Competitiveness
Improve Africa’s competitiveness in the global economy by increasing research-based knowledge and public awareness of the key constraints to competitiveness, including gender inequality.
Few African businesses are internationally competitive. They are stymied by the conditions of the domestic market, where the costs of doing business are too high and the incentives for enterprises to flourish too low. Productivity and competitiveness are hampered by the limited access to finance, energy and technology; the scarcity of relevant skills; logistical limitations caused by poor infrastructure for transportation, communication and energy; the costly interaction between business and government; poor governance; and the marginalisation of women.
Relevant stakeholders from civil society, the labour market and the private sector need to be involved in much-needed reform processes, which must be grounded in detailed analyses, based on benchmarking against international standards and the particular circumstances of each country. This will help identify the greatest constraints and opportunities and, in doing so, build on previous initiatives.
African countries have been willing to submit, through the African Peer Review Mechanism, to a systematic audit of governance and institutional effectiveness. What is needed is to build on this process. Indices tracking African competitiveness already exist. The next step is to use a global index for benchmarking the competitiveness of African countries against each other and – most importantly – relative to international standards. Such a benchmarking project would focus critical attention on improving the business environment across the continent and would help identify the best means to resolve the constraints to competitiveness. It would act as a spur to entrepreneurship and promote growth and employment. For such a benchmarking project to
be truly effective, however, the infrastructure that would enable African governments to analyse the data and use the findings to develop and implement a substantive reform agenda must be developed. Furthermore, a regional mechanism for tracking progress must be put in place.
Competitiveness is not only about “hard” infrastructure such as roads and ports, it is also about the “soft” regulations and decisions, and we need to pay more attention to that. In Africa, in some countries it will take me 50 days to register a business. In some places you need the signature of your father or your husband, and if you fail to get that, you need a judge
Betty Maina, Member of the Africa Commission
The Africa Commission calls for the following policy actions on competitiveness:
- R11: Focus on those particular constraints that prevent African businesses from growing through exports in order to improve Africa’s competitiveness in the global economy.
- R12: Promote the use of competitiveness indices as advocacy tools and ensure ownership among African governments, the private sector and civil society in the results dissemination and follow-up process.
CENTRAL AMERICA AND THE WORLD ECONOMIC FORUM
Central America is an interesting example of useful benchmarking on competitiveness issues that has not only raised the level of the national policy debates but also led to concrete examples of policy initiatives. In the mid-1990s, the Latin American Centre for Competitiveness and Sustainable Development (CLACDS), a think-tank based at INCAE Business School, was launched to promote dialogue and follow through with concrete proposals that would raise competitiveness and improve the business climate in the five nations that comprise the Central American Common Market. As a part of that initiative, CLACDS engaged the World Economic Forum and committed itself to cooperate in data collection processes necessary to include the nations of the region in the Global Competitiveness Report, and to engage in the dissemination and analysis of the resulting data.
Ten years on from the initiation of this process, the discussion about competitiveness in Central America permeates the region’s politics and media, and is central to national debates on the future direction of individual countries. The Global Competitiveness Report is widely reported on and often used to substantiate policy initiatives. Largely based on the Global Competitiveness Report data, and the awareness of competitiveness that it has promoted, several academic studies and proposals emerging from CLACDS in recent years have been taken to the next stage: They have been turned into concrete policies and actions. Two specific initiatives that this process has helped to deliver are:
- The member nations of the Central American Common Market now have common and modern customs legislation.
- The Inter-American Development Bank, the Central American governments and the governments of several neighbouring nations have undertaken the Puebla-Panama Plan, at the heart of which are major infrastructure projects, which were initiated by CLACDS as the Central American Logistics Corridor.
- R13: Develop a global competitiveness index that will eventually benchmark all African countries against international standards and spur debate and action on concrete measures that African countries should implement to promote private sector-led growth.
The Initiative: Benchmarking African Competitiveness
To improve competitiveness and accelerate growth and job creation, the Africa Commission is launching an initiative aimed at improving and expanding the benchmarking of African competitiveness.
This initiative will follow a two-pronged approach. First, it will ensure coverage of a significant and increasing number of African countries in the well-established World Economic Forum’s Global Competitiveness Index. Second, it will encourage policy impact through measures to engage business and government leaders in a results-based dialogue on the required reforms. A related goal will be to raise public awareness about the importance of enhancing competitiveness (through media and other channels) to galvanise support for the reform process.
To encourage policy reform and impact at the intergovernmental level, the African Union will include competitiveness under the existing African Peer Review Mechanism.
The Global Competitiveness Index covers several facets of competitiveness. While the overall ranking focuses attention on the index, instructive comparisons of strengths and weaknesses across twelve pillars of competitiveness can be drawn from the detailed results.
This page forms part of the publication 'Realising the Potential of Africa’s Youth' as chapter 9 of 25
Version 1.0. 09-06-2009
Publication may be found at the address http://www.netpublikationer.dk/um/9336/index.htm
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