South Africa was ranked 50th out of 142 countries in the 2011/2012 World Competitiveness Report, released on 7 September 2011. The latest ranking is up from 54th in last year’s report. While the latest ranking is a welcome improvement, South Africa has fallen significantly in the World Competitiveness rankings over the past few years. The top five places went to Switzerland, Singapore, Sweden, Finland and the United States, while last place went to Chad. (Nigeria was ranked 127 th, down from 125th last year).
South Africa remains an economy of extremes. This is illustrated in the breakdown of the components of the competitiveness ranking. South Africa ranks near the top of the global ratings in a number of factors namely:
- Regulation of securities exchanges 1st
- Strength of auditing and reporting standards 1st
- Soundness of banks 2nd
- Efficacy of corporate boards 2nd
- Availability of financial services 3rd
- Protection of minority shareholders’ interests 3rd
- Financing through local equity market 4th
- Effectiveness of anti-monopoly policy 7th
- Legal rights 8th
- Quality of management schools 13th
- Efficiency of legal framework in settling disputes 16th
Unfortunately, South Africa ranks near the bottom of the ratings in a number of key areas, namely:
- Availability of scientists and engineers 111th
- Organized crime 112th
- Burden of government regulation 112th
- Favoritism in decisions of government officials 114th
- Quality of primary education 127th
- Life expectancy, years 130th
- Pay and productivity 130th
- Business impact of HIV/AIDS 132nd
- Quality of the educational system 133rd
- Business costs of crime and violence 136th
- Quality of math and science education 138th
- Cooperation in labour-employer relations 138th
- Flexibility of wage determination 138th
- HIV prevalence, % adult pop 139th
- Hiring and firing practices 139th
These extremes reflect in an economy that is able to compete with the best in the world in some sectors/components, but is ultimately held-back by crucial factors, mainly poor education and labour inflexibility. The main risk for the SA economy is that the factors as the bottom of ranking drag the other, better-ranked, components systematically lower. Instead, South Africa urgently needs to find a way to utilise its inherent strengths to create employment. This is clearly going to have to include resolving the major education and labour constraints.
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