WEF results are a wake-up call for SA
BRAND South Africa, the official marketing agency of South Africa, said yesterday that the 2017-2018 World Economic Forum Global Competitiveness Index (WEF GCI) year’s results was a wake-up call to the nation following on two years where the country made strong progress in the global competitiveness rankings.
South Africa’s performance in the WEF GCI slipped 14 positions from the 2016-2017 WEF GCI results, leaving the country ranking 61 out of 137 economies assessed in the annual survey.
Corruption, crime and theft, as well as government instability were cited as three primary reasons why the country dropped 14 positions in the overall rankings this year, although it remains one of the most competitive countries in sub-Saharan Africa, and among the region’s most innovative ranked 39th.
Other factors related to the fall in the index released yesterday include tax rates, inefficient government bureaucracy, poor work ethic in the national labour force, restrictive labour regulations, inadequately educated workforce, inflation, access to financing, and policy instability.
Brand South Africa’s chief executive Kingsley Makhubela said South Africa’s declined competitiveness profile could
be attributed to low gross domestic product (GDP) growth forecasts at just 1 percent in 2017 and 1.2 percent in 2018 – hit by low persistently international demand for its commodities.
“It is also concerning that the financial sector has been affected by uncertainty, as can be seen in the dramatic drop in performance in this indicator, while historically low levels of business confidence have now clearly impacted on the competitiveness profile of the Nation Brand,” Makhubela said.
“We note decreasing competitiveness in institutions, macro-economic environment, goods and market efficiency, and financial market development. Both the government and
the private sector should take heed of the deteriorating competitiveness indicators.”
Respondents to the WEF’s Executive Opinion Survey were asked to select the five most problematic factors for doing business in their country and rank them between most problematic and least problematic.
Standstill The 2017-2018 WEF GCI also noted that South Africa’s economy was nearly at a standstill, with GDP growth forecast at just 1 percent this year and 1.2 percent next year – hit by persistently low international demand for its commodities, while its unemployment rate was estimated at above 25 percent and rising.
The survey said political uncertainty in 2017 has decreased the confidence of South African business leaders and although still relatively good in the African context, the country’s institutional environment (76th), financial markets (44th), and goods market efficiency (54th) are all rated as weaker than last year.
The Independent Regulatory Board for Auditors (Irba) yesterday said in response to the release of the 2017-2018 World WEF GCI that it had expected not to retain the number one ranking for auditing standards, a ranking it enjoyed for the past seven years.
Bernard Agulhas, the chief executive of the Irba, said: “Confidence in financial markets is dependent on perceptions of how safe it is to do business in a country, and such perceptions are influenced by levels of corruption, crime, downgrades and strength of financial institutions.”
“This drop in confidence indicates that South Africa is no longer seen as a good investment. As confidence drops, investment drops and our markets suffer the consequence. Given that our financial markets and institutional ranking slipped in a number of areas including strength of securities exchange, efficacy of corporate boards, protection of minority shareholders’ interests, decline in strength of investor protection and ethical behaviour of firms, the result is predictable.”