Thursday, September 6, 2012

Nigeria ranked behind Ghana and Kenya by World Economic Forum

Despite a series of reforms to improve the economic conditions and business competiveness in Nigeria, the country still trails smaller African countries like Ghana, Cameroun and Kenya in global competiveness.

The Global Competitiveness Report (GCR) Index 2012-2013 released by the World Economic Forum (WEF) indicated that Nigeria ranked 115th out of 144 countries assessed - behind Ghana, Kenya and Cameroun, which ranked higher at 103rd, 106th and 112th positions respectively. Only Benin Republic trailed Nigeria with a ranking of 119th while South Africa ranked 52nd globally, making it the most competitive in Africa.

The GCR Index, which assessed the competitiveness landscape of 144 economies, providing insight into the drivers of their productivity and prosperity, indicated that after some deterioration in the rankings in recent years, Nigeria has moved up to 115th place this year due to improved macroeconomic conditions which reflected a positive government balance and a drop in inflation.

According to the report, despite a slight improvement since last year, the institutional environment did not support a competitive economy because of concerns about the protection of property rights, ethics and corruption, undue influence, and government inefficiencies.

The security situation in the country was also considered dire and having worsened since last year. Additionally, Nigeria received poor assessments for its infrastructure (130th) as well as its health and primary education levels (142nd).

On IT infrastructure, the report pointed that Nigeria was not harnessing the latest technologies for productivity enhancements, as demonstrated by its low rates of ICT penetration.

However, despite these weaknesses, the report noted that the country has a number of strengths on which to build, including its relatively large market (33rd), which provides its companies with opportunities for economies of scale as well as sophisticated regional standards (66th), with some cluster development, companies that tend to hire professional managers, and a willingness to delegate decision-making authority within the organisation.

Ghana ranked 103rd this year, having moved up an impressive 11 places since last year, on the back of improvements in the basic requirements of its macroeconomic stability and health as well as educational outcomes.

The report noted that Ghana traditionally displayed strong public institutions and governance indicators, especially in regional comparison, along with increased government regulation, though sizeable deteriorations in all indicators dragged down the country's score in the institution's pillar to 75th place (from 61st last year). Education levels also continued to lag behind international standards at all levels, labour markets are still characterized by inefficiencies, and the country is not harnessing new technologies for productivity enhancements (ICT adoption rates are very low).

South Africa was ranked 52nd this year, remaining the highest-ranked country in sub-Saharan Africa and the third-placed among the BRICS economies. According to the report, the country benefited from the large size of its economy, particularly by regional standards (it ranked 25th in the market size pillar).

It also does well on measures of the quality of its institutions and on factor allocation, such as intellectual property protection (20th), property rights (26th), the accountability of its private institutions (2nd), and its goods market efficiency (32rd).

Particularly impressive is the country's financial market development (3rd), indicating high confidence in South Africa's financial markets at a time when trust is returning only slowly in many other parts of the world.

South Africa also does reasonably well in more complex areas such as business sophistication (38th) and innovation (42nd), benefitting from good scientific research institutions (34th) and strong collaboration between universities and the business sector in innovation (30th).

Overall, this year's report findings showed that Switzerland topped the rankings in the Global Competitiveness Report for the fourth consecutive year. Singapore remained in second position with Finland, in third position, overtaking Sweden (4th). These and other Northern and Western European countries dominated the top 10 with the Netherlands, Germany and United Kingdom respectively ranked 5th, 6th and 8th.

The United States (7th), Hong Kong (9th) and Japan (10th) completed the top 10. The Report emphasized persisting competitiveness divides across and within regions, as short-termism and political deadlock continue to hold back the economic performance of many countries and regions.

Looking forward, productivity improvements and private sector investment would be key to improving global economies at a time of heightened uncertainty about the global economic outlook, the report said.

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