WEF names Africa's most competitive economies

08 September 2013
Mauritius, South Africa and Rwanda have emerged as Africa's three most competitive economies, according to a new report.

Mauritius shot up nine places to be ranked the world's 45th most competitive economy in The World Economic Forum's benchmark annual Global Competitiveness Index (GCI) 2013-14.

South Africa captured 53rd spot globally, overtaking Brazil as the second best-ranked BRICS state. Only China is ranked higher, among the five-nation economic cooperation group that includes India and Russia.

Rwanda, slipped three places from last year's ranking, and emerged as the 66th most entrepreneurial economy in the world.

But beyond these high-flyers, the rest of Sub-Saharan African countries had dismal figures to report.

"Sub-Saharan Africa as a whole trails the rest of the world in competitiveness, requiring efforts across many areas to place the region on a firmly sustainable growth and development path going forward: the region continues to register a profound infrastructure deficit," the World Economic Forum said in a report published on September 4.

The region also underperformed in a number of sub-categories including health and basic education.

Sub-Saharan Africa's poor showing in the GCI rankings is at odds with the rapid economic progress under way. Some estimates show Africa is the fastest growing region in the world, with a number of countries such as Kenya and Ghana attracting billons in investment.


Mauritius, a tiny state off the Indian Ocean with a population of 1.2 million beat its more populous and larger African peers, thanks to its strong institutions,  transparent property rights and an efficient government, with strong transport infrastructure in a country roughly three times the size of Bahrain.

"Furthermore, notable improvements have taken place in the areas of market efficiency," WEF said. "Financial markets have deepened, lifting Mauritius' rank up to 26th (in that subcategory) on the back of improved access to different modes of financing and financial services."

On the African mainland, the region's largest economy is also the most competitive, despite its share of struggles over the past year such as strikes and labor unrest.

South Africa has strong institutions, with robust regulations for intellectual property protection and property rights and legal tools to resolve disputes. The country's financial markets are also strong and comparable to any among its emerging market peers.

But the country had low scores for the diversion of public funds (99th), the perceived wastefulness of government spending (79th), and a more general lack of public trust in politicians (98th) remain worrisome, and security continues to be a major area of concern for doing business (at 109th), WEF said.

"Building a skilled labor force and creating sufficient employment also present considerable challenges," the WEF, echoing the chronic labor turmoil facing the country.


Rwanda, which has been Africa's regulatory star over the past few years, also held on to its position as one of the most competitive African economies. The high ranking mirrors the World Bank's Doing Business survey, which ranked Rwanda as the most business-friendly jurisdiction in Sub-Saharan Africa.

Despite faring poorly on health and university enrollment categories, the country has strong institutions to build on.

"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 no-tolerance policy, and a good security environment. Its labor markets are efficient, its financial markets are relatively well developed, and Rwanda is characterized by a capacity for innovation that is quite good for a country at its stage of development," WEF said.


Despite these bright spots, most African states occupy much of the lower half of The World Economic Forum index. Twenty-two of the last 30 spots feature African countries that highlight the lack of progress made despite high growth rates.

But there were some cold comfort amid the regulatory gloom. Kenya - true to its form as an up-and-coming African dynamo - jumped 10 places to be among the 100th most competitive states in the world. Botswana also jumped five places to be the 74th in the ranking - and the fifth best in the SSA region.


There was not much change at the top with Switzerland, Singapore and Finland retaining their spots as the world's three most competitive economies.
Germany and the United States jumped two places each to become the 4th and 5th most competitive economies.

Sweden, Hong Kong, Netherlands, Japan and the United Kingdom - in that order - completed the top 10.

Qatar, which has astounded analysts with its high ranking in previous surveys, stood at 13 - although two notches below its previous year's ranking.

"As a high-income economy, Qatar will have to continue to pay significant attention to developing into a knowledge- and innovation-driven economy," said WEF. "The country's patenting activity remains low by international standards, at 60th, although some elements that could contribute to fostering innovation are in place."

The United Arab Emirates has emerged as the Middle East's second most competitive economy with an impressive 19th ranking - up five places from last year.

Saudi Arabia at 20th place, Oman at 33rd, Kuwait at 36th and Bahrain at 43rd, ensured that Gulf states remain in the top half of the survey.

However, countries impacted by the Arab Spring continue to fare poorly. Egypt dropped 11 positions to be placed at 118th, as the country's political strife delays much-needed structural and financial reforms.

Tunisia was ranked 83rd while Morocco fell seven places to be at 77th.  Other countries impacted by regional turmoil such as Lebanon dropped 12 places to be placed 103rd and Jordan fell four places to 68th.

Libya jumped five places to reach 108th, although that may be short-lived as a fresh way of uncertainty has gripped the country.

The survey did not rank Syria and Iraq.

© 2013


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