Thu, 25 Oct 2018
The World Economic Forum (WEF) has published its latest Global Competitiveness Index, showing that South Africa has dropped five places in the rankings since 2017.
The report measures and assesses the competitiveness landscape of 140 economies, and gives insights into what drives economic growth among them.
This is done through assigning scores to various indicators across 12 key pillars – starting with a country’s institutions, all the way through to the business dynamics.
In 2018, South Africa ranked 67th globally – with an overall score of 60.8 – attaining the second spot in Sub-Saharan Africa. This is down five places from 62nd place in 2017.
According to the WEF, among its strengths, South Africa is home to a large market size (68.4), good infrastructure (68.6) and a well-developed financial system (82.1, 18th).
More specifically, South Africa’s financial sector offers a relatively balanced access to various sources of finance, including credit (100.0, 11th), venture capital (33.0, 63rd), equity (100.0, 2nd) and insurance (100.0, 3rd).
In addition, South Africa’s innovation capability is relatively advanced (44.3, 46th), although limited by insufficient research and development (37.5).
Among its weaknesses, however, South Africa’s performances on the health pillar (43.2, 125th) and security (43.7, 132nd) sub-pillar are among the worst in the world.
Driven by high incidence of communicable diseases and high rate of homicides (34 per hundred population, 135th), these factors are major challenges for the economic and human development of the country.
Low ICT adoption (46.1, 85th) is another important restraint on South Africa’s competitiveness. Only 54% of the adult population has access to the internet, and only 70 out of 100 people have subscribed to mobile-broadband services (66th).
Similarly, the digital skills (116th) and critical thinking skills (78th) of the current workforce are inadequate for the progress of a successful economy in the Fourth Industrial Revolution
The bad news
Among the 98 individual indicators measured by the WEF, South Africa ranks in the lowest quartile (bottom 35 countries) in 13 categories, which emerge as the main factors dragging us down the competitiveness rankings.
According to the WEF’s assessment, much of what’s holding South Africa back competitively has to do with labour and crime – particularly the high rate of murder coupled with an unreliable police force, and the friction between labour and employers that often results in protracted strikes which bring industries to a halt.
Other factors dragging us down the rankings include a lack of digital skills, poor education, and poor healthcare.
Co-operation in labour-employer relations
Flexibility of wage determination
Time to start a business
Healthy life expectancy
Reliability of the police service
Hiring and firing practices
Active labour policies
South Africa and crime
The WEF mentions South Africa in two very specific contexts relating to competitiveness – namely security and inequality: two areas South Africa puts in the worst performance.
Globally, performance among all countries is best on Security. Here, the median score is 72 and half of all countries score 75 or above, with Finland (97.5) coming closest to being free from terrorism and crime.
With equal scores of 33.8, El Salvador and Venezuela are the worst performers, but crime and [...]