Government drags on SA competitiveness

South Africa has lost the top spot as most competitive sub-Saharan country, as wasteful government spending, poor education and tense labour relations drag on the country’s economy.

This is according to the latest Global Competitiveness Index for 2013/14 by the World Economic Forum (WEF) which ranked South Africa as the 53rd most competitive market, out of 148 countries.

In last year’s 2012/13 report, South Africa placed 53rd out of the 144 countries indexed – equivalent to 52nd, when compared to the 148 countries in the 2013/14 list.

This means that, while South Africa’s positioning on the index has not changed since last year, in real terms it’s slipped one place.

Mauritius shot past to place higher than South Africa on list, having moved up from 54th position in 2012/13 to 45th in 2013/14.

According to the WEF, regional variation is high in sub-Saharan Africa in terms of competitiveness – with countries ranking between 45th (Mauritius) and 148th (Chad).

“Over all, sub-Saharan Africa trails the rest of the world, especially in the basics – institutions, infrastructure and higher education – with a comparatively stronger performance in the market pillars (goods, labour and financial),” the WEF said.

“Economies with closer ties to advanced economies, such as South Africa, have not yet returned to pre-crisis growth rates.”

Sub- Saharan Africa 2013-2014 Infographic
Sub- Saharan Africa 2013-2014 Infographic (click to enlarge)

South Africa

The WEF noted that South Africa’s financial market development remains impressive, at 3rd place over all – though the South African government was playing a large role in dragging down the country’s ability to compete globally, as well as the low level of education and tense labour relations.

“Low scores for the diversion of public funds (99th), the perceived wastefulness of government spending (79th), and a more general lack of public trust in politicians (98th) remain worrisome, and security continues to be a major area of concern for doing business (at 109th),” the WEF said.

South Africa also ranked higher than most of the BRICS nations this year, overtaking Brazil as number 2. Only China ranked higher (29th) – well ahead of South Africa (53rd), Brazil (56th), India (60th), and Russia (64th).

Global performance

New countries added to the index include Myanmar, Bhutan and Loa PDR, while Tunisia and Angola have been re-added. Tajikistan was not covered.

The top 10 remained dominated by a number of European countries, with Switzerland, Finland, Germany, Sweden, the Netherlands, and the United Kingdom confirming their places among the most competitive economies.

Three Asian countries also figure in top 10, with Singapore remaining the second-most competitive economy in the world, and Hong Kong SAR and Japan placing 7th and 9th.

“It is worth noting that a vast majority of the top 10 most competitive economies share strengths in innovation and a strong institutional framework,” the WEF said.

Switzerland retained top spot as a result of its continuing strong performance across the board. The country’s most notable strengths are related to innovation and labor market efficiency as well as the sophistication of its business sector.

Switzerland has ranked number 1 on the index for 5 years.

GCI click
GCI Top 70 2013/14 (click to enlarge)

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Government drags on SA competitiveness