SA competitiveness improves; R350m state capture bill; Motsepe, Rupert bid on Blue Bulls

By Jackie Cameron

  • South Africa’s economy is showing signs of improvement, says the World Economic Forum. Releasing its global competitiveness report, it says South Africa’s competitiveness has regained momentum after the recent political landscape shift and climbs 7 places to 60th. It attributes this improvement to its well-developed equity, insurance and credit markets, all achieving a score of 100. In addition, the WEF says South Africa has also developed one of the most advanced transport infrastructures in the region (58.7, 45th) and is among one of the top countries in Africa for market size (68.6, 35th). “Challenges remain, including: health conditions – though starting from a low base (118th) – are better, adding 3.3 years to the average healthy life expectancy since the last assessment. Institutional quality has also improved (+3.3 points, 55th) but unevenly.” Remarkable progress has been made in restoring balance of powers across different state’s entities (+7.7 points, 16th), enhancing administrative efficiency of the public sector (+6.3, 39th) and corporate governance (+3.3, 26th), says the Forum. By contrast, it notes, other aspects continue to perform poorly: security (42.7, 135th) remains one of the main restraints to South Africa’s competitiveness, while transparency (43.0, 62nd) and government adaptability to change (39.6, 100th) are also below par. “Further, South Africa’s competitiveness is being held back by relatively low business dynamism (61.9, 60th), which is inhibited by insolvency regulation and administrative burdens to start a business, and a persistently insufficient labour market flexibility (52.1, 111th),” it says. Reforms are needed to re-ignite the economy and offer better opportunities to a larger share of South African citizens, says the Forum.
  • Investigating state capture has cost taxpayers a whopping R350m so far, according to the SABC. Julius Malema, head of the Economic Freedom Fighters has reportedly asked chairperson, Deputy Chief Justice Raymond Zondo, to find cheaper options to save costs.
  • The Blue Bulls Rugby Union has received a joint offer from Remgro, the investment company of Johann Rupert, and African Rainbow Capital, which is backed by Patrice Motsepe, says Bloomberg, quoting Johannesburg-based Rapport. Remgro already owns half of the Blue Bulls Company together with the Blue Bulls Rugby Union. The deal will see Remgro reducing its share to 37.45% and Motsepe taking up 37.45%, giving the two businessmen a controlling stake in the Pretoria-based side, the newspaper reported, without saying where it got the information. Motsepe, the country’s richest black person and a brother-in-law of President Cyril Ramaphosa, also owns Mamelodi Sundowns, a top soccer team in the country’s premier league. Rupert is South Africa’s second-richest person, with a net worth of $6.5bn, according the Bloomberg Billionaires Index. The Blue Bulls is South Africa’s only multiple winner of the prestigious Super Rugby competition, which includes regional teams from New Zealand, Australia and Argentina. But it has struggled in recent years with players leaving for overseas clubs who pay more.
  • United Nations Secretary-General Antonio Guterres warned that the global body is facing its worst cash crisis in about a decade and runs the risk of defaulting on payments to staff and vendors, says Bloomberg. Many members are behind on their payments, forcing the UN to cut back on travel, purchases of goods and services and conferences, Guterres said. This year, 129 of the UN’s member states have paid $2bn toward the organisation’s 2019 regular budget, the UN is reported as saying. But about $1.4bn remains outstanding. Among the 64 nations that have yet to pay their 2019 dues in full are Argentina, South Korea, Israel, Saudi Arabia, Senegal and the US, says Bloomberg. “Earlier this year, Guterres warned the UN was struggling with a worsening funding shortfall for peacekeeping operations as well as its regular budget due to member states failing to pay what they owe and byzantine budget rules that constrain the UN’s ability to move its money between accounts,” says the news agency.
  • The UK stepped up preparations for a no-deal Brexit in three weeks’ time as negotiations with the European Union headed toward a breakdown, says Bloomberg. In a call on Tuesday morning, Boris Johnson told German Chancellor Angela Merkel a divorce agreement is essentially impossible if the EU demands Northern Ireland must stay in the bloc’s customs union. He blamed the EU’s refusal to engage with his blueprint for the likely collapse of talks. The bloc’s leaders hit back, says the news wire.

President Cyril Ramaphosa responds to WEF Competitiveness report

President Cyril Ramaphosa has welcomed the findings of the World Economic Forum’s (WEF) annual Global Competitiveness Index that shows South Africa has climbed 7 places since 2018.

“That we have been able to improve our ranking so remarkably and within a relatively short period of time is a welcome sign that the structural reforms put in place to stimulate the economy and promote recovery are slowly but surely gaining traction,” President Ramaphosa said.

The report notes that the country has registered ‘remarkable progress’ with regards to institutional quality, such as in restored balance of powers across different state entities; enhanced administrative efficiency of the public sector, and corporate governance.

South Africa also achieved a score of 100 for its ‘well developed equity, insurance and credit markets,’ and ranked 19th globally as a financial hub.  The report also scores the country highly for having ‘one of the most advanced transport infrastructures in the region’ (a ranking of 45th) and for market size (a ranking of 35th).

The report is an annual assessment of the drivers of productivity and long-term economic growth in 141 economies. The report ranks the respective economies under a range of socio-economic indicators such as strength of institutions, infrastructure, ICT adoption, financial systems, macroeconomic stability and business dynamism.

“Whilst we note there are areas for improvement – the report cites security and insufficient labour market flexibility as some of the constraints to growth, this improved ranking gives us added impetus to remain firmly on course with our economic reform agenda,” President Ramaphosa said.

The President added that the country was also looking forward to the release of the World Bank’s Ease of Doing Business Index later this year. South Africa commenced work to realise its objective to be ranked amongst the Top 50 countries on this index by improving indicators such as starting a business; registering property; dealing with construction permits; paying taxes; and trading across borders.


Comment from Steuart Pennington

Every year the World Economic Forum publishers the Global Competitiveness Index of 140 countries which essentially ranks countries in terms of their competitiveness as an investment destination. It has always been considered that the top 60 countries form the Premier League, the next 80 countries the Second League, and below that ‘failed’ states.

Over the past 5 years our competitiveness has slipped to 67th.

THIS YEAR WE IMPROVED 7 PLACES to 60th

WEF GCI 2015 2016 2017 2018 2019
South Africa 49 47 61 67 60

In particular our institutions improved from 69/140 to 55/141 – this is important due to reputation damage in the area of governance in recent years!

Health, also historically a weaker area of SA’s performance improved from 125 to 118

Product market improves from 74 to 69

The Table below summarises where we improved, stayed the same and slipped…

WEF Global Competitiveness Index

South Africa

Pillar 2018 Rank (/140) 2019 (/141)
Over-all rank 67 60
Institutions 69 55
Infrastructure 64 69
ICT Adoption 85 89
Macro-economic stability 57 59
Health 125 118
Skills 84 90
Product market 74 69
Labour market 55 63
Finance system 18 19
Market size 35 35
Business dynamism 56 60
Innovation capability 46 46

In our next newsletter a more detailed analysis will follow.