SA low on list of dynamic business opportunities

Cape Town - South Africa is ranked 54 out of 60 of the world's largest economies on the latest Grant Thornton Global Dynamism Index (GDI).

This is because of the country's lack of dynamic business growth opportunities, Grant Thornton said on Monday.

South Africa fared worst in the labour and human capital indicator, lying second last on the list of 60 countries due to the 25.1% unemployment rate and labour productivity growth being measured at -0.4 compared to 0.6 in 2012.

“Overall, the South African economy has actually performed in line with the previous study apart from the declines in labour productivity, and a further decline in inward direct investment,” said Ian Scott, CEO at Grant Thornton Cape.

“The latter is less of a reflection on South Africa and can be ascribed to the emerging market contagion that has seen global investment shifted from perceived fragile economies."

However, he cautioned that systemic inhibitors to SA’s business dynamism remain and need to be addressed if the country is to realise the potential of one of the most advanced economies on the continent.

Scott said that a lot of work is required to lift South Africa into the top 30 most dynamic economies in the world. In his view this could be achieved by creating a more business-friendly environment.

Scott pointed out that on the positive side, South Africa ranks highly for historical advantages such as its corporate tax (12th), the quality of the overall financial regulatory system (20th) and legal and regulatory risk (32nd). SA lies second for growth in broadband penetration and has also improved its total IT spend to be placed 15th on the list.

“This performance is highly commendable, but we need to seriously look at the factors that are still holding us back. Some solutions which would certainly bolster our business environment include scrapping exchange controls, easing the business operating environment and addressing the inefficiencies inherent in state-owned enterprises," said Scott.

“The answers themselves are not overly complicated, but implementing the changes requires a frank and open dialogue between government and business on how we can jointly overcome barriers to efficiency thereby moving the economy forward."

In his view, creating a more dynamic economy will help address many of the national imperatives such as unemployment, poverty and inequality.

The GDI ranks the business growth environments of 60 leading countries and South Africa has slipped two places in the global rankings from the previous report released two years ago.

The GDI combines 22 indicators, including gross domestic product (GDP) growth, research and development spend, regulatory risk, access to finance and labour productivity. It also correlates these results with the perceptions of business leaders from Grant Thornton’s International Business Report (IBR).

Singapore, which tops the GDI ranking, is noted for its robust, broad-based offer to dynamic businesses for its financing environment, and the country ranks in the top 25 in the economics and growth indicators.