South Africa has improved its ranking and remains the highest-ranked country in sub-Saharan Africa on the World Economic Forum (WEF) global competitiveness index released yesterday.
“South Africa moves up by four places to attain 50th position this year, remaining the highest-ranked country in sub-Saharan Africa and the second-placed among the Brics (Brazil, Russia, India, China, South Africa) economies,” according to the Global Competitiveness Report 2011-2012.
The report found that South Africa benefits from the large size of its economy, particularly by regional standards – it is ranked 25th in market size, the South African Press Association reports.
“It also does well on measures of the quality of institutions and factor allocation, such as intellectual property protection (30th), property rights (30th), the accountability of its private institutions (3rd) and its goods market efficiency (32nd).”
The report said South Africa’s financial market development – in which it ranked fourth – was “particularly impressive” and showed “high confidence in South Africa’s financial markets at a time when trust is returning only slowly in many other parts of the world”.
“South Africa also does reasonably well in more complex areas such as business sophistication (38th) and innovation (41st), benefiting from good scientific research institutions (30th) and strong collaboration between universities and the business sector in innovation (26th).”
This made South Africa the most competitive economy in the region. But it would need to address some weaknesses, particularly on labour issues, to improve its competitiveness.
“South Africa ranks 95th in labour market efficiency, with rigid hiring and firing practices (139th), a lack of flexibility in wage determination by companies (138th), and significant tensions in labour-employer relations (138th).”
The report said university enrolment rates were too low. “Efforts must also be made to increase the university enrolment rate of only 15 percent, which places the country 97th overall, in order to better develop its innovation potential.” Infrastructure was good by regional standards, but needed upgrading. “The poor security situation remains another important obstacle to doing business in South Africa.
“The business costs of crime and violence (136th) and the sense that the police are unable to provide protection from crime (95th) do not contribute to an environment that fosters competitiveness.” The report also found that the health of the workforce, which is ranked 129th out of 142 economies, was concerning. Switzerland topped the overall rankings, followed by Singapore, then Sweden.
In compiling the report, the WEF’s Centre for Global Competitiveness and Performance looks at the business operating environment and competitiveness of 142 economies worldwide.
