South Africa's competitiveness ranking holds steady, but skills shortages and crime weigh
Thématique :
sud afrique
By: Terence Creamer, 08/10/2008
South Africa managed to sustain its position in the top half of the World Economic Forum's global competitiveness index (GCI), which was released on Wednesday as part of the ‘Global Competitiveness Report 2008-2009', ranking 45 out of the 134 countries surveyed.
South Africa's performance was in line with its ranking of 44 in 2007/8, given that three additional countries had joined the exercise during the year - in 2006/7, the country came in thirty-fifth in a grouping of 122 countries.
But the report, which calculated its rankings using both publicly available data and a survey of 12 000 business leaders, also highlighted several disturbing reversals in performance, most notably a decline in the quality of the country's electricity supply. Here, South Africa slipped down the rankings to 101, from a ranking of 83 on this same measure the year prior.
Somewhat ironically, given the current perilous state of the global economy precipitated primarily by the subprime crisis in the US, the world's biggest economy continued to top the overall rankings, followed by Switzerland, Denmark, Sweden and Singapore.
Also worth noting was the UK's fall out of the top 10, with the country declining from ninth to twelfth, as was the rise of China into the top 30.
In sub-Saharan Africa, South Africa, Botswana (whose ranking surged from 76 to 55) and Mauritius featured in the top half of the rankings, with several countries from the region measurably improving their competitiveness. But Chad, Zimbabwe and Burundi all propped up the bottom of the table, with rankings of 134, 133 and 132 respectively.
The GCI, which had become a yearly feature since 2004, was compiled using 12 so-called pillars covering institutions, infrastructure, macroeconomic stability, health and primary education, higher education and training, goods market efficiency, labour market efficiency, financial market sophistication, technological readiness, market size, business sophistication and innovation.
Although South Africa's overall infrastructure ranking, at 48, did not decline markedly, its electricity component emerged as a key weakness. This was largely attributable to the poor performance of State power utility Eskom, which resulted in a prolonged period of load shedding during the first half of 2008.
Further, South African mines and factories had been rationed to 90% of their 2007 average electricity consumption, with only a few mines having recouped an additional 5%.
Worryingly, too, was the fact that Eskom could not cover the full cost of its R343-billion, five-year capital programme, which meant that it would have to approach the domestic and international debt markets to close what could be a R150-billion funding gap. However, it would have to do so during what is arguably the biggest global financial crisis since the 1930s and with one rating agency having already downgraded its credit rating.
BOTTOM OF THE CLASS
But South Africa was not only vulnerable on the power front, with the report, which was published in Geneva, highlighting a deterioration in its health and education, crime and macroeconomic-stability rankings.
The country ranked a dismal 133 with regard to the business impact of HIV/Aids and a worrying 132 when measured against others on the quality of the maths and science education.
The country was the worst performer at 134 on the prevalence of tuberculosis and came in at 133 with regard to the business cost of the disease.
South Africa came in stone last, at 134 out of 134, in the business cost of crime and violence; 126th in the area of organised crime; and ranked a poor 109th in the reliability of its police services.
South Africa's poor national savings levels dragged down its macroeconomic ranking, with the country coming in at a below par 102.
But when surveyed, South African executives identified the country's inadequately educated work force as being the single most problematic factor for doing business, followed closely by crime and theft.
Commenting on the outcomes, Business Unity South Africa's economic policy director Simi Siwisa said that the report and its associated index highlighted many of South Africa's well-known challenges, particularly with regard to the country's human-capital deficiencies.
She told Engineering News Online that it also highlighted that the skills challenge could not be decoupled from the weaknesses currently experienced at primary- and secondary-school levels. Indeed, the report ranked South Africa at a mediocre 110 on the quality of its education system.
"I think it also highlights that we need to do more and that we should be aiming higher. We should not be satisfied with our current ranking, nor with the fact that we are the highest ranked country in Africa - we should be aiming to be in the top 20," Siwisa asserted.
She added that it was also only through productivity and improved governance and efficiency that South Africa could safeguard itself against the economic storms that were now not only brewing, but taking devastating shape across the globe.
This was also in line with sentiments expressed by Xavier Sala-i-Martin, Professor of Economics, Columbia University, and coauthor of the report.
He argued that a competitiveness-supporting economic environment would help national economies weather shocks associated with rising food and energy prices, as well as a major international financial crisis.
South Africa managed to sustain its position in the top half of the World Economic Forum's global competitiveness index (GCI), which was released on Wednesday as part of the ‘Global Competitiveness Report 2008-2009', ranking 45 out of the 134 countries surveyed.
South Africa's performance was in line with its ranking of 44 in 2007/8, given that three additional countries had joined the exercise during the year - in 2006/7, the country came in thirty-fifth in a grouping of 122 countries.
But the report, which calculated its rankings using both publicly available data and a survey of 12 000 business leaders, also highlighted several disturbing reversals in performance, most notably a decline in the quality of the country's electricity supply. Here, South Africa slipped down the rankings to 101, from a ranking of 83 on this same measure the year prior.
Somewhat ironically, given the current perilous state of the global economy precipitated primarily by the subprime crisis in the US, the world's biggest economy continued to top the overall rankings, followed by Switzerland, Denmark, Sweden and Singapore.
Also worth noting was the UK's fall out of the top 10, with the country declining from ninth to twelfth, as was the rise of China into the top 30.
In sub-Saharan Africa, South Africa, Botswana (whose ranking surged from 76 to 55) and Mauritius featured in the top half of the rankings, with several countries from the region measurably improving their competitiveness. But Chad, Zimbabwe and Burundi all propped up the bottom of the table, with rankings of 134, 133 and 132 respectively.
The GCI, which had become a yearly feature since 2004, was compiled using 12 so-called pillars covering institutions, infrastructure, macroeconomic stability, health and primary education, higher education and training, goods market efficiency, labour market efficiency, financial market sophistication, technological readiness, market size, business sophistication and innovation.
Although South Africa's overall infrastructure ranking, at 48, did not decline markedly, its electricity component emerged as a key weakness. This was largely attributable to the poor performance of State power utility Eskom, which resulted in a prolonged period of load shedding during the first half of 2008.
Further, South African mines and factories had been rationed to 90% of their 2007 average electricity consumption, with only a few mines having recouped an additional 5%.
Worryingly, too, was the fact that Eskom could not cover the full cost of its R343-billion, five-year capital programme, which meant that it would have to approach the domestic and international debt markets to close what could be a R150-billion funding gap. However, it would have to do so during what is arguably the biggest global financial crisis since the 1930s and with one rating agency having already downgraded its credit rating.
BOTTOM OF THE CLASS
But South Africa was not only vulnerable on the power front, with the report, which was published in Geneva, highlighting a deterioration in its health and education, crime and macroeconomic-stability rankings.
The country ranked a dismal 133 with regard to the business impact of HIV/Aids and a worrying 132 when measured against others on the quality of the maths and science education.
The country was the worst performer at 134 on the prevalence of tuberculosis and came in at 133 with regard to the business cost of the disease.
South Africa came in stone last, at 134 out of 134, in the business cost of crime and violence; 126th in the area of organised crime; and ranked a poor 109th in the reliability of its police services.
South Africa's poor national savings levels dragged down its macroeconomic ranking, with the country coming in at a below par 102.
But when surveyed, South African executives identified the country's inadequately educated work force as being the single most problematic factor for doing business, followed closely by crime and theft.
Commenting on the outcomes, Business Unity South Africa's economic policy director Simi Siwisa said that the report and its associated index highlighted many of South Africa's well-known challenges, particularly with regard to the country's human-capital deficiencies.
She told Engineering News Online that it also highlighted that the skills challenge could not be decoupled from the weaknesses currently experienced at primary- and secondary-school levels. Indeed, the report ranked South Africa at a mediocre 110 on the quality of its education system.
"I think it also highlights that we need to do more and that we should be aiming higher. We should not be satisfied with our current ranking, nor with the fact that we are the highest ranked country in Africa - we should be aiming to be in the top 20," Siwisa asserted.
She added that it was also only through productivity and improved governance and efficiency that South Africa could safeguard itself against the economic storms that were now not only brewing, but taking devastating shape across the globe.
This was also in line with sentiments expressed by Xavier Sala-i-Martin, Professor of Economics, Columbia University, and coauthor of the report.
He argued that a competitiveness-supporting economic environment would help national economies weather shocks associated with rising food and energy prices, as well as a major international financial crisis.
