SA 45th in competitiveness

Thu, 09 Oct 2008

South Africa has been rated the 45th most competitive country in the 2008/2009 Global Competitiveness Report, Business Unity South Africa said on Wednesday.

This was one ranking lower than last year, when it was 44th out of 134 global economies surveyed and 10 down on 2005/2006, when South Africa was ranked 35th.

While it was still the highest ranked country in sub-Saharan Africa, Busa pointed out that Botswana had moved up 20 places, Namibia nine places and Kenya six.

"The GCR is clearly flashing some important warning lights for SA's future economic performance," said Busa economic consultant Raymond Parsons, who is the overall business convenor at Nedlac.

"It has identified obstacles and constraints with which we are already broadly familiar, such as the costs of crime," he said.

Other factors included an inadequately educated workforce, the country's infrastructure, macro-economic stability, labour market functioning and small business and bureaucracy.

The GCR's main competitiveness ranking is the Global Competitiveness Index.

The GCI is based on the 12 pillars of: institutions, infrastructure, macro-economic stability, health and primary education, higher education and training, goods market efficiency, labour market efficiency, financial market sophistication, technological readiness, market size, business sophistication and innovation.

The overall ranking was topped by the United States, followed by Switzerland, Denmark, Sweden and Singapore.

The United Kingdom had dropped three places, out of the top 10 to 12th slot, mainly because of a weakening of its financial markets.

"Rising food and energy prices, a major international financial crisis and the related slowdown in the world's leading economies, are confronting policy-makers with new economic management challenges," said Xavier Sala-i-Martin, a Columbia University economics professor and co-author of the report.

"Today's volatility underscores the importance of a competitiveness-supporting economic environment that can help national economies to weather these types of shocks in order to ensure solid economic performance going into the future," he said.

Parsons, meanwhile, said the GCR was warning South Africa not to be complacent about its growth prospects.

He said the acceleration of real GDP growth in the past few years had done little to improve South Africa's ranking relative to other middle-income countries, as faster growth had until recently been a worldwide phenomenon.

"South Africa's growth rate still trails behind those of the most dynamic emerging economies," he said.

"And while trend growth of total factor productivity also appears to have turned up, it is still only around average for a country of South Africa's per capita income level."

Parsons said the faster growth in the past four years had been accompanied by only a modest decline in unemployment.

He said the "most disappointing" aspect of post-apartheid economic performance was the emergence and persistence of extreme levels of unemployment, particularly for less-skilled younger blacks, together with the continuation of widespread poverty and the widening of inequalities.

This, even though government strategies had aimed to improve the lot of particularly the historically-disadvantaged black population.

"The failure to bring unemployment down decisively is probably the greatest source of popular discontent about the government's economic policies, despite numerous successes, and it naturally leads to pressures to try more radical and activist solutions which risk being wasteful and counterproductive," he said.

Parsons pointed to a lack of implementation of strategies and said a strong delivery culture was needed in the public sector.

"... We need to get beyond crisis management," he said.

"In short, meeting the delivery challenge is inextricably linked to the socio-economic goals of any new government in SA."

Parson said "extraordinary discipline and persistence" would be needed to defeat the cynics and improve South Africa's ranking in the next GCR.

"Busa would like to see SA get back to the 35th ranking and then rise even higher in the years ahead."