South Africa Improves its Global Competitiveness

By Henry Neondo

PRETORIA--South Africa ranks high among global economies, this is according to a recent World Economic Forum’s Global Competitiveness Index released internationally on Wednesday.

The annual Global Competitiveness Report was first released in 1979 and has since evolved into the prime authority on relative competitiveness among most of the world’s nations. Respondent numbers have grown over the years, with the 2011-2012 report covering 142 countries and some 14 000 respondents.

South Africa’s overall ranking, after slipping nine places last year – from 45 to 54 – recovered to 50 in 2011-2012, thanks mainly to impressive gains in accountability of private institutions, strength of investor protection and technological readiness.

 The country that only got accepted into the global economy in 1994 after years of exclusion under apartheid ranked first and second in the strength of auditing and reporting standards and efficacy of corporate boards respectively.

In line with the improvement in South Africa’s overall ranking, its absolute score remained at 4,3 (on a scale of one to seven).

South Africa’s 50th overall ranking is sub-Saharan Africa’s highest.

The country’s 54th position in 2010-11 was not high enough to earn it the top continental accolade because of Tunisia’s 34th place.

However, owing to that country’s political upheaval it has slipped back to 40th. South Africa is second only to China among the BRICS economies (BRICS also include Brazil, Russia, India, China).

 “Since these factors are categorised by the World Economic Forum as sustainability issues, their superior ratings are indicative of a highly positive long-term outlook for the South African economy,” observes Miller Matola, CEO of the International Marketing Council, custodians of Brand South Africa.

Referring to the World Economic Report’s narrative, Matola remarked that this is highly indicative of trust in South Africa at a time when it is returning only slowly in many other parts of the world. “These combined attributes make South Africa the most competitive economy in the region.”

“We could have fared considerably better had we not lost further ground in the categories in which we scored poorly last year – labour policies, health and education,” says Matola. “We  need to improve our rankings in these criteria if we are to continuously move up the rankings.”

“The results are an indication that the reality and perception of competitiveness in South Africa is improving at a pace ahead of that of many other countries. The World Economic Forum derives about 60% of its score values from actual market data and 40% from perception. That South Africa has scored well on both counts is both highly gratifying and encouraging.”

Of importance, adds Matola, is the country’s third ranking for protection of minority shareholders’ interests. “South Africa’s strong performance in the financial market and corporate governance dimensions is an indication that the country is deemed a safe destination for business and investment.  This is a positioning the country will have to work hard to maintain amidst florid debates about open market policies,” he said.

Ewald Müller, senior executive: Standards at the South African Institute of Chartered Accountants said these standings further enhance the country’s competitiveness in attracting foreign direct investment: “Given a clear account based on international standards, backed by strong regulation and robust corporate governance allows investors open and easy access to assessing the risks and rewards associated with corporate South Africa.”