SOUTH Africa’s low scores on the World Economic Forums’ (WEF) Global Competitiveness Report 2014-15 compared to the rest of sub-Saharan Africa is likely the result of the business community showing frustration at the country’s failure to meet its expectations.
“Are we to believe that South Africa’s bureaucracy is less competent than Kenya, Tanzania and Zimbabwe? Do business people really think that the education levels of our workforce is 10 times worse than in Kenya and more than twice as bad as a failed economy like Chad’s? No wonder we look bad to the rest of the world when we show such low regard for ourselves,” said Conrad Litchfield, an investment adviser with one of the country’s multinational banks.
“It’s time South Africa’s business community stops making ‘own goals’ because we like to complain, and take a more realistic assessment of what we are compared to the rest of Africa. We’re not paradise but does anyone think that crime in South Africa is eight times the problem [that it is] in Zimbabwe?”
South African business people were not asked to compare their country’s business environment to other places.
A representative sample from each of the 144 economies surveyed by the WEF indicates what local business people perceive as “the most problematic factors for doing business” in their own backyards. However, foreign investors and others will inevitably make comparisons.
What they will find is that as far as South Africa’s business community is concerned, the poor work ethic in South Africa (a problem with 5.2 percent of respondents) is four times worse than in Kenya, where only 1.4 percent of respondents noted this concern.
For an investor worried about hiring and maintaining a workforce, South Africa is the country to avoid, by the business community’s own admission. Respondents ranked “restrictive labour regulations” as the number one impediment to doing business, cited by 19.8 percent. Why bother with the country when labour regulations are not a problem in Tanzania (1.6 percent of respondents), Uganda (1.1 percent) or Zambia (2.3 percent)?
Similarly, investors seeking security and frightened of crime will turn to Ethiopia, where only 0.5 percent of their fellow business people find crime a problem, or an even safer destination, Zimbabwe (0.3 percent). Gabon’s most lucrative enterprise may be the trans-shipment of illegal drugs, but crime simply does not exist there, with 0 percent of business people listing crime as a concern. Security-conscious investors will shun South Africa, where 2.5 percent rank crime and theft as serious problems.
However, if an investor takes the time to analyse the WEF report, a pattern appears showing the business people of sub-Saharan Africa’s better-performing economies and more stable countries have different concerns than their colleagues from lesser developed countries.
“If you cannot get a loan to operate your business, that’s a problem bigger than police efficiency or how educated your worker is. South African business people set the bar higher for themselves. We demand better everything, even if what we already have is better than anywhere else in Africa. That shows in the survey,” said a stockbroker who advises clients on investing in African bourses.