S.Africa drops in business environment rankings - CNBC Africa

S.Africa drops in business environment rankings

Southern Africa

by Trust Matsilele 0

Strikes and rigid labour laws have contributed to S.Africa's slip in the business environment ranking. PHOTO: Forbes Africa/Jay Caboz

Africa’s second biggest economy’s slip from 52nd position to 54th place has been attributed to divisions within the ruling African National Congress.

(READ MORE: S.Africa still the gateway into Africa)

Other factors that influenced the slip were high crime rates (especially for violent crime), deep-seated inequality and strikes and rigid labour laws.

Security concerns also influenced the rankings of some regional economies such as Egypt, Kenya and Somalia.

“African economies remained risky, in particular, Egypt, where two presidents have been toppled in three years and the security environment has worsened. [The North African country] has seen a sharp deterioration in its global business environment ranking (down six places, to 68th),” read the Economist Intelligence Unit report.

“The Economist Intelligence Unit continues to place the region bottom or joint bottom in seven of the ten business environment categories. It also has three of the four lowest-ranking countries in the overall rankings: Libya, Iran and Angola.”

The report added that two other sub-Saharan countries—Kenya and Nigeria—also ranked at the lower end of our rankings due to the ongoing problems of corruption, weak infrastructure, deteriorating security and, in the case of Nigeria, the absence of effective government institutions.

(READ MORE: Kenyan government defends security efforts after weekend bombings)

On the developed economies, the unit noted that the debt crisis continued to affect European Union countries. 

“The impact of the debt crisis on political stability, economic stability and financing availability has meant that EU countries remain some way off the top of the unit’s business environment rankings.”

Singapore remained the world’s most investor-friendly location in 2014-18, retaining its number-one spot from the 2009-13 period.

Switzerland and Hong Kong also defend their second and third place position with the US poised to remain an indispensable business destination.

“As the world’s largest economy, which is recovering faster, the US is set to remain an indispensable business destination. Policies towards private enterprise and competition are open and transparent.”

“Apart from certain security-sensitive sectors, such as energy, foreign investment faces few restrictions. The country’s labour market is flexible and the overall standard of infrastructure is solid, although greater investment is needed in some areas, especially roads and bridges.”