South Africa slips in global competitiveness ranking

South Africa has witnessed a significant decline in its global competitiveness ranking, dropping to its lowest position in the World Economic Forum's Global Competitiveness Report since 2007. The country plummeted 14 places to position 61 out of 138 economies, marking a concerning trend in its economic landscape. Key factors contributing to this downward spiral include a fall in institutional ranking, weaker assessment of financial market development, and the repercussions of low commodity prices. Margareta Drzeniek, Chief Economist and Head of Economic Growth and Social Inclusion at WEF, shed light on the stagnation of competitiveness not only in South Africa but also across sub-Saharan Africa. Drzeniek highlighted the challenges facing the region, emphasizing the critical need for reform and innovation to enhance competitiveness. South Africa's decline is a reflection of broader issues plaguing the region as a whole. Drzeniek attributes South Africa's drop in ranking to changes in the institutional environment, such as government functionality and stability, as well as concerns over the perceived stability of financial markets and the level of competition within goods markets. The country's recent political uncertainty and subdued growth expectations, compounded by the end of the commodity super cycle, have further contributed to its diminished competitiveness. The overall macroeconomic environment in Africa has been negatively impacted by the drop in commodity prices, resulting in challenges related to public finance and inflation. Drzeniek's analysis underscores the urgent need for structural reforms and enhanced institutional components to drive economic growth across the continent. While South Africa has struggled to maintain its competitive edge, countries like Mauritius and Rwanda have emerged as standout performers in Africa. Mauritius' strong export performance and robust infrastructure have propelled its competitive position, while Rwanda's focus on improving institutional environments and leveraging digital technologies has driven its economic progress. These countries serve as examples of successful strategies for enhancing competitiveness and fostering sustainable growth. In the wake of South Africa's significant decline in ranking, questions arise regarding the country's reporting standards and business environment. Drzeniek addresses the impact of ongoing issues like the KPMG saga on the perception of South Africa's auditing and reporting integrity. Additionally, she clarifies the distinction between the World Bank's Doing Business report, which ranks South Africa at 74, and the WEF's Global Competitiveness Report, which places the country at 61. While these reports offer different perspectives on business environments, they complement each other in providing a comprehensive assessment of economic competitiveness. As South Africa approaches a pivotal moment with an upcoming elective conference, Drzeniek emphasizes the importance of utilizing the WEF's report as a catalyst for positive change. She hopes that the country's recent ranking decline will serve as a wake-up call for policymakers and investors, spurring momentum for reforms and improvements in the business and institutional landscape. Drzeniek urges South Africa to leverage its innovative strengths and regional competitiveness to drive future growth and bolster its position on the global stage.