‘Just a notch over Greece’
INVESTOR concerns over SA have seen the country drop three places to 53 out of 60 nations surveyed in global business school IMD’s 2013 world competitiveness rankings.
Not only was SA the worst performer compared with its Brics peers, it comes in just one notch above debt-laden Greece, and languishes behind European laggards Spain and Portugal.
IMD world competitiveness centre director Stephane Garelli said the fall mirrored concerns over growth.
INVESTOR concerns about SA have been underlined in a new report on competitiveness, showing SA fell three places to 53rd out of 60 countries not widely regarded as centres of economic excellence, among them Peru and Columbia.
Not only was SA the worst performer compared with its Brazil, Russia, India, China (Brics) counterparts, it comes in just one notch above debt-stricken Greece, and languishes behind such European laggards as Spain and Portugal.
Recent reports by global institutions including the World Bank are showing elevated investor concerns about labour unrest, particularly in the mining sector, unemployment and weak economic growth.
Top-ranked global business school IMD’s 2013 world competitiveness rankings showed that SA’s decline was also mainly on similar concerns. IMD world competitiveness centre director Stephane Garelli said the decline in SA’s rankings mirrored worries relating to growth, among others.
SA’s economy grew much slower than expected in the first quarter.
“The decline in SA’s rankings says that there are a lot of missed opportunities. The growth rate has been disappointing. It is not enough. Some of the problems are unemployment, corruption and difficulties in transparency,” he said.
The IMD uses 300-plus criteria which are grouped under the four themes of economic performance, government efficiency, business efficiency, and infrastructure to rank competitiveness in 60 countries.
International Monetary Fund and World Bank data, and surveys conducted with top local and foreign business executives with companies operating in SA, are also used in the compilation of the report.
Similar to other competitiveness indicators, including the World Economic Forum’s latest global competitiveness report, SA ranks poorly on labour market efficiencies but highly on the financial sector and financial sector regulations.
KPMG senior economist Lullu Krugel said all of SA’s challenges were well known, including those highlighted in the IMD report.
She said SA could emulate African counterparts in terms of making it easy to do business. “Rwanda, for example, has done a lot to make it easier to do business. They looked at incentives, tax legislation, made it easier to process imports and exports, and reduced paperwork.”
Business executives surveyed for the IMD report wanted more small-business-friendly policies to be adopted to boost entrepreneurship.
SA ranked 60th on entrepreneurship. “The system does not favour entrepreneurship. It is difficult to find money as an entrepreneur and the regulation is very complex,” Prof Garelli said.
Increasing manufacturing capacity, enforcing fiscal discipline, supporting small and medium-size enterprises, and investing in infrastructure and education were among the ways in which countries could improve competitiveness, he said.
“These rules apply to many countries, and SA as well. You have the large companies functioning very well. The medium-size enterprises are where more can be done.”