Africa is a continent of great opportunity and potential, but as a whole, the continent needs to work to become more globally competitive for the benefit of industries such as tech to truly thrive.
Africa competes for foreign direct investment with other emerging markets such as Asia, Latin America, and the Caribbean, and it is important for the continent to work towards strengthening a number of pillars that relate directly to how competitive a country is on a global scale.
A KPMG report suggests that Africa needs to address a number of key issues in order to rival their main competitors in the market and carve out a competitive landscape that will attract foreign direct investment.
From an overall global competitiveness point of view, Africa’s average competitiveness ranking is 21 percent compared to Latin America and The Caribbean’s average ranking of 40 percent, and Asia’s average ranking of 57%. This shows that Africa remains significantly less competitive than Asia, Latin America and The Caribbean.
Here are 12 issues Africa needs to address to become more globally competitive.
Sources: BBrief, KPMG, WeForum.
Africa needs to focus on improving infrastructure, among a number of the pillars that require special attention, in order to become more competitive and create more job opportunities for its growing young population. The right efforts in building infrastructure will certainly create jobs and attract investors.
Technology and development are increasingly driving development, and in an emerging market such as Africa, this is even more crucial. Technological readiness is a factor that translates into success for those African countries that are well placed to embrace and adopt new technologies, of which South Africa is the best performer at the moment, while Algeria is the most improved in this category.
The quality of primary education and health care is incredibly important for any nation, especially in the framework of global competitiveness. A well-educated workforce at the most basic level has a positive knock-on effect for the economy, while improved health care ensures that working citizens are healthier.
While basic education is an important stepping stone competitiveness, building the right skills to boost the economy and attract investors comes down to higher education and training. Mauritius is Africa’s top performer in this regard, according to the latest World Economic Forum Global Competitiveness Index, while Botswana has made the most progress this year.
The institutional environment within African countries should encourage investment by protecting the legal rights of investors and enabling them to fully leverage information and communication technologies in daily activities and production processes.
The general economic environment within a country is something that investors watch closely, and improving this within Africa would be a huge step towards being globally competitive. Botswana can show their fellow Africans a thing or two in this regard, while Mali has also been a top performer with great strides of improvement.
Emerging economies such as those in Africa need to implement a comprehensive, consistent and co-ordinated approach to policy-making in order to have an efficient goods market. Mauritius is Africa’s top performer in this regard.
Labor market efficiency feeds into a country’s competitiveness on a global scale, with East Africa showing the way forward for the continent. Rwanda is the top performing African country with regards to labor market efficiency, while Burundi is the most improved country in Africa.
Financial market development is something that most African countries need a great deal of work on, as it relates to performance in terms of the financing through the local equity market, the regulation of securities exchanges, availability of financial services, as well as the soundness of banks. South Africa ranks highly in this particular pillar, and should serve as an example for the continent.
When it comes to Africa, Egypt dominates the market size pillar, with Liberia making huge strides over the past year. It is fairly easy to understand how the size of the market boosts competitiveness, but increasing the size of a market takes time, effort and patience.
South Africa is the continent’s top performer in terms of business sophistication, which is why often new businesses choose to establish themselves in the country first, as it provides an ideal entry-point to Africa and instills confidence in investors with regards to putting their hard-earned money into what can sometimes appear to be an unknown quantity.
African countries need to embrace innovation to remain competitive, and consider how something like mobile has been embraced across the continent as an example of how to apply innovation to current technologies.