South Africa’s competitiveness has improved from 46th place in 2005 to 44th in 2006, according to this year’s World Competitiveness Report, released on Wednesday by Swiss international business school IMD.
The country’s ranking is out of 61 countries. The rankings, which are drawn from a combination of hard data, and the result of the Executive Opinion Survey, are a result of a comprehensive assessment conducted by the IMD in partnership with its network partner institutes, which include leading research institutes and business organisations in the countries covered by the report.
The report showed that South Africa’s overall government efficiency improved from last year’s 34th ranking to 2006’s 28th ranking.
Sello Mosai, National Productivity Institute (NPI) executive manager of knowledge management and research, said that this improvement indicates that the South African government has consistent policies. When compared wither advanced countries such as Brazil, Italy, Turkey, Indonesia and Poland, who did not perform as well in the report in this category as South Africa, the country is seen as a generally stable environment for investors to invest in.
The report also points to government’s focus on improving human-resource development.
“The World Competitiveness Report has 73 criteria included in its assessment of government efficiency and we scored very well in terms of effective income tax rate as a percentage of an income equal to the GDP per-capita, as well as our social security contribution, as well as in management of public finances,” said Mosai.
The report also showed South Africa improving from last year’s 40th position to this year’s 38th position in overall business efficiency, in line with government’s Accelerated and Shared Growth — South Africa’s (ASGISA) initiatives, where large investments are made in various sectors such as state-owned enterprises and the public sector as a whole, working in some instances through public- private partnerships.
Mosai said that South Africa was also recognised for stock-market capitalisation as a percentage of the GDP; social responsibility of business leaders which is high towards society; the large amount of female labour force as a percentage of the country’s total labour force; and the rights of shareholders being sufficiently protected.
In addition, SA was also recognised for adequate implementation in businesses of auditing and accounting practices. However, SA needs to continuously address issues such as the fact that skilled labour is not readily available in the country and that the labour force as percentage of the population is not so high.
“We are also struggling with finance skills that are not readily available, but on the plus side, our labour relations are generally productive,” said Mosai.
“However, we did not score as well in our overall economic performance, which declined from 42nd place last year to this year’s 46th place. Although it is above countries such as Greece and Finland, our GDP is much higher with the market-related exchange rate. In addition, there is more buying power in the rand than in the currencies of countries like Denmark, New Zealand and Ireland, where the GDPs are lower than normal exchange-rate GDPs,” added Mosai.
However, Mosai stressed that South Africa’s GDP will further improve with ASGISA and move forward in the growth league of nations.
South Africa also saw a decline with regards to its performance in the infrastructure category, dropping from last year’s 58th position to 2006’s 60th place, measured by basic infrastructures such as roads, railroads, energy infrastructures and airports, to mention a few. However, this too, Mosai said, will be addressed by ASGISA, which is set to provide an efficient and competitive logistic infrastructure and has set funds aside for, among other things, the demand for electricity and to satisfy the demand for water.
“With South Africa hosting the Fifa World Cup in 2010, government will also continue to pay particular attention to the expanded public works programme in its effort to bridge economic difficulties and play a significant part in poverty alleviation,” added Mosai.
Other areas where South Africa did not perform as well as its counterparts were in aspects such as life expectancy, but this, too, said Mosai, should improve with government’s plans to develop and expand more clinics to meet HIV/Aids-related needs. In addition, in the human development index, which combines economic, social and education indicators, South Africa scored weakly, but steps are in place to build more schools and address skills such as literacy, the upgrading of colleges and universities and overall career guidance.
“Of course, hot topics such as technology and telecommunications are also being addressed. The report again showed that South Africa has the highest internet costs in the world, but as ASGISA plans to grow the country’s broad-band network and our information technology skills and infrastructures. We should see an improvement on these criteria in the very near future,” concluded Mosai.
Overall, South Africa’s performance in the report shows a clear indication that the country is moving in the right direction, and with ASGISA firmly in place, South Africa is set to become a serious player in the world economy as a first-world participant. — I-Net Bridge