Sat, Oct 3, 2015
The WEF's Global Competitiveness Report 2015-2016 says Africa's economic improvement has been driven by overall better infrastructure, macroeconomic environment, health and primary education, goods market and labour market efficiency and innovation.
The Global Competitiveness Report 2015-2016 assesses the competitiveness of 140 world economies. Using a mixture of quantitative and survey data, it ranks countries overall by combining 113 indicators grouped under 12 pillars of competitiveness: institutions; infrastructure; macroeconomic environment; health and primary education; higher education and training; goods market efficiency; labour market efficiency; financial market development; technological readiness; market size; business sophistication; and innovation.
Africa’s solid growth rates—more than 5 percent over the past 15 years—bear witness to the region’s impressive economic potential. However, Africa’s levels of productivity remain low. The recent fall in resource prices has affected many countries and the normalization of US monetary policy may lead to increased investor scrutiny of emerging market risk, undermining growth prospects. Both these developments emphasize the region’s need to prioritize competitiveness-enhancing reforms.
The top performers are Mauritius (46th), South Africa (49th, and reversing its four-year downward trend), Rwanda (58th), and Botswana (71st). However, 15 out of the bottom 20 economies are sub-Saharan African, with Guinea propping up the list in 140th. The other two countries hardest hit by Ebola—Liberia (129th) and Sierra Leone (137th)—also rank low. Côte d’Ivoire (91st) and Ethiopia (109th) are this year’s largest improvers: both have strengthened institutions, while Côte d’Ivoire has also improved its financial markets and domestic competition and Ethiopia has made progress in its goods and labor market as well as its business sophistication and innovation.
The following are the top 10 performers in the region.
The Big Three:
The decade-long improvement of Mauritius comes to a halt this year with a fall of seven places to 46th. Small improvements in the basic factors for competitiveness— institutions (34th, up one), infrastructure (37th, up five), and higher education (52, up two ) are offset by declines in the efficiency of labor (down by five places to 57th) and the financial market (down by eight places to 34th). Despite this, Mauritius remains sub-Saharan Africa’s most competitive economy, ahead of South Africa in 49th. It boasts the region’s best infrastructure (37th), most healthy and educated workforce (63rd on health and 52nd in higher education and training), and most efficient goods market (25th). Institutions are a further asset (34th). However, as the country transitions moves up the development ladder, more needs to be done to unlock the areas of competitiveness conducive to a knowledge-driven economy:
2. South Africa:
South Africa climbs seven places to reach 49th, reversing its four-year downward trend thanks largely to increased uptake of ICTs—especially higher Internet bandwidth—and improvements in innovation (up by five places to 38th), which establish the economy as the region’s most innovative. South Africa also hosts the continent’s most efficient financial market (12th) and benefits from a sound goods market (38th), which is driven by strong domestic competition (28th) and an efficient transport infrastructure (29th). It further benefits from strong institutions (38th), particularly property rights (24th) and a robust and independent legal framework. Reducing corruption (76th) and the burden of government regulation (117th) and improving the security situation (102nd) would further improve institutions.
Rwanda continues its five-year upward trend, placing 58th and improving in seven out of 12 pillars. It has improved in business sophistication (up by 15 places to 69th) and financial markets (28th), with confidence increased by improved regulation of securities exchanges (46th) and the degree to which collateral and bankruptcy laws protect the rights of borrowers and lenders. The country benefits from strong public and private institutions (17th) and efficient markets: a flexible labor market (12th) and high female participation in the labor force (3rd) help Rwanda to rank 8th overall in labor market efficiency, though pay and productivity have to be better aligned (60th). However, basic weaknesses still need to be tackled: despite improvements, infrastructure (97th) is hampered especially by electricity and telephony (112th), while the workforce’s health (108th) and higher education (120th) remain low.
The Global Competitiveness Report 2015-2016 is available here.
Source: The Global Competitiveness Report 2015-2016
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