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Africa Rising As A Competitive Continent

The World Economic Forum (WEF) last week announced the most globally competitive African nations in its 2015 South-AfricaGlobal Competitiveness Index. The Index, which looked at 140 countries, rates the top performing African countries as follows: Mauritius (46), South Africa (49), Rwanda (58), Botswana (71), Namibia (85), Côte d’Ivoire (91), Zambia (96), Seychelles (97), Kenya (99), and Gabon (103).

The WEF measures a nation’s global competitiveness against 12 pillars, i.e. 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.

Each of the 10 best performing African countries have had mixed fortunes in the 2015 Index, with some moving up and others down in the ranks with each improving and declining according to the WEF’s assessment pillars.

Two of Africa’s 54 states, Mauritius and South Africa, are among the top 50 most competitive global nations with Rwanda following in third place. Rwanda’s achievement is truly remarkable considering the tragedy experienced by that country only 21 years ago.

In addition to noting the improvements of individual countries the World Economic Forum’s Africa Competitiveness Report 2015 observes the following about the African continent “… for five years, growth rates have averaged over 5%, and rapid population growth holds the promise of a large emerging consumer market as well as an unprecedented labour force that, if leveraged, can provide significant growth opportunities. Moreover, the expansion of innovative business models, such as mobile technology services, is indicative of the continent’s growth potential.”
The WEF report’s observation with regards to technology, media and telecommunications is shared by the 2015 EY Africa Attractiveness Survey, which notes that these sectors are the most popular for investors and have attracted almost a fifth of all investment into the continent, followed by financial services in second place and consumer products and retail.

At the same time, the WEF report highlights persistent challenges in terms of socio-economic development: “Africa continues to be largely agrarian, with an economy that is underpinned by resource-driven growth and a large and expanding informal sector … more than a decade of consistently high growth rates have not yet trickled down to significant parts of the population – nearly one out of two Africans continues to live in extreme poverty, and income inequality in the region remains among the highest in the world. What is more, across sectors—from agriculture to manufacturing and services—productivity levels remain low.”

This assessment suggests that more needs to be done to unlock the areas which will help build competitive knowledge-intensive economies. The areas identified by WEF’s 2015 Global Competitiveness Index are universal, good quality education; a healthy citizenry with access to medical care; the use of ICTs and the ability to absorb new technologies; the capacity to innovate; and the development of a sophisticated business environment that supports both domestic and international corporations.

According to the World Economic Forum, low levels of competitiveness have two direct consequences – they render regional economies, in the immediate term, vulnerable to important economic downside shocks which include a slowdown in emerging markets to repercussions of the four-year low in oil prices and lower prices for other commodities for the region’s resource-rich economies. In the medium term, they raise questions about whether Africa will be able to leverage its demographic dividend: the over 1 billion people on the continent represent a large emerging consumer market and labour force that provides significant growth opportunities.

The continent, led by the African Union (AU), and its leaders have been conscious of the urgency for African countries to raise their socio-economic levels, to deliver on the aspirations of citizens and to overhaul traditional perceptions of Africa thus building a positive reputation. Agenda 2063 provides the continent’s vision for socio-economic development. In its implementation, Agenda 2063 will enable the building of national and therefore continental competitiveness by addressing issues identified by African leaders as well as the WEF.

The AU has also placed emphasis on good governance and leadership which have a positive impact on socio-economic levels and further impacts positively on the reputations of both countries and the continent as a whole. This bodes well for the continent as there is a positive relationship between a country’s reputation and key factors that contribute to its competitiveness such as the nation’s ability to compete for the global pool of investment, tourism and skills.

Increased competitiveness is important to ensure social equity which contributes not only to national stability but also to a country’s ability to attract investment. This is becoming even more crucial because, while Africa is still an attractive investment destination, EY’s 2015 Africa Attractive Survey has found that the continent is now the fourth fastest growing in the world, having lost its number two spot.

For Africa to reverse this regression and grow as a globally competitive investment destination, the implementation of Agenda 2063 is crucial along with each African nation making the right investments in growing the continent’s human capital, particularly in knowledge areas that will be drivers of competitiveness in a global economy that is becoming more knowledge intensive.
The French Economist Thomas Piketty giving the Nelson Mandela said, “Africa is the future of the world”. Moving with haste and with a collective determination to implement Agenda 2063, Piketty’s words will soon be a reality.

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