South Africa, an increasingly globally competitive destination

Friday, October 2, 2015

By Brand South Africa: Chairperson Chichi Maponya

South Africans awoke to some very good news earlier this week, the results of the 2015 World Economic Forum Global Competitiveness Index (WEF GCI) which placed the country at 49 of 140 in the survey.  This increase of seven places puts South African within the top 50 most globally competitive countries in the world for the first time since 2011.

South Africa’s biggest improvements come in the areas of: health and primary education (up 6 places), labour market efficiency (up 6 places), technological readiness (up 16 places), and innovation (up 5 places).

South Africa has also improved in the areas of: macro-economic environment (up 4 places), higher education and training (up 3 places), and business sophistication (up 2 places).

South Africa has dropped in the area of infrastructure (down 8 places), institutions (down 2 places), goods market efficiency (down 6 places), financial market development (down 5 places) and market size (down 4 places).Top of Form

These results indicate that South Africa’s efforts to respond to the triple challenges of poverty, underdevelopment and unemployment are making a positive impact.  Although much remains to be done, the current assessment of South Africa’s competitiveness, by an independent, international body like the World Economic Forum, should inspire us to keep going.

Interestingly WEF’s assessment of our global competitiveness concurs with our own. 

Recently, Minister Radebe contextualised South Africa’s commitment to addressing the nexus between the development of human capital and economic growth and development: “Reducing South Africa’s high levels of unemployment require the economy to be on a labour-absorbing growth path, as well as the development of entrepreneurship amongst our youth, in terms of interest, skills and creation of opportunities. This depends on a successful reorientation of the economy to raise labour demand, with matching improvements on the supply side. Re-industrialisation and economic diversification are also necessary to boost job creation, and these factors are at the heart of the NDP 2030, the New Growth Path and the Industrial Policy Action Plan.”

At the centre of our developmental programme is the National Development Plan which envisages an active and engaged citizenry with greater opportunities to participate fully in the economic, social and political life of the country, supported by good-quality education, health care, transport and other basic services.

To this end, and as WEF indicates with a 6 place rise on the pillar of health and primary education, South Africa is making strides in improving the quality of life for citizens.  South Africans are living for longer with life expectancy improving steadily over the last decade. The increase in life expectancy can be attributed to the constant improvement in implementation of comprehensive strategies to combat the quadruple burden of diseases inclusive of communicable disease – primarily HIV and AIDS and TB – and the reduction in infant and child mortality rates.

South Africa has also implemented a programme of early childhood development and in the period 2009-2014, we have seen an increase in the enrolment of five-year-old children in formal Early Childhood Development (ECD) centres. The proportion of Grade 1 learners who have attended Grade R reached 87.2% in 2014. Preparatory education in the formative years of learners has been found to be a predictor of good performance in subsequent phases of schooling. South Africa will continue to improve the quality of ECD as an essential ingredient for improving the results of learners in the whole education system.

Mathematics and science are critical in providing the skills needed by the country to grow the economy.  Again our assessment echoes that of WEF where we have seen a decline in the number of learners passing mathematics and physical science.  With South Africa’s focus on moving towards a knowledge economy, this is of concern to the country as a whole.  Key interventions have been implemented and include intensified teacher training and continuous development in these subjects; increased monitoring of curriculum coverage, strengthening of partnership with private sector.  The value of parents and the community playing their part to support learners will also improve performance over time.

A key contributor to the development of a knowledge intensive economy driven by innovation is investment in research and development (R&D) by both government and the private sector.  This will also see South Africa creating the conditions for more young people to be involved in the development of the economy as we harness the vibrancy and entrepreneurial spirit of our youth.  Although R&D expenditure as a percentage of GDP has increased over the years, it was only 0,76% of the GDP in 2011/12.  Increased investments in R&D are required to ensure that the country remains abreast of other nations in the production and application of scientific knowledge which includes indigenous knowledge systems.

Economic development and governance

South Africa recently ranked #3 in the 2015 Open Budget Index.  This is supported by our own assessment of improvements in better financial audit outcomes across national and provincial departments, municipalities and public entities.  While progress has been noted, this must be built upon because this is one of the indicators that build investor confidence.

This said, current developments indicate that South Africa remains a reliable investment destination for multinationals.  Despite global FDI falling by 16% in 2014, South Africa was able to attract over R140 billion in the 2013/14 financial year.  This is almost double the amount of FDI in 2012. 

The amount of inward FDI into the country also attests to the confidence of investors into our country since domestic and foreign investors are first and foremost returns driven.  A range of studies also indicate a positive correlation between investment and the expectation of strong economic growth in a country. 

Multinationals continue to find South Africa an attractive investment destination with recent information suggesting that the country is home to hundreds of companies: 700 from the USA; 600 from the UK; 600 from Germany; 280 from Japan; 185 from France and 120 from India. 

South Africa has also, in recent weeks, received a vote of confidence from, amongst others, VW, Starbucks, Goodyear, Facebook, Marriot Hotels who are either increasing their investment in the country or using South Africa as a base for their African expansion activities.

As Brand South Africa, we stop and take this moment to join President Zuma in congratulating the nation for its improved competitiveness.  A country’s competitiveness is built by each citizen and the 2015 WEF Global Competitiveness Index is a pat on the back for each South African.  Thank you for playing your part. 

We continue to draw inspiration of our founding President and icon of our country, Nelson Mandela who said, that “after climbing a great hill, one only finds that there are many more hills to climb. I have taken a moment here to rest, to steal a view of the glorious vista that surrounds me, to look back on the distance I have come.  But I can only rest for a moment…” 

Our nation’s rise to amongst the top 50 most competitive countries surveyed by WEF must be celebrated.  But the work continues.  The road to an equitable, developed and increasingly globally competitive South Africa continues.

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