Political certainty has seen South Africa move up seven places to 60th on the World Economic Forum’s Global Competitiveness Index 4.0, according to The Global Competitiveness Report 2019.
The annual report, which ranks 141 countries on their economic competitiveness, says SA “has regained momentum” after what it calls “the recent political landscape shift,” obliquely referring to Cyril Ramaphosa’s rise to president of the ruling ANC and later the country.
Ramaphosa’s effort to restore the rule of law and fight corruption, like the establishment of various commissions and the appointment of a well-respected prosecutor, Shamila Batohi as head of the National Prosecuting Authority, played a part in boosting it up the rankings.
Or as it puts it: “Some aspects … have achieved remarkable progress, including restored balance of powers across different state’s entities, enhanced administrative efficiency of the public sector and corporate governance.”
When compared to other Brics countries, SA sits behind China at 28 and the Russian Federation at 43. It is however ahead of India in 68th place and Brazil at 71.
At 60th, SA is now sandwiched between Greece at 59 and Turkey at 61.
Despite the rise in the rankings, the WEF report says there are areas where the country continues to underperform. “Other aspects continue to perform poorly: security remains one of the main restraints to SA’s competitiveness, while transparency and government adaptability to change are also below par.”
The country has also not done its self any favours when it comes to fostering a more friendly business environment. The report notes that “SA’s competitiveness is being held back by relatively low business dynamism, which is inhibited by insolvency regulation and administrative burdens to start a business, and a persistently insufficient labour market flexibility”.
“For instance, flexibility of wage determination is limited and hiring foreign labour is difficult.”
This observation follows the state also coming in for criticism from various local business leaders like FirstRand chair Roger Jardine saying the “government’s apparent unwillingness to champion the private sector as a growth engine is mystifying”, in its latest annual report.
The country’s dependence on commodity exports is also likely to hit its economic outlook, which it says will make cutting unemployment “challenging”.
Given the obstacles, like an unemployment boarding on 27%, the report says more must be done to bring more people into the economy.
“Against this backdrop, structural reforms are needed to re-ignite the economy and offer better opportunities to a larger share of South African citizens”.