SA at 45 in competitive ranking
Fin24

SA at 45 in competitive ranking

2009-09-08 19:15

Johannesburg - South African remains at an unchanged 45 out of 133 countries covered by the World Economic Forum in its Global Competitiveness Index 2009-10, it was revealed on Tuesday.

However, SA is pipped by Barbados this year, which moves from 47 last year to 44. SA, though, remains the highest ranked country in sub-Saharan Africa.

The WEF says South Africa's competitiveness would be enhanced by tackling some enduring weaknesses like its inflexible labour markets, while risks also emerge to its innovation due to weakening education. Crime and violence and health remain other areas that need to be jacked up.

The data reveals that the US has fallen off the number one spot in light of the global credit crisis to number two, with Switzerland moving into the top spot. Third best is Singapore (from 5 in 2008-9), with the UK coming in at 13 from 12 before. Germany remains at an unchanged 7 and Hong Kong at an unchanged 11.

On its sub-indexes, SA scores an abysmal 77 on the basic requirements reading, but is at a better 39 on both the efficiency enhancer and innovation factor fronts.

On macro-economic stability, SA is at number 68, but it is at 125 on health and primary education. It is at 45 on infrastructure and also 45 for its institutions.

It comes in at 65 for higher education and training, 35 for goods market efficiency, 90 for labour market efficiency, a healthy fifth for financial market sophistication, but 65 for technological readiness and 24 for market size. SA is at 36 for business sophistication and 41 for innovation.

Among SA's competitors, Turkey moves up two places to 61st this year, with a stable performance overall.

Russia, however, falls 12 places this year to 63rd, the only BRIC economy to see a decline in performance. India moves to 49 from 50 and China from 30 to 29. Brazil is up to 56 from 64 in 2008-9.

Australia improves by three positions to rank 15th overall, while New Zealand advances four ranks into the top 20 at 20. Tunisia drops four places to 40, but retains the lead in North Africa.

Mauritius is ranked 57th this year, the same ranking it held last year, and the second-highest in sub-Saharan Africa.

On SA, the WEF says it continues to benefit from the large size of its economy, particularly by regional standards (it is ranked 24th in the market size pillar).

"South Africa does well on measures of the quality of institutions and factor allocation, such as intellectual property protection (24th), the accountability of private institutions (5th), and goods market efficiency (35th). In this area there has been a notable improvement in the evaluation of the country's financial markets, which have increased in rank from 24th last year to a very high 5th this year, indicating strong confidence in South Africa's financial markets at a time when trust has been eroded in many other parts of the world," says the WEF.

South Africa also does reasonably well in more complex areas such as business sophistication (36th) and innovation (41st), benefiting from good scientific research institutions (ranked 29th) and strong collaboration between universities and the business sector in innovation (ranked 25th).

On the other hand, South Africa's competitiveness would be enhanced by tackling some enduring weaknesses. "The country ranks 90th in labour market efficiency, with inflexible hiring and firing practices (125th), a lack of flexibility in wage determination by companies (123rd), and poor labour-employer relations (121st). Furthermore, the country's innovative potential could be at risk with a university enrolment rate of only 15 percent, which places the country 94th overall. In addition, South Africa's infrastructure, although good by regional standards, requires upgrading (ranked 45th).

"In this light, the improvements in transport infrastructure related to the 2010 World Cup is a welcome development that should reinforce South Africa's competitiveness." The poor security situation remains another important obstacle to doing business in South Africa.

The business costs of crime and violence (133rd) and the sense that the police are unable to provide protection from crime (106th) do not contribute to an environment that fosters competitiveness.

Another major concern remains the health of the workforce, ranked 127th out of 133 countries, the result of high rates of communicable diseases and poor health indicators more generally.

"Improvements in these areas will enhance South Africa's competitiveness outlook," concludes the WEF.

- I-Net Bridge