Strong showing in global competitiveness

Johannesburg Stock Exchange
Inside South Africa’s Johannesburg Stock Exchange. The World Economic Forum’s Global Competitiveness Report ranks the country first in the world for its regulation of securities exchanges, and on it the legal rights index. (Image: Brand South Africa)


• Di Dai
Associate media manager
World Economic Forum
+41 (0)22 869 1405
Di.Dai@weforum.org
• Rim El Habibi
Associate media manager
World Economic Forum
+41 (0)22 869 3639
Rim.Elhabibi@weforum.org


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Lucille Davie

South Africa is ranked 53rd out of 148 countries in the 2013-2014 Global Competitiveness Report, compiled by the World Economic Forum (WEF). This is down one position out of 144 countries in the 2012-2013 report.

The country has overtaken Brazil in competitiveness, pushing it into second place among the Brics nations – Brazil, Russia, India, China and South Africa – on the Global Competitiveness Index. South Africa’s gross domestic product is $582-billion, with a ranking of 25th in the world.

It is first in strength of auditing and reporting standards, efficacy of corporate boards, and protection of minority shareholders’ interests, according to WEF. Another indicator of the nation’s global competitiveness is the strength of investor protection, which ranks in 10th position. In the financial market, the availability of financial services scores second position, as does financing through the local equity market. The soundness of banks is in third place, while the regulation of securities exchanges and the legal rights index rank first.

South Africa also does well on the quality of its institutions, at 41st position, which includes intellectual property protection in 18th position, while property rights are in 20th position. The country ranks 13th and 12th in the efficiency of its legal framework in challenging and settling disputes. The high accountability of its private institutions, in second position, also supports the institutional framework.

As in the previous year, the country’s financial market development stands at an impressive third position, with an efficient market for goods and services at 28th, up four points from the 2012-2013 year. In business sophistication, South Africa has improved in the rankings, now at 35th; it has also risen to 39th in innovation. These rankings stood at 38 and 42 previously, respectively.

It is steady in financial market development, scoring third position this year and in the previous year. Technological readiness has also remained the same at 62, as has market size at 25. Regarding overall infrastructure, South Africa ranks 63rd, with air transport infrastructure coming in at 11th. There are slight improvements in rail and road transport, measuring 48th and 41st respectively, with port infrastructure in 51st position.

Explore the Global Competitiveness Index:

South Africa’s anti-monopoly policy ranking is in eighth position, with intensity of local competition ranking at 45th, and the effect of taxation on incentives to invest at 16th. Procedures for starting a business ranks in 30th position, with prevalence of trade barriers at 36th. Prevalence of foreign ownership in the country stands at 35th.

Regarding technological readiness, South Africa ranks 40th in the availability of the latest technologies, and 40th in foreign direct investment and technology transfer. Improvements need to be made in internet usage and broadband bandwidth. The country’s domestic market ranks 24th and foreign market 38th. South Africa’s ability to retain talent is good, at 51th, and its ability to attract talent stands at 55th, while more women need to be brought into the economy.

“But the country’s strong ties to advanced economies, notably the euro area, make it more vulnerable to their economic slowdown and likely have contributed to the deterioration of fiscal indicators: its performance in the macroeconomic environment has dropped sharply (from 69th to 95th),” says WEF. This has made it difficult for South Africa to return to pre-crisis growth rates.

Like most African countries, South Africa has to improve in health and education, in its case involving the huge task of undoing years of the debilitating effects of apartheid. “Building a skilled labour force and creating sufficient employment also present considerable challenges.”

Sub-Saharan Africa

WEF’s picture for the region is generally positive. “Sub-Saharan Africa continues its impressive growth rate of close to 5% in 2012 (with similar projections for the next two years), providing something of a silver lining in an otherwise uncertain global economy,” states WEF. This growth has “largely taken place on the back of strong investment, favourable commodity prices, and a prudent macroeconomic stance”.

The continent has the full range of rankings, with Mauritius overtaking South Africa to be ranked in 45th position, while Chad is in 148th position. The region still registers an infrastructure deficit, and needs to improve in its health and education rankings. “The region’s poor performance across all basic requirements for competitiveness stands in stark contrast to its comparatively stronger performance in market efficiency, where particularly the region’s middle-income economies fare relatively well (South Africa, Mauritius, and Kenya rank in the top 20% in financial market development).”

Rwanda is ranked 66th this year, retaining its third place in the region. Botswana moves up five places to 74th, moving into fourth spot in the region. Improvements are driven in large part by a sounder macroeconomic environment, with its strengths being relatively reliable and transparent institutions (34th), with efficient government spending, strong public trust in politicians, and low levels of corruption.

Seychelles ranks 80th overall, with strong and well-functioning institutions for the region, in 45th position, with strong public trust in politicians (32nd) and a government that is seen as efficient (37th). Infrastructure is also relatively well-developed (43rd) and the Seychelles does well in regional comparison when it comes to health and primary education (55th).

Namibia improved its position by two places to reach 90th place. “The country continues to benefit from a relatively well-functioning institutional environment (48th), with well-protected property rights, an independent judiciary, and reasonably strong public trust in politicians. The country’s transport infrastructure is also good by regional standards (47th). Financial markets are reasonably developed (39th) and buttressed by solid confidence in financial institutions (21st), although their overall assessment has weakened for three years in a row.”

Like other sub-Saharan countries, Namibia needs to improve its health and educational systems to improve its competitiveness.

Kenya moves up by an impressive 10 places to 96th position this year because of greater confidence in institutions (88th). Its innovative capacity is ranked a good 46th, with high company spending on research and development and good scientific research institutions that collaborate well with the business sector in research activities.

Its educational system, although only educating a relatively small proportion of the population, produces good results, and is ranked at 44th. Its health standards remain low in 121st position, while security in the country has become worrisome.

Other countries fall below the 100-point mark: Senegal at 113th, Ghana at 114th, Nigeria at 120th, Tanzania at 125th, Ivory Coast at 126th, Ethiopia falls six places to 127th, Liberia at 128th, Zimbabwe remains relatively stable at 131st, Mozambique ranks 137th, and Angola enters the index this year at 142nd place.