Madeleine Wackernagel in Harare
AMID all the rhetoric of new visions and a brighter future, one message came through loud and clear at this year’s Southern Africa Economic Summit, hosted by the World Economic Forum (WEF): if the Southern African Development Community (SADC) countries are serious about attracting foreign investment, the only choice is openness – lower tariffs, easier exchange controls and favourable tax regimes.
In the week that the WEF’s Global Competitiveness Report put South Africa right near the bottom (ranked 44th out of 53 countries surveyed), that message took on an added urgency. But all is not lost:in terms of market size and gross potential, South Africa ranked 23rd – in the same league as Spain, Chile, Argentina, Hong Kong and the Netherlands.
Eight criteria were used:South Africa scored positively in the categories of the role of government Budget and regulation, quality of infrastructure, technology and business management and development of financial markets; but negatively in terms of openness of the economy, flexibility of labour markets and quality of judicial and political institutions.
The region as a whole had enormous potential, said Jeffery Sachs of Harvard University and co-chairman of the report. Testimony to the dynamic process of change undergone in the SADC economies was that globalisation was now regarded as a “good” thing by all the representative speakers, he added. But only trade could be the engine of growth and the degree of openness was the surest measure of a developing economy’s potential for success or failure. On this score the region had some way to go, he said.
Conference participants seemed to agree, judging by the response to the questionnaires left on our tables at dinner. In answer to how the SADC economies could become more competitive, the delegates were unanimous in their calls for lower barriers to entry, tax incentives and flexible labour markets.