Mauritius, South Africa, Rwanda, Botswana, Morocco most Competitive African Economies
30-09-2015 06:28:00 | by: Bas Vlugt | hits: 52988 | Tags:

The Global Competitiveness Report 2015-2016 by the World Economic Forum assesses the competitiveness landscape of 140 economies, providing insight into the drivers of their productivity and prosperity. The Report series remains the most comprehensive assessment of national competitiveness worldwide.

The most competitive economy in Africa is Mauritius. Worldwide Mauritius ranks 46. That makes Mauritius more competitive than countries like Turkey (51), Vietnam (56) and Mexico (57). As most competivite African economy Mauritius is followed by South Africa, Rwanda, Botswana, Morocco. Striking is the low position of Africa's giant Nigeria. Only 24th in Africa and 124th worldwide.

The decade-long improvement of Mauritius comes to a halt this year with a fall of seven places to 46th. Small improvements in the basic factors for competitiveness—institutions (34th, up one), infrastructure (37th, up five), and higher education (52, up two ) are offset by declines in the efficiency of labor (down by five places to 57th) and the financial market (down by eight places to 34th). Despite this, Mauritius remains sub-Saharan Africa’s most competitive economy, ahead of South Africa in 49th. It boasts the region’s best infrastructure (37th), most healthy and educated workforce (63rd on health and 52nd in higher education and training), and most efficient goods market (25th). Institutions are a further asset (34th). However, as the country transitions moves up the development ladder, more needs to be done to unlock the areas of competitiveness conducive to a knowledge-driven economy: higher education, especially its quality; the use of ICTs and ability to absorb new technologies (65th), where it has steadily declined over the past decade; the capacity to innovate, about which business leaders are particularly concerned; and an inadequately educated workforce. 

Global Competitiveness Index (GCI)
Africa Global  
1 46 Mauritius
2 49 South Africa
3 58 Rwanda
4 71 Botswana
5 72 Morocco
6 85 Namibia
7 87 Algeria
8 91 Côte d'Ivoire
9 92 Tunisia
10 96 Zambia
11 99 Kenya
12 103 Gabon
13 109 Ethiopia
14 110 Senegal
15 112 Cape Verde
16 113 Lesotho
17 114 Cameroon
18 115 Uganda
19 116 Egypt
20 119 Ghana
21 120 Tanzania
22 122 Benin
23 123 Gambia, The
24 124 Nigeria
25 125 Zimbabwe

South Africa
climbs seven places to reach 49th, reversing its four-year downward trend thanks largely to increased uptake of ICTs—especially higher Internet bandwidth—and improvements in innovation (up by five places to 38th), which establish the economy as the region’s most innovative. South Africa also hosts the continent’s most efficient financial market (12th) and benefits from a sound goods market (38th), which is driven by strong domestic competition (28th) and an efficient transport infrastructure (29th). It further benefits from strong institutions (38th), particularly property rights (24th) and a robust and independent legal framework. Reducing corruption (76th) and the burden of government regulation (117th) and improving the security situation (102nd) would further improve institutions. The country also needs to address its inefficient electricity supply (116th) and inflexible labor market (107th). Even more worrisome are health (128th) and the quality of education (120th), where higher secondary enrollment rates will not be enough to create the skills needed for a competitive economy. 

Rwanda continues its five-year upward trend, placing 58th and improving in seven out of 12 pillars. It has improved in business sophistication (up by 15 places to 69th) and financial markets (28th), with confidence increased by improved regulation of securities exchanges (46th) and the degree to which collateral and bankruptcy laws protect the rights of borrowers and lenders. The country benefits from strong public and private institutions (17th) and efficient markets: a flexible labor market (12th) and high female participation in the labor force (3rd) help Rwanda to rank 8th overall in labor market efficiency, though pay and productivity have to be better aligned (60th). However, basic weaknesses still need to be tackled: despite improvements, infrastructure (97th) is hampered especially by electricity and telephony (112th), while the workforce’s health (108th) and higher education (120th) remain low.

Egypt, at 116th, moves up in the rankings for the first time since the Arab Spring. This reflects a more positive assessment of the country’s institutions (87th), in particular higher levels of physical security (up by seven places although still, at 133rd, an important hindrance to economic growth), a more efficient judiciary in settling business disputes (up by 23 places), and better protection of property rights (up by seven). Smaller improvements are registered on the macroeconomic environment (up four) and financial market development (up six). The upward movement reflects recent reforms, including a reduction of energy subsidies, tax reforms, and a strengthened business environment, as well as greater political stability after years of turmoil. Continued reforms are needed to create favorable conditions for private-sector growth, which will be crucial for job creation and hence social cohesion. These include more openness to trade and investment (130th on foreign competition), including reduction in tariff duties (132nd), non-tariff barriers (105th), and a more favorable environment for foreign direct investment. Continued efforts to strengthen the financial markets (119th) and investment in skills and education (111th) will further support private-sector growth.

Nigeria improves by three places to 124th. Last year’s revision of GDP is reflected in an increase in market size (up by eight places to 25th), lower government deficit and debt, and decreased national savings. Improvements in property rights, the efficiency of the legal framework to settle and challenge disputes, and the accountability of the private sector lift the country’s institutions up by five places, albeit remaining low overall (124th). The picture is mixed on efficiency of the goods market (100th), where a less competitive domestic environment outweighs improvements to encourage foreign competition; the financial market (79th), where banks are rated as relatively sound but access to finance remains problematic; and the labor market, which is one of the region’s most flexible (18th) but is dragged down by an inefficient use of talent (68th) and a comparatively low female participation rate (87th). Priorities include investment in infrastructure (ranking 133rd and singled out as the most problematic factor for doing business) and human capital, where poor health in the workforce (134th) and inefficient higher education (128th) holds the country back from fulfilling its potential.