New Report Urges Greater Emphasis on Productivity and Competitiveness

August 4, 2010

BENONI, August 4, 2010 – South Africa's business environment compares favorably to its peer group of upper- middle-income economies globally. This and other findings of a new report, "South Africa: Second Investment Climate Assessment - Improving the Business Environment for Job Creation and Growth" was discussed AND debated at a “Development Dialogue” held at the Kopanong Conference Center in Benoni, near Johannesburg.

The report's key messages:

  • South Africa could improve productivity and competitiveness by increasing the market share of efficient producers.  Given the high concentration of South African industry, this requires further efforts to enhance competition through more activist and innovative policies;
  • Investments in employee training in small and medium enterprises (SMMEs) should be increased with better targeted government support, and
  • South Africa could do more to improve access to finance by micro and small enterprises and support productive informal enterprises. 

“The findings of the report are very interesting particularly where they refer to the business environment where South Africa has scored particularly well.  This is one of our competitive advantages, and it is something we want to preserve and improve upon.  Furthermore, we acknowledge the challenges identified such as small business development and access to finance and our Department is working to address them.  We welcome the report as a tool of dialogue, discussion, and debate,” said H.E. Rob Davies, Minister of Trade and Industry, South Africa.

The report which was prepared by a World Bank team in collaboration with the South African Department of Trade and Industry (the dti) presents the results of a 2008 survey of 1,056 manufacturing industries, 68 percent of which are located in Johannesburg, 14 percent in Cape Town, 12 percent in Durban, and 6 percent in Port Elizabeth.  Of the total participating businesses, 231 took part in an earlier 2003 survey. The results provide survey-based analytical advice to policymakers, business leaders, and civil society on how to best strengthen business competitiveness in South Africa.

The findings also call for greater efforts for raising the market share of efficient, high-performing enterprises, enhancing productivity, and increasing export competitiveness for job-led, sustainable economic growth

"Improving the investment climate in South Africa is critical for economic growth and job creation. For Africa's largest economy, a better business environment will generate large spillovers benefits across the African continent. The challenge is to identify bottlenecks and take concrete actions,” said Ruth Kagia, World Bank Country Director for South Africa.

For the purpose of the survey, the comparator group of emerging economies is Argentina, Brazil, Chile, China, Malaysia, and Thailand.  These countries are natural peers of South Africa, as all are relatively high-performing, resource-rich middle-income countries that have experienced significant export-driven industrialization.

World Bank Senior Economist Taye Mengistae, lead author of the report said "The report's findings provide a wealth of information to inform policymaking for achieving shared and sustainable growth.”