Ranked: Africa’s most competitive economies

How We Made it in Africa

The World Economic Forum (WEF) yesterday published its Global Competitiveness Report 2012-2013, which ranks economies in terms of national competitiveness. Of the 144 countries ranked, 38 are African economies, and only South Africa, Mauritius, Rwanda and Morocco feature in the top half.

The WEF defines competitiveness as the “set of institutions, policies, and factors that determine the level of productivity of a country. The level of productivity, in turn, sets the level of prosperity that can be earned by an economy. The productivity level also determines the rates of return obtained by investments in an economy, which in turn are the fundamental drivers of its growth rates. In other words, a more competitive economy is one that is likely to sustain growth.”

To determine these rankings, global economies were rated according to 12 pillars: 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.

This year saw Gabon, Guinea, Liberia, Sierra Leone, and Seychelles included in the rankings with a return by Libya after a year of non-inclusion. Angola and Tunisia were not included this year due to research problems. Below is a summary of the top three and bottom three ranking African countries.

Top three African countries

South Africa is the top ranked country in Africa in terms of competitiveness, and is ranked 52nd out of the 144 economies surveyed, down two points from 50th place last year. South Africa is placed third among the BRICS economies. It ranks second in the world for the accountability of private institutions and third for financial market development, “indicating high confidence in South Africa’s financial markets at a time when trust is returning only slowly in many other parts of the world”. It scored worst for its labour market practises (143rd place for its rigid hiring and firing practises) and it is ranked last (144th) for the country’s significant tensions in labour-employer relations.

“Another major concern remains the health of the workforce, which is ranked 132nd out of 144 economies – the result of high rates of communicable diseases and poor health indicators more generally,” says the report.
Mauritius is ranked in 54th place this year and is the second-highest ranked African economy.

“The country benefits from relatively strong and transparent public institutions (40th), with clear property rights, strong judicial independence, and an efficient government,” states the report. “Private institutions are rated as highly accountable (13th), with effective auditing and accounting standards and strong investor protection. The country’s infrastructure is well developed by regional standards, particularly its ports, air transport, and fixed telephony. Its health standards are also impressive compared with those of other sub-Saharan African countries. Further, its goods markets are efficient (27th).”
The report also listed Mauritius’ most problematic factors for doing business as its inefficient government bureaucracy and access to financing. To boost its rating on the index next year, Mauritius needs to improve its market size (ranked 109th).
Rwanda is one of the top 10 gainers this year, moving up seven places to 63rd from 70th last year, and is the third ranked economy in Africa in terms of competitiveness.

“As do the other comparatively successful African countries, Rwanda benefits from strong and relatively well-functioning institutions, with very low levels of corruption (an outcome that is certainly related to the government’s non-tolerance policy), and a good security environment,” highlights the report. “Its labour markets are efficient, its financial markets are relatively well developed, and Rwanda is characterised by a capacity for innovation that is quite good for a country at its stage of development.”

However, the economy is limited by its market size (ranked 128th) and higher education and training (117th) needs improvement for Rwanda to continue its steady climb up the ranks.

Bottom three African countries

Guinea comes in for the first time on the Global Competitiveness Index at 141st place. It fairs best in terms of labour market efficiency (at 56th place) but needs to improve its infrastructure, macroeconomic environment and technological readiness for this economy to improve in the ranks next year.

Sierra Leone also enters the rankings for the first time this year, at 143rd place in terms of competitiveness. Of the 12 competitive indicators, Sierra Leone features best in its institutional environment, which is nevertheless relatively underdeveloped at 95th place. Health and primary education and its macroeconomic environment were ranked at 143rdplace and need to improve if Sierra Leone is going to lift its national competitiveness.

Burundi is ranked last (144th) in terms of competitiveness this year, falling from 140th place last year and 137th place the year before. Burundi’s most problematic factors for doing business include access to financing, corruption, policy instability, tax rates and inflation. It is ranked last of all the countries surveyed in terms of financial market development and technological readiness.

Global Competitiveness Index 2012-2013: Africa rankings

Country Africa ranking Overall ranking 2012-2013 (of 144)

TAGS: GLOBAL COMPETITIVENESS REPORT, WORLD ECONOMIC FORUM