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How the world rates South Africa

27 May 2008

South Africa is maintaining its strong showing in world rankings, with a series of recent international reports highlighting and supporting the country's strengths as an investment destination.

Despite a fair amount of local scepticism - brought on partly by political uncertainty and the energy crisis - overseas business analysts are still optimistic about South Africa and rate it as "less risky" for capital investment than other African countries.

In a television programme screened recently on actuality channel Carte Blanche, foreign business analysts said they still rated South Africa's minerals and banking sectors as among the best in the world.

Read the transcript here

South Africa, they said, was also seen as a "gateway" to the growing African economy.

"With the combination of the infrastructure that it already has and with the resources that it has it will still be a place for capital to go," said Jake Leslie Melville, an analyst with Booz Allen Hamilton.

These views are supported by an interview in Business Times with Sabine Machenheimer, a researcher at Jane's Information Group, the respected defence industry analysts that released Country Risk Ratings for the first time in 2008.

This study rated South Africa at 115 out of 235 countries.

"With all the current anxieties about crime, HIV/Aids, energy and leadership, a lot of people within South Africa might think the country might have ranked lower, but the figures show South Africa really has a lot of solidity in its systems, its economy and its institutions," Machenheimer is quoted as saying.

Jane's Country Risk Ratings

115 out of 235 countries

Jane's Information Group, a British based defence industry analyst, published Jane's Country Risk Ratings at the end of March 2008. The report measures 235 countries, territories and entities according to 24 stability factors in distinct categories, such as political, social, economic, external, military and security.

A recent report in Business Times reveals that South Africa was ranked 115th, alongside strong economies such as the Ukraine and Vietnam. South Africa was rated the second most stable country in sub-Saharan Africa, behind Mauritius.

Read the report here

According to Reuters, the report ranks the Vatican City as the most stable, followed by Sweden, Luxembourg and Monaco, reports Reuters. But the United States was judged to be only the 22nd most stable country - just below Australia and Portugal - largely because of international drug trafficking and the proliferation of small arms within American society.

As this report is the first of its kind, it contains no comparison figures.

Christian La Miere, managing editor of the report, told the newspaper that South Africa is in a band of moderate to relatively low-risk countries in terms of instability.

Business Times reports that South Africa's rating was tallied from:

62 (out of 100 points) for economic stability;
69 for military steadfastness;
42 for social stability, which includes indicators for crime, health and social cohesion;
78 for external factors, such as South Africa's relationship with neighbours and the international community;
78 for political stability, which focuses on constitutional and institutional factors.

Botswana, which typically tops the region for investor confidence, ranked 142nd, with Zambia 179th, Mozambique 190th and Zimbabwe tied with Chad and the Democratic Republic of Congo at 224.

Global Competitiveness Index:

44 out of 130 countries

South Africa was ranked 44th out of 130 countries, ahead of Italy and India, on the Global Competitiveness Index for 2007/8.

Conducted by the World Economic Forum in partnership with leading academics and a global network of research institutes, the index calculates its rankings from publicly available data and the Executive Opinion Survey, a comprehensive annual survey. For the 2007 report, more than 11 000 business leaders in 131 countries were interviewed.

The study ranks the US as the world's most competitive economy. The sheer size of the US market makes it arguably the country with the most productive and innovative potential in the world, the Swiss-based Forum said in its report.

The highest ranking African country is Tunisia, at 32 with its competitiveness ranking of 4.59. South Africa, with a ranking of 4.42. The Forum said that the "resurgent economic growth in sub-Saharan Africa" was not yet reflected in improved competitiveness rankings for the region.

Read the full index here (PDF file. 226k)

Other southern African countries included are Mauritius (60), Botswana (76), Namibia (89), Mozambique (128) and Zimbabwe (129). Chad was rated lowest, in 131st and last place.

The index is based on 12 pillars of competitiveness: institutions; infrastructure; macroeconomic stability; health and primary education; higher education and training; goods market efficiency; labour market efficiency; financial market sophistication; technological readiness; market size; business sophistication; and innovation.

Business Times reported that South Africa lost its spot in the top 40 because of its 126th rank in the "business costs of crime and violence" category.

Doing Business

35 out of 178 countries

South Africa ranks 35th out of 178 countries in the World Bank and International Finance Corporation's Doing Business 2008 report, an annual survey that measures the time, cost and hassle for businesses to comply with legal and administrative requirements.

Read the report here

South Africa makes it above developed countries such as Portugal (37) and Spain (38), as well as major developing economies, such as Mexico (44), China (83), Russia (106), India (120) and Brazil (122).

The report ranks South Africa ninth for its protection of investors, while it recorded significant improvements in the areas of starting a business and getting credit.

Singapore tops the list, with New Zealand, the US, Hong Kong and Denmark completing the top five.

Egypt, at 126 from the previous year's 152, was the year's most improved economy.

The rankings track indicators of the time and cost to meet government requirements in business start-up, operation, trade, taxation, and closure. Variables such as macroeconomic policy, quality of infrastructure, currency volatility and investor perceptions are not measured.

FDI Confidence Index

18th most attractive destination

South Africa is ranked as the 18th most attractive foreign direct investment destination worldwide in 2007 Foreign Direct Investment (FDI) Confidence Index by global management consulting firm AT Kearney.

South Africa made its debut in the top 25. China and India keep their top spots at first and second position respectively, while 15 of the 25 most attractive FDI destinations are developing markets. Brazil, the United Arab Emirates and Russia all rank in the top 10.

Read the index here

"The assessment of senior executive sentiment at the world's largest companies found corporate investors optimistic about the prospects for developing nations and increasingly targeting them for more corporate investment in the years ahead," AT Kearney said when the index was released.

The company said emerging markets registered the strongest investor optimism.

"While China and India remain the top destinations for first-time investments overall, developing country investors are more bullish about new markets, such as Vietnam, Brazil and South Africa."

AT Kearney's Janet Pau said that developing country investors were likely to be responsible for more than half of the investments greater than US$500-million over the next three years.

The index, a regular survey of global executives, looks at the present and future prospects for international investment flows, with companies participating in the survey accounting for more than U$3.8-trillion in annual global revenue.

Failed States Index

44th strongest out of 177 countries

The Failed States Index, produced by US Foreign Policy magazine and the Fund for Peace think-tank, calls South Africa "a success story" where "the economy and the state institutions are quite strong".

Fund for Peace reviews and analyses hundreds of thousands of articles from global and regional sources to compile its index. Social, economic and political indicators are taken into account with criteria including human flight and economic decline.