Africa in world’s economic competitiveness

RTSVXVE-555x365

BY ALAN GREEN

The World Economic Forum just released the 2017-2018 edition of the biennial Global Competitiveness Report which compares the world’s economies against each other on the basis of a set of factors that determine a country’s economic productivity.

The report looks at various data—the so-called 12 pillars of competitiveness—that include the macro-economic environment, infrastructure, health and primary education, and labor market efficiency, to paint the picture of the economies of nearly all of the world’s countries. Several African countries, including Mauritius and Rwanda, rank pretty well, if way behind the top three world’s leaders, Switzerland, Singapore and the United States.

Switzerland has retained its position as the world’s most competitive economy with a score even higher than that of the previous report, 5.81. It not only features in the top ten of 11 pillars, it actually tops four of them: labor market efficiency, business sophistication, innovation, and technological readiness. Singapore, with a score of 5.72, remains the second most competitive economy for the sixth year in a row, though the World Economic Forum points out the need to improve its score in terms of business sophistication and innovation if it intends to capture the number-one spot. Thanks to its falling budget deficit, innovation, business sophistication, market size, financial market development, labor market efficiency, and higher education and training, the world’s largest economy, the United States, is the world’s third most competitive one, with a score of 5.70, according to the report.

Sub-Saharan African countries, which are far from having the most competitive economies in the world, don’t fare too badly however, with Mauritius holding the top spot int the region and coming 45th globally.

The World Economic Forum experts say the report comes out at a challenging time for the continent, after more than a decade of growth that has fueled expansion in the region has collapsed. The main culprits are the fall of commodity prices and lower growth in emerging countries such as China, and also in advanced countries.

Rwanda, for example, has slipped six positions, from 52nd in the last edition of the report, to 58th this year. Kiagli, however, has remained the most competitive economy in East Africa, with the other regional giant, Kenya, coming way behind in 91st position.Tanzania ranks 113th, Uganda 114th, and Burundi 129th. Says the report:

Rwanda remains among the most competitive African countries thanks to efficient goods and labor markets and a stable political situation that supports robust GDP growth (above 6 percent for the next few years).”

Another sub-Saharan leader, indeed the continent’s largest economy until two years ago, South Africa, has lost 14 positions, tumbling from 47th last time to 61st in the 2017-2018 report. While remaining one of the continent’s most competitive economies—ranking third—the South African economy has shown steep decline in its productivity, being, according to the report, as near standstill, with the GDP growth forecast at only 1% in 2017 and 2% in 2018. Experts say the anemic growth rate is not only the result of persistently-low international demand for the country’s commodities, but also the result of the high unemployment rate estimated above 25%, as well as the political uncertainty that has slashed the confidence of the nation’s business leaders.

The report notes that this situation has given impetus to reforms and economic diversification which, added to the strong economic performance of some of the continent’s economies, gives hope about the future in terms of growth.

Looking ahead, and viewing Africa’s young and increasing population as an asset, the report’s authors write:

A growing labor force and a large and emerging consumer market hold the promise of significant growth opportunities. Yet challenges to reaping these potential gains and achieving greater shared prosperity remain.”

They add:

Most economies in the region still need to promote more productive activities that generate quality employment opportunities for their growing populations and contribute to improving the livelihoods of African people.”

Africa can make this happen, the report says, adding that

decisions and actions taken today will determine whether governments and the private sector in the region can meet the growing economic and social aspirations of its population.

You may also like...