South Africa jumped seven places from 56th to 49th in the World Economic Forum’s (WEF) Global Competitiveness rankings for 2015/16. In total 140 countries were studied for this year’s report, down from 144 studied last year.
South Africa’s competitiveness is being driven forward by its efficient financial markets, a diverse and robust goods market, strong domestic competition and efficient transport infrastructure.
It also does particularly well in the strength of its institutions, including property rights and its independent legal framework.
All is not well, though, and the areas where South Africa is falling behind come as no surprise. These included corruption, government regulation, personal security, electricity generation, the labour market, health care and education.
The WEF also surveys global business leaders and investors to determine the perceptions about the country’s economic landscape and identify the most problematic factors for doing business.
Restrictive labour regulations remain the most troublesome this year, though this needs to be understood in context before just being seen as “bad”.
While South Africa’s current labour laws are poorly designed and begging for improvements, they’re better than none.
The countries where restrictive labour regulations did not factor as a problem for competitiveness were Nigeria, Sierra Leone, Pakistan, Bangladesh, Burundi, Cambodia, and others where labour has very few rights at all.
Bureaucracy
Second-most problematic was the inefficiency of government bureaucracy – an illustrative example is that President Jacob Zuma’s cabinet has more ministers than Germany and the US combined. Inadequate infrastructure took third place followed by policy instability in fourth. The poorly educated workforce completed the top five.
A jump of seven places in global rankings should indicate that things are improving in South Africa but the devil is in the detail. A more accurate deduction is that things are not going as badly for South Africa as they are for most other countries.
In macroeconomic factors, gross national savings increased from 13.5 percent to 14.9 percent.
Company spending on research and development was a large boon for South Africa in ranking, lifting it from 48th to 32nd in this area.
South Africa came in as number one in the world for financing through local equity markets, but its rank for the amount of venture capital available dropped 10 places.
This is representative of South Africa’s disjointed investment climate – large, existing firms have extensive access to capital, but entrepreneurship and individual innovation is stifled by lack of support.
The number of tuberculosis cases per 100 000 people has dropped from 1 003 to 860 since last year, but HIV prevalence as a percentage of the adult population has increased from 17.9 percent to 19.1 percent.
Education
Primary education enrolment grew from 85 percent to 89.6 percent. Secondary education enrolment was far more impressive, however, increasing from 101.9 percent to 110.8 percent and causing South Africa’s rank to jump from 24th to 12th.
The reason these figures are larger than 100 percent is that it is measured as the number of people in secondary education as a percentage of the age group that normally attends high school.
What the results indicate is that there has been strong growth in the number of adults going back to finish their matric.
South Africa’s most dramatic change was in internet access.
Mobile broadband subscriptions per 100 people grew from 25.2 to 40.7, and the total used capacity of international internet bandwidth exploded from 3.7 kilobits per second (kbps) per user to 149.5kbps per user. South Africa’s rank climbed from 126th to 19th among the countries studied.
South Africa has its hands full and challenges abound. But the global perspective is a good reminder that progress is still being made domestically.
* Pierre Heistein is the convener of UCT’s Applied Economics for Smart Decision Making course. Follow him on LinkedIn /in/pierreheistein.
** The views expressed here do not necessarily reflect those of Independent Media.
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