SA business environment weak – global survey

South Africa’s business environment has been ranked as the country’s weakest area in a new survey published by the World Economic Forum.

Out of 62 countries surveyed, SA ranks 42nd for its business environment which considers:

  • The availability of human capital (skilled workers who can be employed by the financial sector and thus provide efficient financial services);
  • The state of physical capital (the physical and technological infrastructure);
  • Taxation policy;
  • Costs of doing business for financial intermediaries;
  • and other aspects of the business environment.

South Africa moved up one spot from 2011 to place 28th overall, and continues to be the top-ranked sub-Saharan African country in the Index.

SA’s quality of infrastructure was ranked mid-way down the table, at 36th, with quality of electricity supply (51st), internet users (51st), Broadband Internet subscriptions (52nd), and Telephone subscriptions (53rd) rated very poorly.

Mobile telephone subscription, however, fared better in 21st place.

A census report published by Stats SA earlier this week, revealed that 64.8% of households in the country had no access to the internet in 2011.

The national statistical service noted that of those households that had access to the internet, 16.3% accessed it via mobile phone, 8.6% from home, 5.6% from elsewhere and 4.7% from work.

According to  the the World Economic Forum, the country experienced a slight improvement in non-banking financial services (22nd) and financial stability (17th). These changes, the report said, were driven by greater currency stability (28th) and more robust IPO (26th) and securitization activity (44th).

Although South Africa’s business environment is the country’s weakest area, results within that pillar were quite mixed. For instance, South Africa’s efficient tax regime (16th) is counterbalanced by a very weak human capital pool (52nd) and underdeveloped infrastructure (51st).

In terms of measuring human capital, South Africa ranked last for its quality of math and science education, and 54th for tertiary enrolment. The country was listed at 33 under the heading “brain drain”.

“South Africa’s comparatively strong institutional environment (25th) is a result of good corporate governance mechanisms (11th) and an ability to effectively enforce contracts (19th),” the report said.

In terms of financial access (36th), South Africa offers varied results. On the one hand, commercial access scores (16th) are solid and improving, while retail access (41st) is relatively weak and declining.

Top ranked countries overall

Rank Country
1 Hong Kong
2 United States
3 United Kingdom
4 Singapore
5 Australia
6 Canada
7 Japan
8 Switzerland
9 Netherlands
10 Sweden

In terms of Africa, Morocco placed 45th, Egypt 53rd, and Kenya 54th. Ghana ranked 56th, Tanzania 60th, and Nigeria second last.

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SA business environment weak – global survey