/ 13 July 2011

SA’s dominance in Africa on the wane, warns economist

South Africa’s role as Africa’s gateway could be under threat, according to an economist for sub-Saharan Africa at IHS Global Insight, Business Report reported on Wednesday.

Ronel Oberholzer highlighted trends that undermined the country’s position in the region at a conference in Johannesburg on Tuesday.

As investors become “less scared of Africa”, many offshore companies were going direct to their target countries rather than basing operations in South Africa, she said.

This is reflected in capital flows from the rest of the world, which are growing at a slower pace to South Africa than to many of its rivals.

Oberholzer said that foreign direct investment to South Africa grew only about 10% a year on average between 2005 and 2008.

Mauritius and Ghana were the front-runners with annual growth of more than 100% — although off a much smaller base.

“Mauritus comes up frequently in our research,” she said.

“It’s a country to watch.”

According to Oberholzer, one of South Africa’s drawbacks is its labour market, which was inflexible and expensive.

“In terms of labour market efficiency, South Africa ranks behind Uganda, Namibia, Mauritius, Botswana, Nigeria, Angola and Ghana,” she said quoting the World Economic Forum’s Global Competitiveness report.

One of South Africa’s biggest rivals for a leading role on the continent is Nigeria.