9 things holding business back in South Africa
South Africa has climbed the global competitiveness rankings for the first time in four years – but problems persist in health, education and labour.
This is according to the latest Global Competitiveness Index for 2015-16, from the World Economic Forum (WEF).
In its latest report, South Africa climbed seven places in the rankings to 49th, overall – reversing a downward trend that has persisted over the past four years.
However this isn’t necessarily a sign of massive progress in the country, as South Africa’s competitiveness score of 4.4 has remained flat (up from 4.3 in 2014-15).
Additionally, this years rankings are based on 140 countries, not the 144 countries in the 2014-15 report
Competitiveness in South Africa
On a positive front, the country’s ICT and broadband sector was the biggest contributor to the reversal of the nation’s downward trend on the index, the WEF said.
Its innovation score has also climbed five places, making it the most innovative country in the Sub-Saharan Africa region – above overall continent leader, Mauritius.
According to the WEF, South Africa hosts the continent’s most efficient financial market (12th) and benefits from a sound goods market (38th), which is driven by strong domestic competition (28th) and an efficient transport infrastructure (29th).
It further benefits from strong institutions (38th), particularly property rights (24th) and a “robust and independent legal framework”.
On the down side, the country needs to work to reduce corruption (76th) and the burden of government regulation (117th) – while improving the security situation (102nd).
“The country also needs to address its inefficient electricity supply (116th) and inflexible labor market (107th),” the WEF said.
The most worrisome sectors in South Africa remain health (128th) and the quality of education (120th) – where higher secondary enrollment rates will not be enough to create the skills needed for a competitive economy, the group said.
South Africa’s maths and science skills remain the worst in the world, at 140th – while cooperation in labor-employer relations also holds the ‘dishonour’ of being stone last.
As part of of its report, the WEF identifies the top 9 factors (ranked by score), which are the most problematic for doing business in South Africa, according to business leaders across the world.
- Restrictive labor regulations – 18.3
- Inefficient government bureaucracy – 17.6
- Inadequate supply of infrastructure – 13.0
- Policy instability – 12.4
- Inadequately educated workforce – 10.9
- Crime and theft – 7.3
- Corruption – 6.0
- Poor work ethic in labor force – 4.7
- Access to financing – 3.5
Scores were determined by asking business leaders across the world to select the five most problematic issues for doing business in the country, and to rank them between 1 (most problematic) and 5. The scores show the responses weighted according to their rankings.
Factors with a score above 2.0 are listed above.
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