SA Sees Major Drop in Competitiveness

SA Sees Major Drop in Competitiveness


South African dropped eight places in its ranking as a competitive country from 44 in 2010 to 52 this year. This is according to the World Competitive Report which looks at how nations and enterprises are managed and what makes countries more attractive to investors from outside. The report is based on a survey completed by corporate executives and comprises 331 criteria in four categories: economic performance, government efficiency, business efficiency and infrastructure.

Last year South Africa moved up from 48 to 44, and in 2009 from 53 to 48. According to Sello Mosai this indicates that the country is able to perform better that it did in the current year.

  • Economic performance: This is the only category that showed improvement, with South Africa moving from 56th to the 54th spot. The major improvements responsible for this relate to international trade.
  • Government efficiency: This category took a knock, mainly due to the decline in institutional framework, public finance and societal framework.
  • Business efficiency: Executives felt negative about the country’s productivity and efficiency in the business sector, dropping from 18 to 44, while the overall business efficiency category dropped from 31 to 40.
  • Infrastructure: Here the country saw a drop from 46 to 56.

Strengths and weaknesses

South Africa was ranked the lowest when it came to the unemployment rate, and also had low results for youth employment, and direct investment abroad. Some of the other weaknesses include life expectancy at birth, education, equal opportunities, labour regulations, immigration laws, exchange rate stability and skilled labour.

There were some strengths reported, including the top ranking for import and export prices and volumes, and a fourth place for cost of living. In terms of government efficiency, a strength was an effective personal income tax rate and employer’s social security contribution rate. In the business efficiency category strengths include stock market capitalisation and social responsibility.

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