21 Years On: South Africa Losing the Competitive Edge?

There is a global economic power shift from the developed to the developing economies. South Africa is a part of the developing world. Within the African continent, South Africa has been the most powerful economic force for decades until it was eclipsed by Nigeria in 2014. The fact that the Nigerian economy rebased its GDP to overtake South Africa as the largest on the continent created much debate because of the perception that this dims South Africa’s attractiveness as an investment destination.

The question is whether South Africa is in fact losing its competitive edge? And what is its competitive edge is the rebasing of another country’s GDP can threaten to divert the shine away from us. What should we, as the country and its people be doing to ensure that we do not fade into the southern oblivion considering that we not even populous enough to compete with the various countries in Sub-Saharan Africa who are asserting themselves on the economic global stage.

According the 2014 KPMG Africa Report, the top 7 fastest growing economies in the world are in Africa: Ethiopia, Tanzania, Mozambique, Ghana, Republic of the Congo, Zambia and Nigeria. South Africa is nowhere in sight. South Africa is ranked amongst the top in the world, not just in Africa, in terms of its financial sector, banks and stock exchange. Additionally, it offers a business-friendly environment, however, according to the World Bank, South Africa has slipped from 37 in 2014 to 43 in 2015 in terms of the ease of doing business out of 189 economies.

Entrepreneurial activity is a cornerstone of economic growth and an important source of net job creation which South Africa solely needs. The KPMG Africa 2014 Report notes that Nigeria is registering about 70 000 new companies annually whilst South Africa only 30 000.

Is South Africa in trouble?