The index is compiled by the World Economic Forum (WEF) and ranked South Africa at 56, down from its previous ranking of 53.
It cited labour market efficiency, health and primary education as the major weaknesses with South Africa coming bottom of the ranking for the quality of its science and math education relative to its stage of development.
(WATCH VIDEO: Investment in education funds)
It did however benefit from its strong institutions, relatively flexible goods market and world class financial markets.
NIGERIA DROPS TO 127
Nigeria, Africa’s largest economy, dropped by seven places to 127 in the 2014-2015 rankings from 120 in the previous year.
“What we saw in Nigeria was driven in particular by the deterioration of the macroeconomic environment,” said Margareta Drzeniek, director and head of global competitiveness and risks at WEF.
“We also see rising security concerns in Nigeria which was reflected in the survey of business executives.”
MAURITIUS – THE STAR PERFORMER
Drzeniek, speaking at the WEF Competitiveness Report debate, also alluded to Mauritius, the region’s most competitive economy, which improved by six places.
“Mauritius moved up last year but we also see a positive trend over the past six years where it’s moved up over 20 places,” she said.
“The past improvement was mainly due to improvements in institutions – more efficient bureaucracy, more efficient judiciary – and also in terms of goods market efficiency so Mauritius is the star performer in Africa.”
THE ECONOMIES AT THE TOP
In terms of the overall ranking, the top 10 comprised Switzerland, Singapore, the United States, Finland, Germany, Japan, Hong Kong SAR, the Netherlands, the United Kingdom and Sweden.
“We see stability on the very top. Switzerland is characterised by a number of strengths – it’s very productive, highly innovative, the collaboration between businesses, universities and the public sector is very good, the institutional framework is very strong and we also see a very flexible labour market,” said Drzeniek.
“Singapore has strong institutions, good infrastructure [and] very good education systems. The country that has the most noticeable movement in the top 10 is the United States – we see improvements in business, innovation.”
RANKINGS AIMED AT MOTIVATING REFORM
Drzeniek added that the report was always intended to motivate reform and to encourage and aid productivity.
“In order to achieve reform, we need public-private collaboration. We use this report as a platform for public-private discussions in order to identify the strengths and weaknesses that those countries need to address or that they can build on,” she explained.
“For us competitiveness is really about productivity. Productivity is what determines macroeconomic growth.”
(READ MORE: WEF Africa to address quality of African growth)
To catch the WEF Competitiveness Report debate, tune in to CNBC Africa on 4 September 2014 at 21:00 CAT.