required to provide leadership and create the right environment to enable business to pursue its goal of making a profit.
“The important thing to realise is that this is not a three-year strategy, but a 10 to 20 year strategy,” he said, noting that Africa had to “gear up” for a rapidly growing population that would require a robust economy and excellent education and health systems.