Miyelani Mkhabela, economist and director at Antswisa Transaction Advisory. Photo: Supplied
Miyelani Mkhabela, economist and director at Antswisa Transaction Advisory. Photo: Supplied

SA needs to mobilize, arrange human capital base to boost its global competitiveness

By Miyelani Mkhabela Time of article published Nov 1, 2019

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JOHANNESBURG – The World Economic Forum (WEF) global competitiveness index report has ranked South Africa on 60/141 nations.

South Africa will need to mobilize and arrange its national human capital base to work toward taking South Africa to a ranking below 40 and also do a proper assessment on the technological needs that can accelerate the nation. We need to address a few indicators to move from a factor-driven to transition to sophistication and we will then work to arrive at a sophisticated or innovative factor.

I believe the political and economic instability has cost the country so much the past five to seven years.

When nations elect great leaders, it will also assist their national competitiveness compared to other nations ranked with. Leadership, governance and accountability play a pivotal role in the viability and adaptability to geopolitics and economic challenges that are happening more often during this epoch.

South Africa’s competitiveness has regained momentum after the recent political landscape shift and climbs 7 places to 60th. The country is a regional financial hub (83.2, 19th), with well-developed equity, insurance and credit markets, all achieving a score of 100.

South Africa has also developed one of the most advanced transport infrastructures in the region (58.7, 45th) and is among the top countries in Africa for market size (68.6, 35th). Beyond these established strengths, health conditions—though starting from a low base (118th)—are better, adding 3.3 years to the average healthy life expectancy since the last assessment.

Institutional quality has also improved (+3.3 points, 55th) but unevenly. 

We need to improve our institutions mainly the section 9 institutions, justice cluster as a whole, government departments and state-owned institutions. 

The recent report by the Auditor-General reveals that 11 of the 14 state-owned enterprises audited faired poorly. The department of public enterprises and national treasury needs to come with proactive operational systems to operate this SOEs to operate efficiently and commercially self-sufficient. 

Some aspects of this category have achieved remarkable progress, including restored balance of powers across different state’s entities (+7.7 points, 16th), enhanced administrative efficiency of the public sector (+6.3, 39th) and corporate governance (+3.3, 26th). By contrast, other aspects continue to perform poorly: security (42.7, 135th) remains one of the main restraints to South Africa’s competitiveness, while transparency (43.0, 62nd) and government adaptability to change (39.6, 100th) are also below par. 

Further, South Africa’s competitiveness is being held back by relatively low business dynamism (61.9, 60th), which is inhibited by insolvency regulation and administrative burdens to start a business, and a persistently insufficient labour market flexibility (52.1, 111th). 

Business and Labour must come with new approaches that will assist south Africa's doing business frontier to improve while workers are safe from mistreatment. 

For instance, the flexibility of wage determination is limited (41.1, 134th) and hiring foreign labour is difficult (40.6, 123rd). 

South Africa’s sensitivity to exports of mineral resources is likely to hit the country’s economic outlook and will make reducing unemployment (projected above 27 percent) challenging. 

Our international banking and the international chamber of commerce understanding confirm that South Africa is great in the export of minerals but the domestic political instability has made the respondents of the WEF GCI feel in that the country is sensitive. 

Against this backdrop, structural reforms are needed to re-ignite the economy and offer better opportunities to a larger share of South African citizens. 

We are strategically optimistic that when the country implements the reforms recommended, in the next 12 to 18 months, we will see the nation improving much in different economic indicators such as investment and business confidence, our doing business in South Africa and consumer confidence. 

We have managed to remove the state from the pit and we are treating it towards its better health. 

Miyelani Mkhabela is a director for Antswisa Transaction Advisory and Antswisa Private Equity.


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