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There are two global markers which, each year, differentiate the world’s top-performing economies from those at the bottom of the pile.
Allowing for methodological differences, assumptions and sample size, the World Economic Forum’s Global Competitiveness Index and the Insead Global Innovation Index have three things in common: the trio at the top of the table.
Dominating the 2011 competitiveness rankings are Switzerland, Singapore and Sweden, in that order. SA ranks 50th out of the 139 countries surveyed. The 2011 innovation index top three reads: Switzerland, Sweden and Singapore. SA is 59th out of 125.
Both are barometers for competitiveness and they seem pretty much in accord. This ranking was inevitable for established, developed economies such as Switzerland and Sweden. But what about Singapore?
I shared a stage with Dr Vijay Mahajan at a forum in Joburg last year. During our debate the esteemed academic and author of Africa Rising made the point that SA can and should be taking on the same sort of role Singapore played in Asia some 20 years ago, but in the African context.
I couldn’t agree more. With our elevation to the Brics bloc we have powerful allies in Brazil, Russia, India and China, but our role in this elite grouping is a strategic one. SA was actively courted to be part of Brics, not for altruistic reasons but because SA is positioned to be a convenient platform into SADC and Africa as a whole.
That’s not a dissimilar role to the one Singapore adopted in the early 1990s, before the Asia crisis hit, before China was fully recognised as a dominant global force and before emerging markets became fashionable. Back then, multinational companies shied away from the risk of opening offices in India and China. Singapore stepped up to become a conduit between the rest of the world and these two challenging but potentially lucrative markets. Singapore, which gained sovereignty from Malaysia in 1965, had the infrastructure, telecommunications and education system for the job. With no natural resources of its own – Singapore imports its water from neighbouring Malaysia – this tiny nation of 5.18 million carved out a profitable niche.
SA is grappling with powerful external forces including the impact of the global financial crisis, the European debt crisis and internal challenges. Singapore could hold clues as to how a nation overcomes challenges and harnesses competitiveness. Central to the success of Singapore is how it manages its education system. The future of the best and the brightest is assured as young talent is spotted early and nurtured.
Dynamic young people with potential are granted full scholarships by the government and sent abroad to study at top universities. They study to Master’s or PhD level and when they have soaked up the finest education the world has to offer, they return to Singapore.
Aged roughly 27 to 28 years old they must now put in six years’ work in the private sector, working across three industries. The next step, when they are experienced 33- to 34-year-olds, is a position in the public sector. What this clear progression shows is not only a thoughtful process coupled with heavy, long-term investment, but it means that the best and brightest are now running the civil service.
Many of Singapore’s successes are premised around state-owned enterprises, such as the Maritime and Port Authority of Singapore and Singapore Airlines.
These enterprises are run by individuals with a history and legacy of straddling the public and private sectors, and with an understanding of how the business world works.
It’s that co-ordinated approach of understanding the fundamentals of education and the symbiotic relationship between various segments of society which has been key to Singapore’s continued achievement on the world stage.
Like Singapore, SA performs exceptionally well when it comes to some vital aspects of our global competitiveness report card. We rank first in terms of the regulation of our stock exchange; our banking system is in the top 10, as are our legal infrastructure and legal rights. Where we drop to a Third World ranking is in our health and primary school education, our higher education and training, and our technological readiness.
Sound fiscal policies coupled with our strong banking system and banking regulations have helped us side-step to a large extent the fall-out from the global financial crisis, but unless we can feed and educate our people, tackle inequality head on and provide basic services and adequate health care, we risk effectively losing a generation as unemployment and the cost of living continue to rise.
This will lead to massive social unrest. Cranking up competitiveness is the key, but in spite of renewed interest in Africa – and SA – as a market, as an opportunity and as the so-called “last frontier”, we are still struggling with the transition from talk to action. We also need to understand that the challenges we face are not a government problem as is often perceived, but a South African problem.
Look at the economic performance of African countries from a competitive perspective over the last five years: Africa has never had the economic traction that it has right now, but this is not because Africa has become more competitive. Almost every African country with the exception of Morocco has become less competitive according to the rankings. However, only when we deal with issues of competitiveness will trade and investment with various economies around the world result in meaningful impact for communities in Africa.
The National Planning Commission’s Vision 2030 document, which sets a recommended course for SA, is a step in the right direction. SA needs a clear vision – just like Singapore had – which sets achievable targets; helps to encourage business creation and entrepreneurship; looks pragmatically at the impact of labour regulations on our economy; addresses the skills requirement in the civil service; and brings together key actors in our system, from youth activists, the private and public sectors, civil society and academia, to engage and debate the challenges facing this country.
We need to entrench a closer and more symbiotic relationship between our public and private sectors. The debate around SA’s relationship with the Bric nations has been dominated by the political leverage the relationship will bring in advancing our interests.
But very little has been said about the positioning of the SA corporate sector in leveraging the relationship. I suspect boardrooms in Sandton have not begun to fully unpack the impact of the Bric engagement on corporate strategy. The alacrity with which our government accepted the invitation has not translated into a similar vigour by corporate SA.
I do know that boardrooms in Mumbai, São Paolo and Shanghai have already begun this discourse and have engaged effectively with the political actors to advance their interests.
This is exacerbated by a total lack of coherence between the political agendas in Pretoria and the corporate strategies in Sandton. SA government and business interests are often misaligned. South Africans are fantastic when it comes to individual and company competitiveness.
Then there is the issue of country competitiveness – something that is the responsibility of all citizens; here we fail dismally because we are unable to understand that if our country is a success, so will be our companies and ultimately the individuals in the country. Unfortunately we are doing things the other way around. It’s time to flick the switch.
n Verachia serves as an adjunct faculty member and head of the India-Africa Business Network at the Gordon Institute of Business Science. He is also a partner and co-founder at Frontier Advisory, a leading dynamic markets advisory firm.