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The latest World Economic Forum Global Competitive Index (GCI) finds Sub-Saharan Africa to be the poorest performing region globally.
The latest World Economic Forum Global Competitive Index (GCI) finds Sub-Saharan Africa to be the poorest performing region globally.

Global competitiveness: Sub-Saharan Africa still lags behind

ECONOMIC NEWS

By Liezl Rees - Nov 20th 2018, 08:16

The latest World Economic Forum Global Competitive Index (GCI) finds Sub-Saharan Africa to be the poorest performing region globally. The only apparent bright spot is Mauritius, among the top 50 countries in the world.
 

Despite Sub-Saharan Africa’s poor performance relative to regional peers, the continent is home to several countries that have achieved results above the global average on key indicators. Numbers and rankings can be misleading, and these better-than-expected scores suggest that straight-line projections and simplistic rise-and-fall economics undermine important details relevant to the basic understanding of such a vast and diversified continent.

The GCI has ranked countries since 2005. The 2018 index is adjusted to account for the impact of technological advances and disruption in the fourth industrial revolution (4IR). To reflect the true drivers of productivity and competitiveness in the 4IR era, the GCI introduces several new indicators. Of 98 indicators used, 64 are new.

The GCI uses a combination of secondary data and sample surveys to establish a country’s competitiveness. Surveys of this nature present a challenge. The evidence is not of a hard, empirical nature. Negative perceptions creep into the results, which is especially true for the African tally.

To address some of these discrepancies, a new progress score, ranging from 0 (worst) to 100 has been introduced. This score is an indication of a country’s progress against the frontier, and the remaining distance to achieving it.

According to the 2018 GCI, the most competitive economy in Sub-Saharan Africa is Mauritius, 49th of the 140 countries measured. SA follows at 67, with the Seychelles at 74. On the downside, 17 of the 34 Sub-Saharan African economies were in the bottom 20.

But it is in the GCI’s detail that the results of Sub-Saharan Africa’s performance reveal diverging performances, with some progressing well beyond the global average.

Institutions

Strong institutions are the backbone of an economy. These are critical for driving a country’s productivity and long-term growth. For 117 of the 140 economies studied, the quality of institutions was a hindrance to their overall competitiveness.

The average institutions score for Sub-Saharan Africa is 47.5, below the global average of 55.3. This indicates that weak institutions continue to impede the region’s competitiveness. Only five countries scored higher than the global average: Rwanda (64.4), Mauritius (62.8), Namibia (57.2), the Seychelles (57.1) and Ghana (55.7). The weakest were Burundi (36.3), the Democratic Republic of Congo (DRC), with 36, and Chad (34.6)

Infrastructure

The global average score for infrastructure is 65.2, nearly 20 points better than Sub-Saharan Africa’s average of 46.3. Infrastructure is a prerequisite to creating productive economies and liveable cities. Only three Sub-Saharan African countries exceeded the global average: SA (68.6), Mauritius (68) and the Seychelles (67). The poorest performers were Mozambique (44.5), the DRC (39.1) and Angola (31.1).

Information and communications technologies (ICT)

The report finds that ICT adoption, which represents a country’s general level of technological adoption, is the weakest or second-weakest of the 12 pillars for nearly half the countries measured. Sub-Saharan Africa’s average of 29.6 is well below the global average of 51.9. Only two Sub-Saharan African countries score above 50. The top performers were Mauritius (62.1) and the Seychelles (56.6), and the weakest Ethiopia (16), Liberia (14.9) and Chad (12.8).

Macroeconomic stability

This is Sub-Saharan Africa’s best-performing pillar. But at an average of 66.9, it still lags behind the global average of 79.4. The strongest performers were Botswana and Mauritius, with 90 each, and SA (86.7). The poorest were Mozambique (44.5), the DRC (39.1) and Angola (31.1).

Health

Sub-Saharan Africa still has the world’s weakest health conditions, averaging 48 against a global 75.3. Africa’s “demographic dividend”, where nearly 60% of the current population is under 18 and a population of 2.4-billion is projected by 2050, will be realised only through a healthy, productive and educated workforce.

The strongest health performers were Mauritius (77.7) and Cape Verde (75.6), while Zambia (35.8), Swaziland (30.1) and Lesotho (11.9) propped up the table.

Skills

Against a global average of 60.6, the region lags behind with 43.4 in globally competitive skills. This is a pressing need that is often described as the biggest constraint to business in Africa.

The strongest performers were the Seychelles (69.3) and Mauritius (61). The weakest were Angola (31.1), Chad (29.9) and Mozambique (28.2)

Product market

This is one of only two pillars where Sub-Saharan Africa is not the worst regional performer. At 50.4, it beats South Asia’s 47.3, but it is still behind the global average of 56.4. Leading the way were Mauritius (65.5), Seychelles (60.1), Ghana (56.8) and Rwanda (56.6), while Chad (38.4), Zimbabwe (38.2) and Angola (37.5) were the weakest.

Labour market

Sub-Saharan Africa’s score of 53.8 is higher than that of the Middle East & North Africa and South Asia, but behind the global average of 59.3. This bodes well for the demographic future of the region. The strongest performers were Seychelles (67.8), Namibia (63.7), Rwanda (62.1) and SA (61), and the weakest Mauritania (42.8), Mozambique (42.5) and Chad (42)

Financial system

Sub-Saharan Africa’s 50.4 is below the global average of 61.4. There is a need for African governments to focus on improving the availability of credit, equity, debt, insurance and other financial products — and ensure a stable financial system by reducing excessive risk-taking and opportunistic behaviour.

Strongest performers: SA (82.1), Mauritius (77.7) and Namibia (65.7). Weakest: Angola (40.1), Mauritania (38.9) and Chad (38.7).

Market size

With a relatively low per capita income, Sub-Saharan Africa performs poorly, with an average score of 38.8. The global average is 54. Larger markets lift productivity through economies of scale while incentivising innovation through the generation of new ideas. This is crucial for sustained development in Africa. The strongest performers were Nigeria (70.8), SA (68.4) and Ethiopia (54.6). Bottom were Cape Verde (17.1), Seychelles (16.4) and Gambia (16).

Business dynamism

An agile and dynamic private sector increases productivity by taking business risks, testing new ideas and creating innovative products and services. Sub-Saharan Africa achieves an average score of 51.1 compared to the global average of 59.3. This is not a huge gap, but it does suggest a need to improve Africa’s competitive performance through more dynamic processes and systems.

The strongest performers were Mauritius (66.5), SA (61.4), Rwanda and Kenya (both 60.2), while Mauritania (38.7), Angola (34.5) and Chad (28.6) occupied the bottom places.

Innovation capability

This category measures factors that generate knowledge, leading to innovative ideas and new business models. This has the lowest global average (42.4) of any category. Sub-Saharan Africa scores a dismal 28.4. The best performer was SA (44.3). Cape Verde (21.4), the DRC (18.8) and Angola (16.8) bring up the rear.

Countries around the world have yet to implement the prerequisites for long-term growth, sustainability and resilience in the era of the 4IR.

In Africa, despite the lowest overall ranking on the index, certain countries have made impressive progress, and are displaying characteristics that could make them globally competitive in niche areas.
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