77452 Africa The Competitiveness Report 2013 Insight Report The Africa Competitiveness Report 2013 The Africa Competitiveness Report 2013 is the result of Copyright © 2013 collaboration among the World Economic Forum, the World Bank, the African Development Bank, and the by the World Economic Forum, the International Bank for Ministry of Foreign Affairs of Denmark. Reconstruction and Development/The World Bank, the African Development Bank, and the Ministry of Foreign Published by the World Economic Forum, Geneva. Affairs of Denmark The findings, interpretations, and conclusions expressed herein are those of the author(s) and do not necessarily All rights reserved. No part of this publication may be reflect the views of the Executive Directors of The World reproduced, stored in a retrieval system, or transmitted, Bank, The African Development Bank, or the governments in any form or by any means, electronic, mechanical, they represent. photocopying, or otherwise without the prior permission of the World Economic Forum. The World Bank, the African Development Bank, and the World Economic Forum do not guarantee accuracy of ISBN-10: 92-95044-44-4 the data included in this work. The boundaries, colors, ISBN-13: 978-92-95044-44-9 denominations, and other information shown on any map in this work do not imply any judgment on the part of The World Bank, the African Development Bank, or the World Economic Forum concerning the legal status of any territory or the endorsement or acceptance of such boundaries. AT THE WORLD ECONOMIC FORUM AT THE WORLD BANK Professor Klaus Schwab Jim Yong Kim Executive Chairman President Børge Brende Shantayanan Devarajan Managing Director, Government Relations and Constituent Chief Economist, Africa Region Engagement Gaiv Tata Jennifer Blanke Sector Director, Finance & Private Sector Development, Chief Economist and Head of the Global Competitiveness Africa Region and Benchmarking Network Paul Noumba Um Margareta Drzeniek Hanouz Sector Manager, Finance & Private Sector Development, Lead Economist and Head of Competitiveness Research, Africa Region Global Competitiveness and Benchmarking Network Irina Astrakhan Ciara Browne Sector Manager, Finance & Private Sector Development, Associate Director, Global Competitiveness and Africa Region Benchmarking Network John Speakman Elsie Kanza Lead Private Sector Development Specialist, Private Director, Head of Africa Sector Development, Africa Region Caroline Ko Marjo Koivisto Junior Economist, Global Competitiveness and Private Sector Development Specialist, Private Sector Benchmarking Network Development, Africa Region AT THE AFRICAN DEVELOPMENT BANK AT THE MINISTRY OF FOREIGN AFFAIRS OF DENMARK Donald Kaberuka Christian Friis Bach President Minister for Development Cooperation Mthuli Ncube Chief Economist & Vice President, ECON Complex We thank Hope Steele for her superb editing work and Neil Weinberg for his excellent graphic design and layout. Steve Kayizzi-Mugerwa The terms country and nation as used in this report do Director, Development Research Department not in all cases refer to a territorial entity that is a state Issa Faye as understood by international law and practice. The Manager (EDRE1), Development Research Department terms cover well-defined, geographically self-contained Peter Ondiege economic areas that may not be states but for which Chief Research Economist, Development Research statistical data are maintained on a separate and Department independent basis. Jennifer Mbabazi Moyo Senior Research Economist, Development Research Department Audrey Verdier-Chouchane Chief Research Economist, Development Research Department Contents Preface v Part 3: Competitiveness Profiles 107 by Donald Kaberuka (African Development Bank How to Read the Competitiveness Profiles....................................109 Group), Christian Friis Bach (Ministry of Foreign Affairs of List of Countries............................................................................123 Denmark), Klaus Schwab (World Economic Forum), Jim Competitiveness Profiles...............................................................124 Yong Kim (World Bank Group) Acknowledgments vii About the Authors 201 Partner Institutes of the World Economic Forum ix Overview xi Part 1: Assessing Africa’s Competitiveness 1 1.1: Assessing Africa’s Competitiveness 3 in an International Context by Jennifer Blanke and Caroline Ko (World Economic Forum), Marjo Koivisto (World Bank), Jennifer Mbabazi Moyo and Peter Ondiege (African Development Bank), John Speakman (World Bank), and Audrey Verdier-Chouchane (African Development Bank) Part 2: Connecting Africa’s Markets in 39 a Sustainable Way 2.1: Enabling African Trade: Findings from 41 the Enabling Trade Index by Margareta Drzeniek Hanouz and Caroline Ko (World Economic Forum) 2.2: Developing Africa’s Infrastructure 69 for Enhanced Competitiveness by Peter Ondiege, Jennifer Mbabazi Moyo, and Audrey Verdier-Chouchane (African Development Bank) 2.3: Growth Poles: Raising Competitiveness 93 and Deepening Regional Integration by John Speakman and Marjo Koivisto (World Bank) The Africa Competitiveness Report 2013 | iii Preface DONALD KABERUKA, President, African Development Bank Group CHRISTIAN FRIIS BACH, Danish Minister for Development Cooperation KLAUS SCHWAB, Executive Chairman, World Economic Forum JIM YONG KIM, President, World Bank Group The Africa Competitiveness Report 2013, the fourth regional integration within the continent, and to ensure report jointly published by our organizations, comes that the benefits of growth are equitably shared. For out at a time when international interest in Africa is regional integration, a vibrant private sector—as the surging and the continent is seen both as an investment producer of tradable goods and services—will play a key destination of choice and as a region marked by greater role. Businesses can advocate for reforms that enhance prosperity and development. competitiveness at the national level and lend their Talk of an “African economic renaissance� support to initiatives that facilitate trade beyond national continues to grow: the continent has experienced an borders. Governments can lay the foundations for the average growth rate of more than 5 percent over the sound business climate required for firms to prosper, and past decade, when much of the developed world still can provide the legal and regulatory frameworks required struggles to recover from crisis. However, Africa will for regional integration. need to translate this impressive economic growth into Africa is at an auspicious moment in history, when rapidly improving living standards for all Africans, as the successes of past decades and an increasingly has happened in other regions with a similar growth favorable economic outlook combine to give the performance. This is imperative if the continent is to take continent an unprecedented opportunity to boost advantage of its historic opportunity to end poverty and investments and spur regional integration to end poverty embrace shared prosperity. Decisions and actions today within a generation. will have a strong bearing on whether Africa places itself on an inclusive and sustainable growth path. On a biennial basis, The Africa Competitiveness Report highlights areas requiring policy action and investment to ensure Africa lays the foundation for inclusive and sustained growth. The Report leverages the knowledge and expertise of the African Development Bank, the World Bank Group, and the World Economic Forum to present a policy vision that can help Africa connect its markets and communities through increased regional integration. Through a comprehensive analysis of Africa’s most pressing competitiveness challenges, the Report discusses the barriers to increased trade, including the state of Africa’s infrastructure and its legal and regulatory environment. It similarly considers how innovative public-private partnerships, often anchored to potential growth poles, can serve as incubators for self-sustaining industrialization, more jobs, greater opportunities, and more dynamic regional integration. The Report also delivers detailed competitiveness profiles for 38 African countries, providing a comprehensive summary of the drivers of productivity and competitiveness within the continent. We hope that this year’s Report will stimulate enthusiastic discussion among government, business, and community leaders about what we can all do together to better connect Africa’s markets, to advance The Africa Competitiveness Report 2013 | v Acknowledgments The Africa Competitiveness Report 2013 was prepared by a joint team comprised of Jennifer Blanke, Margareta Drzeniek Hanouz, and Caroline Ko from the World Economic Forum; John Speakman and Marjo Koivisto from the World Bank, and Peter Ondiege, Jennifer Mbabazi Moyo, and Audrey Verdier-Chouchane from the African Development Bank. The work was carried out under the general direction of Shantayanan Devarajan, Chief Economist for the Africa Region, and Gaiv Tata, Sector Director, Finance and Private Sector Development, Africa Region, The World Bank; Børge Brende, Managing Director, the World Economic Forum; and Mthuli Ncube, Chief Economist and Vice President, and Steve Kayizzi-Mugerva, Director, Development Research Department, the African Development Bank. We are similarly grateful to all staff from our institutions who have worked so hard to make this joint report possible and who have provided comments at different stages of the report preparation. In particular, from the African Development Bank, we thank Steve Kayizzi-Mugerwa, Issa Faye, Gilbert Galibaka, Thierry Kangoye, Succès Assyongar Masra, Ralf Kruger, Daniel Isooba, Jacqueline Odula, Emílio A.F. Dava, Emelly Mutambatsere, Anthony Simpasa, Stefan Atchia, Ishmael Abeyie (Consultant), John Luiz (Consultant), Thierry Urbain Yogo (Consultant), and Lazreg Said (Statistical Assistant); assistance was also provided by Rhoda Bangurah, Nana Cobbina, Abiana Nelson, Ines Hajri, and Imen Rabai. From the World Bank, we thank Richard Damania, José Guilherme Reis, Parth S. Tewari, and Jyoti Bisbey (peer reviewers and the other staff who participated in reviewing the drafts); and contributors from the World Bank on trade issues: Ian Gillson, Olivier Hartmann, Charles Kunaka, and José Guilherme Reis from the International Trade Department; and Tadatsugu Matsudaira from Africa Transport. From the World Economic Forum, we thank Guido Battaglia, Beñat Bilbao-Osorio, Ciara Browne, Sophie Bussmann- Kemdjo, Oliver Cann, Gemma Corrigan, Reuben Coulter, Roberto Crotti, Thierry Geiger, Tania Gutknecht, Marius Hugo, Elsie Kanza, Dimitri Kaskoutas, Patrick McGee, Pedro Rodrigues De Almeida, and Cecilia Serin. We also thank the Ministry of Foreign Affairs of Denmark. The Africa Competitiveness Report 2013 | vii Partner Institutes The World Economic Forum’s Global Competitiveness Egypt The Egyptian Center for Economic Studies and Benchmarking Network is pleased to acknowledge Iman Al-Ayouty, Senior Economist and thank the following organizations as its valued Omneia Helmy, Acting Executive Director and Director of Partner Institutes, without which the realization of The Research Africa Competitiveness Report 2013 would not have Ethiopia been feasible: African Institute of Management, Development and Governance Algeria Zebenay Kifle, General Manager Centre de Recherche en Economie Appliquée pour le Tegenge Teka, Senior Expert Développement (CREAD) Youcef Benabdallah, Assistant Professor Gabon Yassine Ferfera, Director Confédération Patronale Gabonaise Regis Loussou Kiki, General Secretary Benin Gina Eyama Ondo, Assistant General Secretary CAPOD—Conception et Analyse de Politiques de Henri Claude Oyima, President Développement Epiphane Adjovi, Director Gambia, The Maria-Odile Attanasso, Deputy Coordinator Gambia Economic and Social Development Research Institute Fructueux Deguenonvo, Researcher (GESDRI) Makaireh A. Njie, Director Botswana Botswana National Productivity Centre Ghana Letsogile Batsetswe, Research Consultant and Statistician Association of Ghana Industries (AGI) Baeti Molake, Executive Director Patricia Addy, Projects Officer Phumzile Thobokwe, Manager, Information and Research Nana Owusu-Afari, President Services Department Seth Twum-Akwaboah, Executive Director Burkina Faso Guinea lnstitut Supérieure des Sciences de la Population (ISSP), Confédération Patronale des Entreprises de Guinée University of Ouagadougou Mohamed Bénogo Conde, Secretary-General Baya Banza, Director Kenya Burundi Institute for Development Studies, University of Nairobi University Research Centre for Economic and Social Mohamud Jama, Director and Associate Research Professor Development (CURDES), National University of Burundi Paul Kamau, Senior Research Fellow Banderembako Deo, Director Dorothy McCormick, Research Professor Gilbert Niyongabo, Dean, Faculty of Economics & Lesotho Management Private Sector Foundation of Lesotho Cameroon O.S.M. Moosa, President Comité de Compétitivité (Competitiveness Committee) Thabo Qhesi, Chief Executive Officer Lucien Sanzouango, Permanent Secretary Nteboheleng Thaele, Researcher Cape Verde Libya INOVE RESEARCH—Investigação e Desenvolvimento, Lda Libya Development Policy Center Júlio Delgado, Partner and Senior Researcher Yusser Al-Gayed, Project Director José Mendes, Chief Executive Officer Ahmed Jehani, Chairman Sara França Silva, Project Manager Mohamed Wefati, Director Chad Madagascar Groupe de Recherches Alternatives et de Monitoring du Projet Centre of Economic Studies, University of Antananarivo Pétrole-Tchad-Cameroun (GRAMP-TC) Ravelomanana Mamy Raoul, Director Antoine Doudjidingao, Researcher Razato Rarijaona Simon, Executive Secretary Gilbert Maoundonodji, Director Malawi Celine Nénodji Mbaipeur, Programme Officer Malawi Confederation of Chambers of Commerce and Côte d’Ivoire Industry Chambre de Commerce et d’Industrie de Côte d’Ivoire Hope Chavula, Public Private Dialogue Manager Jean-Louis Billon, President Chancellor L. Kaferapanjira, Chief Executive Officer Mamadou Sarr, Director General The Africa Competitiveness Report 2013 | ix Partner Institutes Mali Uganda Groupe de Recherche en Economie Appliquée et Théorique Kabano Research and Development Centre (GREAT) Robert Apunyo, Program Manager Massa Coulibaly, Executive Director Delius Asiimwe, Executive Director Francis Mukuya, Research Associate Mauritania Centre d’Information Mauritanien pour le Développement Zambia Economique et Technique (CIMDET/CCIAM) Institute of Economic and Social Research (INESOR), Lô Abdoul, Consultant and Analyst University of Zambia Mehla Mint Ahmed, Director Patricia Funjika, Research Fellow Habib Sy, Administrative Agent and Analyst Jolly Kamwanga, Senior Research Fellow and Project Coordinator Mauritius Mubiana Macwan’gi, Director and Professor Board of Investment of Mauritius Nirmala Jeetah, Director, Planning and Policy Zimbabwe Ken Poonoosamy, Managing Director Graduate School of Management, University of Zimbabwe Joint Economic Council A. M. Hawkins, Professor Raj Makoond, Director Liberia and Sierra Leone Morocco FJP Development and Management Consultants Comité National de l’Environnement des Affaires Omodele R. N. Jones, Chief Executive Officer Seloua Benmbarek, Head of Mission Mozambique EconPolicy Research Group, Lda. Peter Coughlin, Director Donaldo Miguel Soares, Researcher Ema Marta Soares, Assistant Namibia Institute for Public Policy Research (IPPR) Graham Hopwood, Executive Director Nigeria Nigerian Economic Summit Group (NESG) Frank Nweke Jr., Director General Chris Okpoko, Associate Director, Research Foluso Phillips, Chairman Rwanda Private Sector Federation (PSF) Hannington Namara, Chief Executive Officer Andrew O. Rwigyema, Head of Research and Policy Senegal Centre de Recherches Economiques Appliquées (CREA), University of Dakar Diop Ibrahima Thione, Director Seychelles Plutus Auditing & Accounting Services Nicolas Boulle, Partner Marco L. Francis, Partner South Africa Business Leadership South Africa Friede Dowie, Director Thero Setiloane, Chief Executive Officer Business Unity South Africa Nomaxabiso Majokweni, Chief Executive Officer Joan Stott, Executive Director, Economic Policy Swaziland Federation of Swaziland Employers and Chamber of Commerce Mduduzi Lokotfwako, Research Analyst Zodwa Mabuza, Chief Executive Officer Nyakwesi Motsa, Administration & Finance Manager Tanzania Research on Poverty Alleviation (REPOA) Cornel Jahari, Assistant Researcher Johansein Rutaihwa, Commissioned Researcher Samuel Wangwe, Professor and Executive Director x | The Africa Competitiveness Report 2013 Overview The Africa Competitiveness Report 2013 comes out critical for developing competitiveness in Africa, this at a time of growing international attention focused on year’s Report leverages the research, expertise, and Africa as an investment destination and mounting talk substantial amount of work on regional integration that of an African economic renaissance. This increased has been carried out by its partner organizations—the optimism is being spurred on by a decade of historically World Economic Forum, the World Bank, and the African strong growth, with many countries in Africa relatively Development Bank. The aim is to provide a better unscathed by the global economic crisis, thanks to understanding of the benefits of regional integration prudent macroeconomic management. 1 However, for higher-value-added growth and to discuss current growth remains unevenly spread across the region constraints and the policy environment required to and has not yet translated to a rise in living standards develop the necessary infrastructure for connecting comparable to those observed in other rapidly growing Africa’s markets in a sustainable way. It is based on developing regions. Further, the turbulence in North the assumption that regional integration could be an Africa has slowed growth in some of those countries. important way to reinforce competitiveness across the More generally, the question of how sustainable and continent. Such integration is, however, not an end in inclusive Africa’s growth will be going forward remains. itself, but a reinforcing process. Both regional integration Many efforts are still needed for African economies to and competitiveness challenges must be addressed diversify and enhance their competitiveness so that they at the same time within a country to lay the basis for a can absorb the 10 million new entrants to the labor force strong and thriving private sector, and hence, increased every year. 2 Indeed, the African Economic Outlook (AEO) productivity. Against this backdrop, the Report begins report in 2012 highlights the fast but jobless growth with an assessment of the different factors that affect pattern on the continent: as a result of the youngest Africa’s economic competitiveness. Chapter 1.1 of the population in the world—200 million young people Report outlines the competitiveness challenges faced by between the ages of 15 and 24—coupled with improved the continent. levels of education, Africa faces the challenge—and opportunity—of a youth bulge. ASSESSING THE COMPETITIVENESS OF AFRICAN Africa is at a crossroads, and decisions and actions COUNTRIES taken today will have a strong bearing on whether it Many African countries continue to feature among places itself on a path similar to that of other regions the least competitive economies in the world. By such as developing Asia, allowing it to transition from competitiveness we mean all of the factors, institutions, resource-driven to higher-value-added growth. In this and policies that determine a country’s level of context, this Report will assess the extent to which productivity. Productivity, in turn, sets the sustainable African economies have laid the foundations and made level and path of prosperity that a country can achieve. the necessary investments for sustained growth. In other words, more competitive economies tend to be The 2011 Africa Competitiveness Report examined able to produce higher levels of income for their citizens. Africa’s human resources and services industries Competitiveness also determines the rates of return and looked at the efforts required to improve higher obtained by investment. Because the rates of return education, strengthen women’s entrepreneurship, and are the fundamental drivers of growth rates, a more capitalize on the emerging Travel & Tourism industry. competitive economy is one that is likely to grow faster Building on this work, this year’s Africa Competitiveness over the medium to long term. Report focuses on the potential of regional integration Chapter 1.1 of the Report analyzes competitiveness as a stepping stone for building economies of scale, across the continent and looks at a broad range of increasing competition, and fostering economic factors that impact productivity in African countries. The diversification. Information on the key data sources Global Competitiveness Index (GCI) identifies the majority used in this Report can be found in Boxes 1 and 2. of African countries as among the least competitive in Although human capital development continues to be the world, and notes that Africa must make headway The Africa Competitiveness Report 2013 | xi Overview Box 1: Data used in this Report The Executive Opinion Survey a Business, Dealing with Construction Permits, Registering The Executive Opinion Survey (the Survey) conducted Property, Getting Credit, Protecting Investors, Paying annually by the World Economic Forum captures the Taxes, Trading Across Borders, Enforcing Contracts, and perceptions of leading business executives on numerous Closing a Business. The indicators are built on the basis of dimensions of the economy from a cross-section of firms standardized scenarios that permit consistency of approach representing its main sectors. The Survey compiles data and straightforward comparisons across countries. They in the following areas: infrastructure, financial environment, also enable the tracking of reform efforts over time. Ease of innovation and technology, foreign trade and investment, use makes this a useful tool for policy analysis. The Doing domestic competition, company operations and strategy, Business data are updated annually; the most recent report government and public institutions, education and human (published in September 2012) covers 185 economies, over capital, corruption, ethics and social responsibility, Travel 50 of them in Africa. Subnational Doing Business Rankings & Tourism, environment, and health. All these areas feed are now also available for some African countries, including into the 12 pillars of the Global Competitiveness Index. In Egypt, Kenya, Morocco, and Nigeria. Some of these the Survey, business leaders are asked to assess specific indicators are included in the Global Competitiveness Index. aspects of the business environment in the country in which For more information, visit www.doingbusiness.org. they operate. For each question, respondents are asked to give their opinion about the situation in their country of Enterprise Surveys residence, compared with a global norm. The World Bank’s Enterprise Surveys provide another The Survey gauges the current condition of a given important point of reference, collecting both perception and economy’s business climate. The data generated from objective indicators of the business environment in each the Survey comprise the core qualitative ingredient of the country. Although not carried out in every country in every Global Competitiveness Index as well as a number of other year, the Enterprise Surveys are made up of larger sample development-related studies and indexes carried out by sizes that allow for a nuanced analysis of the results—for the Forum and other institutions. The most recent Survey example, by economic sector and gender of respondent. data cover a record 144 economies, with responses of The data are collected through face-to-face interviews with over 14,000 business executives worldwide, almost 3,000 hundreds of entrepreneurs; hence responses reflect the of whom are from 38 African countries. To conduct the managers’ actual experiences. The data collected span all Survey in each country, the World Economic Forum relies major investment climate topics, ranging from infrastructure on a network of over 160 Partner Institutes. Typically, the to access to finance and from corruption to crime. Detailed Partner Institutes are recognized economics departments productivity information includes firm finances, costs such as of national universities, independent research institutes, or labor and materials, sales, and investment. business organizations. More information on the Executive The breadth and depth of data allow for cross-country Opinion Survey can be found in Chapter 1.3 of The Global analysis by firm attributes (size, ownership, industry, etc.), Competitiveness Report 2012–2013. and can probe the relationship between investment climate characteristics and firm productivity. Every year, 15–30 Doing Business Indicators Enterprise Surveys are implemented, with updates planned The World Bank’s Doing Business Indicators are updated for each country every three to five years. This reflects the on an annual basis, providing a quantitative measure of intense nature of administering firm surveys, given that firms a particular aspect relevant to competitiveness: business are required to respond to many detailed questions. So regulations relevant to the operation of domestic small- to far, over 135 countries have been surveyed, including over medium-sized enterprises (SMEs) throughout their life 130,000 entrepreneurs, senior managers, and CEOs all over cycle. Specifically, they cover the following topics: Starting the world. in many areas in order to set itself on a sustainable half of the rankings at 52nd, while Burundi is the lowest growth trajectory going forward. It shows that the gap ranked country out of all assessed at 144th. with comparable regions—such as Southeast Asia Recognizing the continent’s heterogeneity, and Latin America and the Caribbean—is particularly the chapter explores in greater detail the main large in the basic building blocks for a competitive competitiveness challenges by classifying Africa’s economy: governance and institutions, infrastructure, economies into oil and gas exporters, middle-income and education. Beyond these gaps, countries (with the economies, non-fragile low-income economies, and exception of South Africa, Egypt, and the oil-exporting fragile economies. 3 We see that oil- and gas-exporting economies) suffer from small market sizes. Moreover, economies perform as poorly as fragile economies in 9 despite the rapid rise in mobile telephone subscriptions, out of the 12 competitiveness pillars, calling into question Africa trails other regions significantly in its use of whether these countries’ high economic growth rates information and communication technologies (ICTs). are sustainable. We further observe that non-fragile Furthermore, the chapter finds wide regional differences low-income economies do particularly well in the areas in competitiveness across the continent, as captured in of financial, goods, and labor market efficiency. Middle- findings such as the placement of South Africa in the top income economies, while generally faring better, face xii | The Africa Competitiveness Report 2013 Overview many of the same competitiveness challenges as their peers. Box 2: The African Development Bank: These competitiveness figures bring to the fore the Knowledge to improve investment climate and competitiveness important question of whether, while enjoying high rates of growth, African countries have been making the types The African Economic Outlook (AEO) is jointly produced of investments and implementing policies that can put by the African Development Bank (AfDB), the Organisation their economies on sustainable growth paths so that for Economic Co-operation and Development (OECD) they can create enough jobs to benefit from, rather than Development Centre, the United Nations Development Programme (UNDP), and the United Nations Economic suffer from, Africa’s youth bulge. Given the importance Commission for Africa (UNECA). It reviews recent of social and environmental sustainability for growth and economic developments in Africa by adopting a development going forward, Africa’s economies are also comparative approach and a common analytical assessed according to these criteria, demonstrating that framework. It provides forecasts for key macroeconomic all eight African economies in the sample do worse when variables. The AEO surveys and analyzes the current socioeconomic performance of African economies and social and environmental variables are taken into account. provides information on a country-by-country basis on their socioeconomic progress as well as on the short- to REGIONAL INTEGRATION medium-term prospects of these countries. It also provides Efforts to foster trade through regional integration will be an overview of specific international developments that may impact African economies. critical for Africa to diversify its economies and increase Each year, the AEO addresses a specific theme the region’s competitiveness. Participating in both intra- that focuses on a critical area of Africa’s socioeconomic Africa and international trade and investment flows can development. The 2012 theme was Promoting Youth fuel competitiveness in a number of ways. Increased Employment. The 2013 edition of the AEO, with the theme of Structural Transformation and Natural Management, cross-border trade can lead to a virtuous cycle of more covers 53 African countries and is currently being competition in domestic markets that—coupled with the prepared. The key objectives of the AEO are to broaden exploitation of economies of scale—lowers the costs the knowledge base of African economies and to offer of goods and services while increasing their variety, valuable support for policymaking, investment decisions, and donors’ interventions. Another important objective is thereby generating more economic activity, such as the to assist in capacity building. Through the involvement of development of the manufacturing or services sectors. African experts and institutions in its preparation, the AEO This, in turn, has the potential to create strong backward increases research capacity and reinforces the ownership and forward linkages within the economy. For African of local African experts in that research. For more information, visit www.africaneconomicoutlook.org. countries, two inter-related challenges are critical: to diversify the export base to reduce vulnerability stemming from commodity price swings, and to tighten regional integration. A recent World Bank report shows that countries are losing out on billions of dollars in potential trade every year because of the region’s fragmented regional market, 4 and because cross-border production networks that have spurred economic raises the cost of trading, particularly for landlocked dynamism in other regions, especially East Asia, have yet economies. The chapter also corroborates that access to materialize in Africa. to finance and identifying potential markets and buyers are considered the most important bottlenecks to TRADE LIBERALIZATION exporting across Africa. This suggests that further Africa has failed to benefit from trade liberalization to the developing the financial services sector, as outlined in same extent as other regions, such as Asia and some Chapter 1.1, would be beneficial for trade; there is also countries in Latin America. Chapter 2.1, therefore, looks a need and a demand for accessible business services at how to strengthen the trade performance of African that could help exporters identify markets and buyers. economies. The Enabling Trade Index (ETI) points to a number of strengths and many challenges to developing AFRICA’S DEEP AND PERSISTENT trade on the African continent. Access to African markets INFRASTRUCTURE DEFICIT has been significantly liberalized in most countries, and Together with border administration, the insufficient the business environment is often more conducive to amount and quality of infrastructure is one of the major corporate activity than it is in other regions, although impediments to developing trade in Africa and improving regional differences between East, Southern, and West competitiveness; closing this deficit is part of the solution Africa remain. However, inefficient border administration (see Chapters 2.1 and 2.2). While over half of Africa’s reduces the price competitiveness of African exports improved growth performance can be attributed to in global markets and adds to the cost of imports. The improvements in infrastructure, US$93 billion annually transport and communications infrastructure is far less until 2020 is still needed for infrastructure development. 5 developed than in other regions, which also significantly And increased urbanization, growing consumer markets, The Africa Competitiveness Report 2013 | xiii Overview and broader ties to the global economy are putting to regional integration, as they often attract foreign additional pressure on the need for African economies direct investment, are built across borders, and have to invest more in infrastructure. Developing adequate spillovers beyond national economies. Growth poles can and efficient infrastructure will assist African economies thus be important spurs for national competitiveness, to increase productivity, especially in manufacturing and can be especially effective by reinforcing the and service delivery. This in turn will create more jobs capacity for regional integration and increasing business and increase attractive investment opportunities as well sophistication. as encourage the efficient use of natural resources. Improved and efficient infrastructure will also contribute POLICY RECOMMENDATIONS to social development in the areas of health and Several policy recommendations flow from the analysis education and reduce societal inequalities through a in this Report. Individually each recommendation could more equitable distribution of national wealth. facilitate trade and regional integration, and jointly Chapter 2.2 therefore looks at infrastructure they could be important drivers for more regional development in the sectors of energy, transportation, integration across Africa and for improving the region’s and ICTs. The chapter shows that, in general, progress competitiveness. has been very slow or even negative in terms of Simplifying import-export procedures: Chapter 2.1 electricity generation and the provision of paved roads, shows that reducing import-export procedures lends while the uptake of mobile telephone subscriptions itself to relatively rapid gains from trade facilitation, has been impressively rapid during the last decade. while countries are putting in place the necessary The chapter argues that, at the regional level, urgent infrastructure that proves critical to more regional attention should be given to the development of regional integration in the medium to long run. More specifically, infrastructure to achieve economies of scale. Africa streamlining border administration to reduce the cost needs well-structured networks linking production of procedures and delays during clearance, along with centers and distribution hubs across the continent to improving the coordination of the clearance process, deepen regional trade and integration. Reducing this could be instrumental in providing these rapid gains. significant infrastructure deficit will help to increase An example of this approach is seen in the Uganda- Africa’s competitiveness. Very important for building the Kenya revenue authorities digital exchange platform (see necessary infrastructure will be (1) planning for adequate Chapter 2.1, Box 3). maintenance in all sectors, including the new ICT sector; Developing and leveraging ICTs: Chapter 2.1 shows (2) removing regulatory and institutional bottlenecks; and that improvements in ICTs could also further support (3) interconnecting infrastructure so as to maximize the and help make more transparent the administrative benefits from regional integration. processes in regard to trade facilitation. Furthering this, Chapter 2.2 highlights the urgent need (1) to liberalize COMPREHENSIVE POLICY MIX NEEDED the subsector in countries still dominated by government Infrastructure development needs to be supported by monopolies, as well as to avoid policy reversals, a comprehensive policy mix to reinforce the backward which create uncertainty; (2) to improve private-sector and forward linkages of infrastructure investments in the participation, particularly in the backbone infrastructure, economy. In this context, Chapter 2.3 discusses growth so as to enhance terrestrial connectivity; (3) to create poles as a successful and innovative approach that an open, dynamic, and responsive legal and regulatory links infrastructure investments to the development of framework that responds to new advances such as industries and that can set into motion a reinforcing cycle mobile money; and (4) to anticipate plans for adequate of forward and backward linkages. Growth poles are maintenance. multi-year, generally public-private investments aiming to Improving energy: From an in-depth analysis of accelerate growth in the industries that engage in export Africa’s energy sector, Chapter 2.2 recommends that and to support infrastructure around already-existing policymakers should (1) reconsider subsidies and tariffs opportunities in the economy, such as a natural resource that are not cost-reflective and that prevent crucial (such as a mine) or an agglomeration economy (such as investments; (2) invest in the diversification of the energy a boom city). Growth poles are built on the assumption mix to reduce vulnerability of one source of energy and that there is a need for simultaneous, coordinated ensure sustainability; (3) promote energy efficiency and investments in many sectors to encourage self-sustaining pursue green energy, which will address the energy industrialization that could increase market size, deficit at no further cost to the environment; and (4) thereby attracting more investment and employment. build competitive regional power pools coupled with the By bringing together investors from both the public requisite legal and regulatory framework. and private sectors to share risks, growth poles can Improving transportation: In the transportation reduce the costs of infrastructure projects and especially sector, outdated infrastructure and limited maintenance incentivize the local private sector’s participation in call for a pressing rehabilitation in all subsectors. these projects. Growth pole projects can be a boost Transport infrastructure is particularly important for xiv | The Africa Competitiveness Report 2013 Overview landlocked countries that face prohibitive costs in NOTES getting their goods to market, thereby undermining their 1 See, for example, IMF 2008. Furthermore, a recent IMF Working Paper (IMF 2013) shows that economic growth in sub-Saharan competitiveness. Policymakers should encourage and Africa was less volatile between 1995 and 2010 than it was facilitate investment in (1) upgrading rail transport links between 1980 and 1994. to ensure cost-effective transportation of bulky exports; 2 AfDB et al. 2012. (2) increasing capacity storage in the port sector; and 3 We follow the IMF’s country classification applied in the Regional (3) improving feeder and rural roads, thereby enhancing Economic Outlooks on sub-Saharan Africa based on the most recent data on per capita gross national income (averaged over inclusiveness. three years) and the 2010 World Bank’s (IDA) Resource Allocation Building growth poles: Linked to but going beyond Index (IRAI). Oil-exporting countries are those where oil exports improving infrastructure, growth poles are an innovative make up for more than 30 percent of total exports. Middle-income countries not classified as oil exporter or fragile countries are means to link regional integration and develop productive those that had an average income per capital gross national capacity. Chapter 2.3 highlights policy lessons for income in the years 2008–10 of more than US$992.7 and an IRAI score higher than 3.2; low-income countries not classified building growth poles. It shows that growth poles can as fragile or oil exporters had average income per capital gross be an important means of creating dialogue among national income in the years 2008–10 of less than US$992.7; and fragile countries not classified as oil exporters had IRAI scores stakeholders, but they require a thorough upfront of 3.2 or less (see IMF 2012). The criteria are extended to North analysis and need to incorporate clear leadership on African economies. the implementation side. In dialogue with the private 4 World Bank 2012. sector and other stakeholders, policymakers will then 5 AfDB Group 2010. need to deal with three kinds of challenges: (1) policy coordination is key. Consideration must be given to how REFERENCES growth poles get picked and how specific transactions AfDB Group (African Development Bank Group). 2010. “Infrastructure get selected. Responding to these challenges requires Deficit and Opportunities in Africa.� Economic Brief 1 (September). both institutional (horizontal) coordination, and effective Available at http://www.afdb.org/fileadmin/uploads/afdb/ Documents/Publications/ECON%20Brief_Infrastructure%20 coordination of implementation arrangements. (2) A Deficit%20and%20Opportunities%20in%20Africa_Vol%201%20 monitoring and evaluation framework for growth pole Issue%202.pdf. investments must be established from the outset AfDB (African Development Bank), OECD (Organisation for Economic of the projects as a key measure for increasing the Co-operation and Development), UNDP (United Nations Development Programme), and UNECA (United Nations accountability and transparency of these investments. Economic Commission for Africa). 2012. African Economic (3) Successful risk management of growth poles needs Outlook 2012. Paris: OECD Publishing. Available at http://www. africaneconomicoutlook.org/en/. to recognize the specific risks associated with them IMF (International Monetary Fund). 2008. “The Great Sub-Saharan (including risk-sharing and risk-management challenges, African Growth Takeoff: Lessons and Prospects.“ Sub-Saharan payment challenges, and demand and construction risk Africa Regional Economic Outlook, Fall. Washington, DC: IMF. challenges). ———. 2012. Regional Economic Outlook: Sub-Saharan Africa: A coordinated effort by several African countries Sustaining Growth amid Global Uncertainty, April. Available at http://www.imf.org/external/pubs/ft/reo/2012/afr/eng/sreo0412.pdf. is needed for the full positive impact of these recommendations, each building the necessary policy ———. 2013. “The Quality of the Recent High-Growth Episode in Sub- Saharan Africa.� IMF Working Paper No. WP/13/53. Washington, environments and building the required infrastructure DC: IMF. that will facilitate regional integration. However, regional World Bank. 2012. De-Fragmenting Africa: Deepening Regional integration is not an end in itself. Efforts to close Integration in Goods and Services. Washington, DC: World Bank. Available at http://www-wds.worldbank.org/external/default/ Africa’s competitiveness gap—particularly in the areas WDSContentServer/WDSP/IB/2012/05/03/000333038_2012050 of institutions, education and skills, and technological 3000714/Rendered/PDF/684900ESW0Whit00Box367921B00PU adoption—will be critical for African economies to BLIC0.pdf. build their productive capacities: putting in place the World Economic Forum. 2012. The Global Competitiveness Report 2012–2013. Geneva: World Economic Forum. necessary factors to move up the value chain will lay the basis for a transformative manufacturing and services sector that will provide the goods and services that will be traded. Efforts are underway in some parts of the continent, but in order to truly improve Africa’s productivity and competitiveness and see a rapid rise in living standards, such efforts must be scaled up and accelerated. The final section of the Report provides detailed competitiveness profiles for the 38 African countries included in the World Economic Forum’s Global Competitiveness Index. These profiles present the detailed rankings that underlie the broader global competitiveness rankings. The Africa Competitiveness Report 2013 | xv Part 1 Assessing Africa's Competitiveness CHAPTER 1.1 After two difficult decades, Africa has enjoyed a period of high, sustained economic growth. Since the early Assessing Africa’s 2000s, African countries have registered consistent growth rates well above 5 percent on average, a rate Competitiveness in an that has been only temporarily interrupted by the global economic downturn. Indeed, Africa has weathered International Context the crisis remarkably well: since our last Report, the region has bounced back rapidly and seen slow but JENNIFER BLANKE, World Economic Forum steady upward growth at a time when much of the rest CAROLINE KO, World Economic Forum of the world is struggling and many countries are actually MARJO KOIVISTO, World Bank experiencing a double-dip recession. But two recent JENNIFER MBABAZI MOYO, African developments will be of critical importance for Africa’s Development Bank future path: the continent’s population has reached the PETER ONDIEGE, African Development Bank 1 billion mark—or 15 percent of the world’s total—and JOHN SPEAKMAN, World Bank is projected to increase to 20 percent by 2030. 1 In AUDREY VERDIER-CHOUCHANE, African this context, events such as the Arab Spring highlight Development Bank the tensions that can arise from a growing population without accompanying economic and social progress that will ensure decent living standards, employment, and fair opportunities to better people’s lives. Thus, although this period of growth has given rise to increased optimism about Africa’s economic prospects, supported by advances in information and communication technologies (ICT) development and auspicious projections about Africa’s rapidly growing new consumer base on the one hand, on the other hand, many African economies continue to figure among the least competitive in the Global Competitiveness Index (GCI)—14 out of the 20 lowest-ranked economies are African. They underperform by a wide margin on human development indicators, 2 and armed conflict and recurrent food crises continue to make headline news. Indeed, for many African economies, sources of growth are insufficiently diversified. Mineral exports make up over half of the region’s total exports, rendering them vulnerable to commodity shocks. The share of gross domestic product (GDP) held by the manufacturing sector has remained largely unchanged since the 1970s, 3 and more than two-thirds of the labor force is employed in the agricultural sector, implying limited structural transformation. 4 In view of these evident concerns, the pertinent question is one of countries’ competitiveness: are policymakers putting into place the fundamentals that will keep them growing rapidly, placing them on the higher growth trajectories needed to ensure rapid increases in living standards? In this chapter we hope to shed further light on Africa’s potential for sustained and inclusive growth. We will also explore the extent to which growth in the region can be maintained over the longer term while ensuring environmental and social sustainability. As the chapter will show, Africa still must make headway in a number of areas in order to set itself on a sustainable growth trajectory going forward. The Africa Competitiveness Report 2013 | 3 1.1: Assessing Africa’s Competitiveness in an International Context Figure 1: Prosperity and economic growth 15,000 GDP PPP per capita, current international dollars —  Sub-Saharan Africa 12,000 —  Developing Asia —  Latin America and the Caribbean 9,000 6,000 3,000 0 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012 Source: IMF, 2012c. AFRICA’S COMPETITIVENESS CHALLENGE However, the slight recovery in productivity seen since Overall, high economic growth rates have not yet the early 2000s provides something of a silver lining, translated into the rapidly improving living standards indicating that economic growth is increasingly driven that have been seen in other regions with a similar by rising productivity in some African countries. growth performance. Africa's growth rates have Indeed, the International Monetary Fund (IMF) averaged well above 5 percent in the past decade, examines productivity figures at a disaggregate level after 20 difficult years of flat and often negative growth for 1995–2010, analyzing the extent to which structural in several countries. The question going forward is transformation—defined as the shift of workers from whether Africa will be able to maintain these impressive low to high-average productivity activities—occurred in growth rates, and whether future growth will be built sub-Saharan Africa. The findings show that structural on the types of productivity enhancements that are transformation has seen some countries (Ethiopia, associated with rising living standards. To date, given Kenya, Mozambique, and Tanzania) developing a the low starting point and the comparatively shorter manufacturing sector, and Kenya and Mauritius period of above-average growth, and despite the developing a service sector, although the report notes continent’s impressive resilience to the recent financial that the remaining African economies have registered and economic crisis, economic growth has not yet led only slow growth in labor productivity. 5 to the same magnitude of rising living standards that Identifying the drivers of productivity needed to has been observed in other regions with similar growth ensure rapid and sustained increases in living standards performance (see Figure 1). is the goal of the GCI, which defines competitiveness Low and falling productivity figures are at the as the set of institutions, policies, and factors that core of these differences in living standards. Figure 2 determine the level of productivity of a country. The compares labor productivity—as a proxy for overall current and future levels of productivity, in turn, set the productivity—for Africa with that of other regions for the sustainable level of prosperity that can be earned by an past 50 years. Although Africa and developing economy. In other words, more competitive economies Asia started from similar, very low levels, labor in tend to be able to produce higher levels of income for developing Asia has since become more productive, their citizens. The measurement of competitiveness is effectively converging with the Organisation for a complex undertaking. To address this complexity, Economic Co-operation and Development (OECD) the idea that many different factors matter for average. Figure 2 further shows that Africa, in contrast, competitiveness is reflected by the 12 distinct pillars of has not only been trailing Southeast Asia, but in fact the the Index: 6 institutions (public and private), infrastructure, productivity gap deepened between 1960 and 2000. the macroeconomic environment, health and primary 4 | The Africa Competitiveness Report 2013 1.1: Assessing Africa’s Competitiveness in an International Context Figure 2: Africa’s falling productivity 120 OECD = 100 100 —  Sub-Saharan Africa GDP per hour worked, Geary/Khamis $ —  Developing Asia —  Latin America and the Caribbean 80 60 40 20 0 1950 1952 1954 1956 1958 1960 1962 1964 1966 1968 1970 1972 1968 1976 1978 1980 1982 1984 1986 1988 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012 Sources: The Conference Board Total Economy Database™, January 2013, http://www.conference-board.org/data/economydatabase; authors’ calculation. Note: The database begins in 1960 for Africa and Developing Southeast Asia. Figure 3: The Global Competitiveness Index framework GLOBAL COMPETITIVENESS INDEX Basic requirements Efficiency enhancers Innovation and sophistication subindex subindex factors subindex Pillar 1. Institutions Pillar 5. Higher education and Pillar 11. Business sophistication training Pillar 2. Infrastructure Pillar 12. Innovation Pillar 6. Goods market efficiency Pillar 3. Macroeconomic environment Pillar 7. Labor market efficiency Pillar 4. Health and primary education Pillar 8. Financial market development Pillar 9. Technological readiness Pillar 10. Market size Key for Key for Key for factor-driven efficiency-driven innovation-driven economies economies economies Source: World Economic Forum, 2012. The Africa Competitiveness Report 2013 | 5 1.1: Assessing Africa’s Competitiveness in an International Context Table 1: African economies by stages of development Stage African countries Other countries in this stage Important areas for competitiveness Stage 1 (factor-driven) Benin, Burkina Faso, Burundi, Bangladesh, Nicaragua, Pakistan, Basic requirements (60 percent), GDP per capita < US$2,000 Cameroon, Chad, Côte d’Ivoire, Vietnam, Yemen efficiency enhancers (35 percent), and Ethiopia, Gambia, Ghana, Guinea, innovation factors (5 percent) Kenya, Lesotho, Liberia, Madagascar, Malawi, Mali, Mauritania, Mozambique, Nigeria, Rwanda, Senegal, Sierra Leone, Tanzania, Uganda, Zambia, Zimbabwe Transition from 1 to 2 Algeria, Botswana, Egypt, Gabon, Libya Azerbaijan, Bolivia, Brunei Darussalam, Basic requirements (between 40 GDP per capita US$2,000 to US$3,000 Iran, Islamic Rep., Venezuela percent and 60 percent), efficiency enhancers (between 35 percent and 50 percent), and innovation factors (between 5 percent and 10 percent)* Stage 2 (efficiency-driven) Cape Verde, Mauritius, Morocco, Albania, Belize, China, Costa Rica, Basic requirements (40 percent), GDP per capita US$3,000 to US$9,000 Namibia, South Africa, Swaziland Indonesia, Jordan, Mexico efficiency enhancers (50 percent), and innovation factors (10 percent) Transition from 2 to 3 Seychelles Argentina, Brazil, Chile, Croatia, Basic requirements (between 20 GDP per capita US$9,000 to Malaysia, Mexico, Russian Federation, percent and 40 percent), efficiency US$17,000 Turkey enhancers (50 percent), and innovation factors (between 10 percent and 30 percent)* Stage 3 (innovation-driven) Germany, Republic of Korea, Norway, Basic requirements (20 percent), GDP per capita > US$17,000 Spain, United Kingdom, United States efficiency enhancers (50 percent), and innovation factors (30 percent)* Source: World Economic Forum, 2012. Note: Countries with a share of mineral exports in their total exports greater than 70 percent are moved toward a lower stage of development. education, higher education and training, goods market country’s companies (pillar 10). Finally, as countries move efficiency, labor market efficiency, financial market into the third, innovation-driven stage, they are able to development, technological readiness, market size, sustain higher wages and the associated standard of business sophistication, and innovation (see Figure 3). living only if their businesses are able to compete with Improving competitiveness across the 12 GCI pillars new and unique products. At this stage, companies would be important for meeting Africa’s sustainable must compete through producing new and different growth challenge. goods using the most sophisticated production and The GCI takes into account the fact that countries business processes (pillar 11) and innovation (pillar 12). around the world are at different stages of economic Table 1 provides a detailed overview of the development and offers guidance on the priority areas stages of development of African economies and for reforms. Specifically, the GCI distinguishes three places these into context with other regions. 7 It stages of development. In their first stage, economies suggests that a competitiveness agenda for most are factor-driven and countries compete based on their African countries, classified as factor-driven economies, factor endowments—primarily unskilled labor and natural should make putting into place the basic fundamentals resources. Maintaining competitiveness in this stage as their first critical step toward improving productivity depends primarily on well-functioning public and private and competitiveness. That is, these economies institutions (pillar 1), well-developed infrastructure (pillar should prioritize providing sound institutions and 2), a stable macroeconomic environment (pillar 3), and macroeconomic policies, adequate infrastructure, a healthy and literate workforce (pillar 4). As wages rise and the means for ensuring a healthy and literate with advancing development, countries move into the workforce before moving on to the next stages. This second, efficiency-driven stage of development, when is particularly important for the five countries (Algeria, they must begin to develop more efficient production Botswana, Egypt, Gabon, and Libya) that are currently processes and increase product quality. At this stage, transitioning to the second—efficiency-driven—stage competitiveness is driven by higher education and of development, which will require them to move into training (pillar 5), an efficient goods and services market more efficient production processes and increase (pillar 6), frictionless labor markets (pillar 7), developed product quality to maintain growth. Six other African financial markets (pillar 8), the ability to make use of economies are currently in the efficiency-driven stage latest technological developments (pillar 9), and the size of the GCI, where higher education and market of the domestic and foreign markets available to the efficiencies (goods, labor, financial) take a more 6 | The Africa Competitiveness Report 2013 1.1: Assessing Africa’s Competitiveness in an International Context Figure 4: The GCI heat map GCI score* n  [5.39,5.72†] n  [5.00,5.39[ n  [4.60,5.00[ n  [4.20,4.60[ n  [3.80,4.20[ n  [2.78††,3.80[ n  Not covered Source: World Economic Forum, 2012. * The interval [x ,y [ is inclusive of x but exclusive of y. † Highest value; †† lowest value. prominent role. Only one African economy—Seychelles— AFRICA’S PERFORMANCE IN AN INTERNATIONAL is currently transitioning to the innovation-driven stage. CONTEXT For Seychelles to increase its competitiveness, On average, African economies trail the rest of the therefore, more needs to be done to put into place a world in competitiveness: 14 out of the 20 least skilled workforce and a business environment that is competitive economies are from Africa. Figure 4 supportive for innovation. However, it is important to identifies competitiveness “hotspots� and the regions bear in mind that the sequencing proposed by the or countries with weak performance according to the GCI serves as a guideline rather than carved-in-stone GCI. The 10 best-performing countries are shaded policies, and a holistic competitiveness agenda needs in dark red. The remaining countries are shaded in to consider the country-specific context and unique increasingly “cooler� tones moving from orange (the challenges. second-best-performing group) through yellow, light The next section will assess the overall blue, medium blue, and dark blue; this last color competitiveness of Africa. To get a sense of how the identifies the least-competitive economies according region’s performance stands in international comparison, to the GCI. As shown on the map, a vast majority of we also show the results of relevant regions and African countries covered in this Report fall into the countries (Southeast Asia, Latin America and the group of least-competitive economies (dark blue). Caribbean, and the BRIC economies). 8 Outside of Africa, only eight Latin American countries (Bolivia, Dominican Republic, El Salvador, Guyana, Haiti, COUNTRY COVERAGE Nicaragua, Paraguay, Suriname), four Asian economies This year’s Report features 38 African economies. (Bangladesh, Nepal, Pakistan, Timor-Leste), and one The newly covered countries are Gabon, Guinea, Liberia, country each from the Middle East and Central Asian Seychelles, and Sierra Leone. Two previously covered regions (Yemen, Kyrgyz Republic) perform similarly. countries—Angola and Tunisia—have not been included However, within Africa, Botswana, Gabon, Morocco, this year. For Angola, sufficient Executive Opinion Namibia, Seychelles (medium blue), and Mauritius, Survey data could not be collected.9 In the case of Rwanda, and South Africa (light blue) are somewhat Tunisia, results are not reported because of an important more competitive. structural break in the data, which does not allow for Africa’s competitiveness as a whole trails comparison with previous years. Southeast Asia and Latin America and the Caribbean; the biggest gaps are seen in the quality of institutions, The Africa Competitiveness Report 2013 | 7 1.1: Assessing Africa’s Competitiveness in an International Context Figure 5: Africa’s performance in regional comparison Institutions 7 Innovation Infrastructure 6 5 Business Macroeconomic sophistication 4 environment 3 2 Health and   Africa Market size 1 primary   Southeast Asia education   Latin America and the Caribbean Technological Higher education readiness and training Financial market Goods market development ef�ciency Labor market ef�ciency Source: World Economic Forum, 2012. Note: The sample includes Africa: Algeria, Benin, Botswana, Burkina Faso, Burundi, Cameroon, Cape Verde, Chad, Côte d’Ivoire, Egypt, Ethiopia, Gabon, Gambia, Ghana, Guinea, Kenya, Lesotho, Liberia, Libya, Madagascar, Malawi, Mali, Mauritania, Mauritius, Morocco, Mozambique, Namibia, Nigeria, Rwanda, Senegal, Seychelles, Sierra Leone, South Africa, Swaziland, Tanzania, Uganda, Zambia, and Zimbabwe; Southeast Asia: Brunei Darussalam, Cambodia, Indonesia, Malaysia, the Philippines, Singapore, Thailand, Timor-Leste, and Vietnam; Latin America and the Caribbean: Argentina, Barbados, Bolivia, Brazil, Chile, Colombia, Costa Rica, Dominican Republic, Ecuador, El Salvador, Guatemala, Guyana, Haiti, Honduras, Jamaica, Mexico, Nicaragua, Panama, Paraguay, Peru, Suriname, Trinidad and Tobago, Uruguay, and Venezuela. infrastructure, macroeconomic stability, education, remain vigilant with regard to its macroeconomic stability and ICTs. Comparing Africa’s performance with other, as defined by the GCI, 10 although this is improving. The more advanced regions helps to identify the region’s region’s savings rate (on average, 17 percent of GDP) overall strengths and weaknesses. Southeast Asia and government budget balance (on average, –4 percent provides an insightful benchmark for a large number of of GDP) is worse than that of other regions. However, African economies: although both regions registered following debt cancellation for a number of countries, approximately the same levels of GDP per capita in the overall its government debt is now in line with that of 1960s, developing Asia has since risen considerably other regions. In fact, improvements in macroeconomic more rapidly than sub-Saharan Africa (see Figure 1). performance, coupled with its limited integration into the Figure 5 shows that African economies consistently global economy, have helped to mitigate the effects of underperform the Southeast Asian average across the global economic crisis. More generally, it should be all competitiveness pillars. Although Africa’s financial, noted that sub-Saharan Africa has made considerable goods, and labor markets are well developed (on a progress in ensuring sounder macroeconomic policies par, or nearly on a par, with Latin America) these over the past 15 years and has reached levels of economies feature wide deficits in the areas of basic macroeconomic performance similar to that of other requirements. developing countries. 11 A particular point of concern is the continent’s weak However, the region is trailing significantly in institutions: although Africa on average does as well as technological readiness, which measures the agility Latin America in this pillar, both regions have institutions with which an economy adopts existing technologies to that receive scores below the middle value of 4 (on a enhance the productivity of its industries, with a specific scale of 1–7). This suggests that more must be done emphasis on its capacity to fully leverage ICTs. This is to increase the capacity of the public sector to set the important in view of the changing role of ICTs. Indeed, framework for the economy to run efficiently, which they have become critical tools in today’s economy, could generate critical spillovers into other dimensions of accounting for a significant share of value-added and competitiveness. employment in advanced economies and supporting Figure 5 also points out Africa’s pronounced efficiency gain and enabling transformative innovation. infrastructure deficit, which will be explored further in Although Africa has registered rapid improvement Chapter 2.2 of this Report. The region also needs to in ICT use, particularly in terms of mobile telephone 8 | The Africa Competitiveness Report 2013 1.1: Assessing Africa’s Competitiveness in an International Context Figure 6: Trends in GCI scores, 2006–12 5.0 4.5 GCI score (1–7) 4.0 3.5 — Africa —  Southeast Asia —  Latin America and the Caribbean  OECD 3.0 2006–2007 2007–2008 2008–2009 2009–2010 2010–2011 2011–2012 2012–2013 GCI edition Sources: World Economic Forum, The Global Competitiveness Report (various editions); authors’ calculations. Notes: All data refer to the 2005 constant sample. The constant sample includes Africa: Algeria, Benin, Botswana, Cameroon, Chad, Egypt, Ethiopia, Gambia, Kenya, Madagascar, Mali, Mauritius, Morocco, Mozambique, Namibia, Nigeria, South Africa, Tanzania, Uganda, and Zimbabwe; Southeast Asia: Cambodia, Indonesia, Malaysia, Philippines, Singapore, Thailand, and Vietnam; Latin America and the Caribbean: Argentina, Bolivia, Brazil, Chile, Colombia, Costa Rica, Dominican Republic, Ecuador, El Salvador, Guatemala, Honduras, Jamaica, Mexico, Nicaragua, Panama, Paraguay, Peru, Suriname, Uruguay, and Venezuela. subscriptions, it started from a low base. Going forward, which is becoming ever more important to ensure African economies need not only to make the types of that the continent can compete with other emerging investment necessary to build out the ICT infrastructure, regions. but also to create an enabling environment to fully Africa has not remained stagnant, however, but leverage ICT uptake to boost economic and social has been improving its competitiveness, although impacts. 12 The M-PESA mobile payment system in change has been gradual and modest. Reducing the Kenya (see Chapter 2.2) and improved e-government competitiveness divide between African economies services are examples of important steps in the right and other, more advanced regions will be critical for direction. placing the region on a firmly sustainable growth and Finally, the region is neglecting its talent pool, development path. To complement the static analysis, underperforming significantly in educating and providing Figure 6 shows the trends in average GCI scores based a healthy environment for its citizens. This is a pressing on the constant sample of the 20 African economies concern in view of the region’s youth unemployment that have been included since the Index was introduced challenge and the large number of people who will in 2006. Their performance is benchmarked against enter the labor market in the coming years. In the that of the OECD average, providing a sense of how short term, absorbing the enormous number of new these regions compare with a group of the world’s labor-market entrants will require the development of more advanced economies. It is also measured against job-intensive sectors. In the longer term, moving up the the performance of Southeast Asia and Latin America, value chain into more-advanced manufacturing and which are more comparable benchmarks in terms of services sectors will require significant and immediate stage of development. Although Africa has increased its investment in education in order to provide a workforce score from 3.6 points seven years ago up to 3.7 (on a that can move beyond simple production processes. In scale of 1–7), converging gradually with the performance this context, education will play an even more prominent of the OECD countries until last year, the region has role in ensuring knowledge spillovers from the natural not managed to close the gap with developing Asia resource sector to the domestic economy. This will and Latin America. Overall, Africa remains the lowest- happen only through skills and training, particularly in performing region in the GCI sample. the context of facilitating the adoption of new technology To gain a better understanding of the drivers and strengthening a science agenda and innovation, of the region’s competitiveness and future trends, The Africa Competitiveness Report 2013 | 9 1.1: Assessing Africa’s Competitiveness in an International Context Figure 7: Trends in factor-driven and efficiency scores: Africa 5.0 South Africa 4.5 Namibia South Africa 4.0 Mauritius GCI score (1–7) South Africa Namibia 3.5 South Africa Botswana Namibia Mauritius South Africa Namibia Morocco 3.0 Mauritius Botswana   Efficiency enhancers Namibia   Health and primary eduction Mauritius Egypt  Institutions 2.5 South Africa  Infrastructure   Macroeconomic Botswanaenvironment   Basic requirements Morocco Mauritius Botswana 2.0 Namibia Morocco Egypt 2005-2006 2007-2008 2006-2007 Botswana Morocco 2009-2010 2008-2009 2010-2011 2011-2012 2012-2013 Mauritius Egypt GCI edition Morocco Egypt Botswana Sources: World Economic Forum, The Global Competitiveness Report (various editions); authors’ calculations. Note: The constant sample includes Algeria, Benin, Botswana, Cameroon, Chad, Egypt, Ethiopia, Gambia, Kenya, Madagascar, Mali, Mauritius, Morocco, Mozambique, Namibia, Nigeria, South Egypt Africa, Tanzania, Uganda, and Zimbabwe. Morocco Egypt Figure 7 presents the evolution of scores in basic many countries. A notable improvement was also requirements and the respective pillars that make up registered in the region’s health and primary education that subindex for 2005–12. The figure also presents the assessments, reflecting improved health outcomes average performance of the six pillars making up the and gradually higher primary enrollment rates. This efficiency-enhancers subindex. The reason for focusing improvement was especially strong in 2009–10, but on these two areas is that—as described above—the it leveled off in 2010–11 and this year has seen a GCI classifies most African economies into the factor- slight decline. driven and efficiency-driven stages of development (see On a less positive note, the figure confirms the Table 1), meaning that these two subindexes capture continent’s persistent and worrisome infrastructure those elements that are currently the most critical for the deficit (see Chapters 2.2 and 2.3 for a more detailed competitiveness of these countries. analysis). Despite gradual improvements in the run-up Overall, the trend confirms Africa’s steady and to the global financial crisis, the quality and quantity of continuous but gradual improvement in those areas infrastructure has largely stagnated at low levels since. that make up the efficiency pillars of the GCI. The This stagnation is partially the consequence of a decline graph also reveals that until 2009–10, gains in African in investment following the crisis. This infrastructure competitiveness from 2005 levels stemmed from deficit is particularly striking given gradual improvements improvements in institutional quality, infrastructure across the various efficiency enhancers (e.g., market development—which showed a promising upward efficiency, technological readiness) in recent years. It is trend between 2006 and 2010 from very low levels— even more urgent in view of Africa’s rapid population and improved macroeconomic conditions. However, growth and increased urbanization: with 41 percent of improving the quality of institutions and strengthening the African population living in cities, and a foreseen 1 infrastructure have, since 2010, come to a near percent increase every two years, the need to ramp up standstill or even deteriorated across a number of infrastructure to cope with these demographic pressures African economies. Likewise, initial improvements in is critical. 13 Removing the infrastructure bottleneck macroeconomic stability in the pre-crisis years would—among other measures explored further in entered a period of decline in 2008–10 on the back Chapter 2.2—help to boost intra-regional trade and of concerns about deteriorating public finances, diversify external trade, thereby making Africa more increased food prices, and double-digit inflation in resilient to external shocks. 10 | The Africa Competitiveness Report 2013 1.1: Assessing Africa’s Competitiveness in an International Context AFRICA’S COMPETITIVENESS DIVIDE Table 2: The Global Competitiveness Index 2012–2013: Aggregate competitiveness figures do not point to Africa and selected comparator economies a uniform condition, but instead they mask wide differences among African economies themselves, GCI 2012–2013 GCI 2011–12 suggesting a competitiveness divide across the Economy Rank/144 Direction Score Rank continent. This is reflected in the wide range of results China 29 â 4.8 26 among African economies in the GCI, ranking from 52nd Southeast Asian average 4.5 (South Africa) to 144th, or last of all countries (Burundi). Brazil 48 á 4.4 53 Table 2 matches the GCI score of Figure 4 with the rank South Africa 52 â 4.4 50 performance of all African economies and comparator Mauritius 54 à 4.4 54 regions and countries. South Africa and Mauritius are India 59 â 4.3 56 the continent’s top performers, ranked 52nd and 54th, Rwanda 63 á 4.2 70 respectively, just below the Southeast Asian average Russian Federation 67 â 4.2 66 and above emerging market economies of India and Morocco 70 á 4.1 73 Russia. They are followed by a second cluster of Seychelles 76 4.1 n/a countries—Rwanda (63rd), Morocco (70th), Seychelles Botswana 79 á 4.1 80 (76th), and Botswana (79th)—which are more competitive Latin America and than Latin America on average. A third group of African the Caribbean average 4.0 economies—Namibia, Gambia, Gabon, Zambia, Ghana, Namibia 92 â 3.9 83 Kenya, and Egypt—cluster between the Latin American Gambia, The 98 á 3.8 99 and North African averages. Algeria (110th) and Libya Gabon 99 3.8 n/a (113th) do worse than the North African average, while Zambia 102 á 3.8 113 Liberia, Cameroon, Senegal, Benin, and Tanzania do Ghana 103 á 3.8 114 better than the sub-Saharan average. The countries at Kenya 106 â 3.7 102 the bottom of the table are outperformed by all other Egypt 107 â 3.7 94 countries and regions. North African Against this backdrop, regional integration could be average 3.8 an important way to reinforce competitiveness across the Algeria 110 â 3.7 87 continent. Increased cross-border trade would enlarge Liberia 111 3.7 n/a market size (an area where the region is significantly Cameroon 112 á 3.7 116 lagging behind) and boost competition (as measured in Libya 113 3.7 n/a the GCI's goods market efficiency pillar), and thereby Senegal 117 â 3.7 111 increase the variety of products and services. This in turn Benin 119 â 3.6 104 would facilitate the creation of new manufacturing and Tanzania 120 à 3.6 120 services industries. Regional integration, however, is not Sub-Saharan an end in itself, but a reinforcing process that requires African average 3.6 addressing competitiveness challenges within the Ethiopia 121 â 3.6 106 country to lay the basis for a strong and striving private Cape Verde 122 â 3.5 119 sector and, hence, increased productivity. Uganda 123 â 3.5 121 These wide differences in the overall performance of Nigeria 115 á 3.5 127 African countries demonstrate that challenges faced by Mali 128 à 3.4 128 individual countries and country groups are diverse, and Malawi 129 â 3.4 117 that there is no one-size-fits-all blueprint for improving Madagascar 130 à 3.4 130 competitiveness. African middle-income economies, Côte d’Ivoire 131 â 3.4 129 such as South Africa, face very different challenges than Zimbabwe 132 à 3.3 132 lower-income economies, such as Burundi; those natural Burkina Faso 133 á 3.3 136 resource–abundant economies face yet another set of Mauritania 134 á 3.3 137 competitiveness challenges, quite different from those of Swaziland 135 â 3.3 134 largely agrarian economies. Naturally, priorities for fragile Lesotho 137 â 3.2 135 economies are to restore stability. Against this backdrop, Mozambique 138 â 3.2 133 following the IMF’s classification, the next section Chad 139 á 3.1 142 looks at four distinct groups of African economies: oil Guinea 141 2.9 n/a exporters, middle-income economies, non-fragile low- Sierra Leone 143 2.8 n/a income economies, and fragile economies. 14 The aim Burundi 144 â 2.8 140 of this classification is to facilitate discussion and draw Sources: World Economic Forum 2011, 2012. out some general conclusions on the strengths and weaknesses of these country groups. Yet it is important The Africa Competitiveness Report 2013 | 11 1.1: Assessing Africa’s Competitiveness in an International Context Figure 8: GCI score dispersion among groups of African economies, OECD comparison African average Fragile countries Non-fragile low-income countries 7 Oil exporters OECD Middle-income countries 6 5 GCI score (1–7) 4 3 2 1 Institutions Infrastructure Macroeconomic primary education Higher education Goods market Labor market Financial market Technological Market size Innovation sophistication environment development ef�ciency readiness ef�ciency and training Business Health and Sources: World Economic Forum, 2012; authors’ calculations. Note: The sample includes oil exporters: Algeria, Cameroon, Chad, Gabon, Libya, and Nigeria; middle-income countries: Botswana, Cape Verde, Egypt, Ghana, Lesotho, Mauritius, Morocco, Namibia, Senegal, Seychelles, South Africa, Swaziland, and Zambia; non-fragile, low-income economies: Benin, Burkina Faso, Ethiopia, Gambia, Kenya, Madagascar, Malawi, Mali, Mozambique, Rwanda, Sierra Leone, Tanzania, and Uganda; fragile economies: Burundi, Côte d’Ivoire, Guinea, Liberia, Mauritania, and Zimbabwe. to note the limitations of such a general analysis, which by a wide margin. Indeed, Kenya, the second-best- restricts us to formulating generalities. These of course performing economy—comes in only at 24th place, would need to be confirmed by an in-depth country scoring a full point lower on the GCI scale of 1–7. These analysis of the specific challenges and priorities of two accomplishments stand in stark contrast to the individual countries. 15 large number of African economies with rudimentary Figure 8 breaks down the performance of these four financial markets, including two North African economies country groups across all 12 competitiveness pillars. In (Libya at 140th and Algeria at 142nd) and Burundi addition, it shows the average performance of the OECD (144th), which closes the global rankings. The degree of as an international benchmark (shown by a white dot) natural resource abundance and exploitation adds to the and the African average (shown by a black bar). divergence, with the oil-exporting economies of Gabon There would appear to be a “tale of two Africas� in (9th), Algeria (23rd), and Nigeria (39th) leading in the the areas of education, infrastructure, macroeconomic areas of macroeconomic stability—largely attributable to and financial stability, and market size. To start with, a better fiscal position that results from strong resource Figure 8 provides a sense of divergence in score of the revenues—and market size by a wide margin. 16 The fact 38 African economies covered in this year’s GCI. This is that resource-abundant countries register considerably complemented by Table 3, which shows the three best- stronger fiscal positions suggests that these economies and worst-performing economies in the sample. The need to ensure that windfall revenues are managed and figure shows that divergences in Africa are particularly re-invested wisely and take into account the longer term, large in the areas mentioned above. as discussed later. With regard to the depth of financial markets, we The same holds true for infrastructure and see, for example, that Africa hosts some countries that educational performance. In the context of Africa’s large perform very well on the one hand, and a cluster of infrastructure deficit (noted earlier in the chapter), the bar countries that exhibit below-average performances on chart of Figure 8 provides some additional information the other, indicating that Africa’s good performance at on the divergence in performance. Although Seychelles the aggregate level is skewed by a few extremely well receives the region’s best assessment (42nd), followed performing economies in this pillar. South Africa ranks by Mauritius (54th), Namibia (59th), and South Africa 3rd in global comparison, registering a score of close (63rd), the majority of countries in the sample score to 6 and thereby leading any other African economy lower than 3 (out of 7), with, for example, Burundi scoring 12 | The Africa Competitiveness Report 2013 1.1: Assessing Africa’s Competitiveness in an International Context Table 3: Three best- and worst-performing African countries, by pillar (out of 144) 1st pillar: Institutions 2nd pillar: Infrastructure 3rd pillar: Macroeconomic environment Country Rank Score Country Rank Score Country Rank Score Rwanda 20 5.2 Seychelles 42 4.7 Gabon 9 6.2 Botswana 33 4.8 Mauritius 54 4.3 Algeria 23 5.7 Gambia, The 35 4.7 Namibia 59 4.2 Nigeria 39 5.2 … … … … … … … … … Chad 140 2.7 Chad 140 1.9 Egypt 138 3.1 Algeria 141 2.7 Burundi 141 1.9 Guinea 142 2.6 Burundi 142 2.6 Guinea 142 1.9 Sierra Leone 143 2.5 4th pillar: Health and primary education 5th pillar: Higher education and training 6th pillar: Goods market efficiency Country Rank Score Country Rank Score Country Rank Score Seychelles 47 5.9 Seychelles 31 5.0 Mauritius 27 4.8 Mauritius 54 5.9 Mauritius 65 4.3 South Africa 32 4.7 Cape Verde 71 5.7 South Africa 84 4.0 Rwanda 39 4.5 … … … … … … … … … Nigeria 142 3.2 Sierra Leone 141 2.3 Burundi 139 3.3 Sierra Leone 143 3.0 Mauritania 142 2.2 Chad 141 3.1 Chad 144 2.9 Burundi 143 2.0 Algeria 143 3.0 7th pillar: Labor market efficiency 8th pillar: Financial market development 9th pillar: Technological readiness Country Rank Score Country Rank Score Country Rank Score Rwanda 11 5.1 South Africa 3 5.7 South Africa 62 4.0 Uganda 23 4.8 Kenya 24 4.7 Mauritius 63 4.0 Gambia, The 31 4.7 Mauritius 35 4.6 Seychelles 66 3.9 … … … … … … … … … Zimbabwe 139 3.4 Libya 140 2.7 Guinea 142 2.5 Egypt 142 3.1 Algeria 142 2.4 Chad 143 2.2 Algeria 144 2.8 Burundi 144 2.3 Burundi 144 2.2 10th pillar: Market size 11th pillar: Business sophistication 12th pillar: Innovation Country Rank Score Country Rank Score Country Rank Score South Africa 25 4.8 South Africa 38 4.3 South Africa 42 3.5 Egypt 29 4.8 Mauritius 41 4.3 Kenya 50 3.4 Nigeria 33 4.6 Gambia, The 59 4.1 Rwanda 51 3.4 … … … … … … … … … Seychelles 142 1.4 Gabon 141 2.9 Sierra Leone 139 2.3 Cape Verde 143 1.2 Burundi 143 2.7 Burundi 140 2.2 Liberia 144 1.2 Algeria 144 2.5 Algeria 141 2.1 Source: World Economic Forum, 2012. less than 2, further illustrating the immense infrastructure goods, labor, and financial market efficiencies trails that challenge on the continent. A similar case pertains to of Africa’s low-income economies. higher education and training—while Seychelles is again While the poor quality of institutions is endogenous Africa’s best-performing country at 31st globally, it is in clustering fragile economies, it reveals important followed by Mauritius, which comes in at only 65th place. insights into the functioning of oil-exporting economies. All other economies score worse than the mid-point of 4, Although Gabon fares comparatively better (67th), its with Burundi near rock bottom at 143rd place. peers mostly populate the lower end of the rankings Oil- and gas-exporting economies perform as poorly (Nigeria comes in at 117th, Chad at 140th, and Algeria as fragile economies in 9 out of the 12 competitiveness at 141st) together with the fragile economies of Guinea pillars. In view of Africa’s high growth rates and natural (128th), Côte d’Ivoire (129th), and Burundi (142nd). resource abundance, there has been much debate as to Sound public and private institutions are a prerequisite whether or not commodity-led growth will be sustainable for a stable and efficiently run economy, and they have moving forward. Figure 8 informs this debate by a strong bearing on competitiveness and growth. 17 comparing the performance of oil-exporting economies For oil-exporting economies, the poor performance of with that of the other three groups. In terms of putting institutions raises doubts about the efficient management into place the fundamentals for a competitive economy, of resource revenues and their ability to re-allocate oil-exporting economies perform similarly—that is to say, revenue proceeds elsewhere in the economy to lay the as poorly—as fragile economies across most pillars of foundations for more diversified growth, while avoiding competitiveness. Jointly, the quality of their institutions, boom-bust cycles that could jeopardize macroeconomic The Africa Competitiveness Report 2013 | 13 South Africa 1.1: Assessing Africa’s Competitiveness in an International Context Namibia Figure 9: Trends in two GCI institutions subpillars, oil-exporting economies South Africa Mauritius South Africa Namibia South Africa Botswana 9a: Government efficiency subpillar Namibia Mauritius Namibia Morocco Mauritius Botswana 7  Algeria Egypt  Nigeria Mauritius  Cameroon  Chad Botswana Morocco 6 Botswana Morocco Egypt 5 Morocco GCI score (1–7) Egypt 4 Egypt 3 2 1 2005–2006 2006–2007 2007–2008 2008–2009 2009–2010 2010–2011 2011–2012 2012–2013 GCI edition 9b: Ethics and corruption subpillar 7 6 5 GCI score (1–7) 4 3 2 1 2005–2006 2006–2007 2007–2008 2008–2009 2009–2010 2010–2011 2011–2012 2012–2013 GCI edition Source: World Economic Forum, The Global Competitiveness Report, (various editions). Note: See Appendix A for a detailed breakdown of variables. stability. The need to boost the efficiency of revenue ethics and corruption (which, among other indicators, management is particularly important when considering gauges the extent to which public funds are being that many oil-exporting economies are fiscally resource- diverted) and government efficiency (measuring, among dependent: more than half of total public revenues in other variables, the effectiveness or wastefulness Chad, Gabon, and Nigeria are resource revenues. 18 of government spending) (Figure 9). Improvements, A closer look at two of the seven pillars that make up however, come from a very low base and major efforts the institutional pillar of the GCI shows, however, that to strengthen public institutions will be essential going modest improvements have been made in the areas of forward. 14 | The Africa Competitiveness Report 2013 1.1: Assessing Africa’s Competitiveness in an International Context Table 4: Selected indicators of the GCI 2012–2013 for oil-exporting, fragile, and non-fragile low-income African countries SELECTED PILLARS OF THE GCI 2012–2013: BASIC REQUIREMENTS Overall GCI 2012–2013 Institutions Infrastructure Health and primary education Country Rank Score Rank Score Rank Score Rank Score Oil exporters Gabon 99 3.8 67 3.9 117 2.7 128 4.1 Algeria 110 3.7 141 2.7 100 3.2 93 5.4 Cameroon 112 3.7 107 3.4 125 2.5 118 4.5 Libya 113 3.7 81 3.7 88 3.6 121 4.4 Nigeria 115 3.7 117 3.3 130 2.3 142 3.2 Chad 139 3.1 140 2.7 140 1.9 144 2.9 Fragile countries Liberia 111 3.7 45 4.3 115 2.8 130 4.1 Côte d’Ivoire 131 3.4 129 3.2 102 3.1 140 3.4 Zimbabwe 132 3.3 101 3.5 128 2.4 119 4.5 Mauritania 134 3.3 122 3.3 113 2.8 133 3.9 Guinea 141 2.9 128 3.2 142 1.9 138 3.5 Burundi 144 2.8 142 2.6 141 1.9 127 4.2 Non-fragile low-income countries Rwanda 63 4.2 20 5.2 96 3.2 100 5.3 Gambia, The 98 3.8 35 4.7 82 3.6 126 4.2 Kenya 106 3.7 106 3.4 103 3.1 115 4.6 Benin 119 3.6 99 3.5 122 2.6 111 4.7 Tanzania 120 3.6 86 3.6 132 2.3 113 4.6 Ethiopia 121 3.6 74 3.8 119 2.6 116 4.6 Uganda 123 3.5 102 3.5 133 2.3 123 4.4 Mali 128 3.4 120 3.3 107 3.0 141 3.4 Malawi 129 3.4 76 3.8 135 2.2 124 4.3 Madagascar 130 3.4 136 2.9 137 2.1 110 4.7 Burkina Faso 133 3.3 83 3.7 136 2.2 139 3.5 Mozambique 138 3.2 112 3.4 129 2.4 137 3.5 Sierra Leone 143 2.8 95 3.6 138 2.1 143 3.0 Source: World Economic Forum, 2012. In addition, infrastructure is inadequate in all six oil perform very poorly in providing education and skills— exporters, with all countries in this group except for Libya indeed, Chad ranks last (144th) on health and primary ranking lower than 100. While there is no clear answer education and 140th on the higher education pillar. to whether or not commodity prices will accommodate Finally, inefficiencies in goods and labor markets are growth in the longer term, economic growth as it stands rife. Overall, this is also reflected in this year’s rankings, now has not been inclusive. The majority of oil-exporting where first-time entrant Gabon leads the African oil economies are very poorly assessed on the United exporters at 99th place, followed by Algeria, Cameroon, Nations’ Human Development Index (see individual Nigeria, and finally Chad at 139th. Thus, despite relatively competitiveness profiles in Part 3). This is worrisome strong growth in recent years, these economies remain because these economies will need to diversify growth vulnerable to oil price shocks and will need to reinforce to ensure that resource wealth is evenly distributed so the drivers of productivity and competitiveness and as to make growth overall more sustainable in the long encourage greater market diversification if they are to run. In order to diversify, a skilled workforce is needed. place their economies on more sustainable and inclusive However, the rankings show that all oil exporters development paths. The Africa Competitiveness Report 2013 | 15 1.1: Assessing Africa’s Competitiveness in an International Context Table 5: Selected indicators of the GCI 2012–2013 for African middle-income economies SELECTED PILLARS OF THE GCI 2012–2013 Health and Overall GCI 2012–2013 primary education Higher education Goods market efficiency Labor market efficiency Country Rank Score Rank Score Rank Score Rank Score Rank Score South Africa 52 4.4 132 3.9 84 4.0 32 4.7 113 3.9 Mauritius 54 4.4 54 5.9 65 4.3 27 4.8 70 4.4 Morocco 70 4.1 81 5.5 101 3.6 69 4.3 122 3.8 Seychelles 76 4.1 47 5.9 31 5.0 70 4.3 48 4.5 Botswana 79 4.1 114 4.6 95 3.7 78 4.2 60 4.5 Namibia 92 3.9 120 4.4 119 3.1 87 4.2 74 4.3 Zambia 102 3.8 129 4.1 121 3.1 42 4.5 111 4.0 Ghana 103 3.8 112 4.7 107 3.4 76 4.2 97 4.1 Egypt 107 3.7 94 5.3 109 3.3 125 3.8 142 3.1 Senegal 117 3.7 125 4.2 116 3.2 77 4.2 80 4.3 Cape Verde 122 3.5 71 5.7 99 3.6 105 3.9 126 3.7 Swaziland 135 3.3 135 3.6 125 2.9 107 3.9 119 3.9 Lesotho 137 3.2 136 3.5 135 2.7 102 4.0 116 3.9 Source: World Economic Forum, 2012. Non-fragile low-income economies are dispersed allow them to transition to higher-value-added activities. throughout the middle to the bottom of the rankings, with In this light, we see some important variations in Rwanda leading at 63rd and Sierra Leone at 143rd place performance, ranging from South Africa at 52nd overall (Table 4). This is a diverse group of countries, presenting to Lesotho at just 137th place (Table 5). Although middle- all low-income countries that are not classified as oil- income economies outperform their regional peers in exporting or fragile, and where “economic development institutional quality, they barely reach the median of this can be explained by reference to more conventional pillar (4 on a scale of 1–7). As described earlier, these economic factors.� 19 Mirroring the statements above, countries generally have already put into place better overall this group performs better than both oil- infrastructure than their peers and they fare particularly exporting and fragile economies across most pillars. well in the efficiency pillars of the GCI. Yet infrastructure The difference is particularly pronounced in the areas remains inefficient and pooling financing for large-scale of institutions and labor and financial market efficiency. projects will be more difficult going forward because Kenya (ranked 24th, as discussed previously), Rwanda their middle-income status makes them ineligible for (ranked 49th), and Uganda (62nd) boast a deeper soft loans from multilateral donors. Moving on, many financial market than their peers. Similarly, Rwanda and have relatively well-developed financial markets and, as Gambia perform well in the institutional pillar at 20th Figure 10 suggests, have made important improvements and 35th rank, respectively, pulling up the average for in the areas of domestic and foreign competition that this group, which closes with Madagascar at 136th. make up the goods market pillar. Stronger foreign Conversely, a majority in this group do comparatively competition stems primarily from a country lowering well when it comes to labor market efficiency. As shown trade tariffs and increasing imports, which ushers in new in Table 3, Rwanda, Uganda, and Gambia lead African foreign entrants, thus encouraging greater efficiency. economies in this pillar, and overall more than two-thirds The domestic competition pillar considers the overall of these economies are in the upper half of the global business environment, taking into account the intensity rankings. On the other hand, as for a majority of African of local competition, which is affected, for example, by economies, low-income economies perform poorly in the number of days and documents required to start the areas of infrastructure, education, and technological up a business. Notably, Mauritius and Namibia have readiness, all placing in the bottom third of the global improved in this area over the last several years, as have rankings. 20 Morocco and South Africa since 2011. A strong business Africa’s middle-income economies face a more environment is critical, as it will set the operating complex and diverse set of competitiveness challenges. framework for a strong private sector and, hence, Having entered a middle-income stage, these countries employment creation (see Box 1). will need to put into place the fundamentals that will 16 | The Africa Competitiveness Report 2013 Namibia South Africa 1.1: Assessing Africa’s Competitiveness in an International Context Mauritius Figure 10: Trends in the GCI goods market efficiency Namibiasubpillars, middle-income countries competition South Africa South Africa Botswana Namibia Mauritius 10a: Domestic competition South Africa Namibia Morocco Mauritius Botswana 6  Namibia Mauritius  Egypt Egypt Namibia  Mauritius South Africa   South Africa Botswana Morocco  Botswana Morocco Mauritius Botswana Namibia Morocco Egypt Botswana Morocco 5 Mauritius Egypt GCI score (1–7) Morocco Egypt Botswana Egypt 4 Morocco Egypt 3 2005–2006 2006–2007 2007–2008 2008–2009 2009–2010 2010–2011 2011–2012 2012–2013 GCI edition 10b: Foreign competition 6 5 GCI score (1–7) 4 3 2005–2006 2006–2007 2007–2008 2008–2009 2009–2010 2010–2011 2011–2012 2012–2013 GCI edition Source: World Economic Forum, The Global Competitiveness Report, (various editions). Note: See Appendix A for a detailed breakdown of variables. There has been important progress. Yet, moving and has a university enrollment rate of just 15 percent, forward, the business environment will require a talent compared with 82 percent in the United States and 95 pool on which businesses can draw, and this is an percent in the Republic of Korea. With the exception of area where most middle-income economies have Morocco, gains in labor market efficiency have largely reached a bottleneck. With the exception of Mauritius stalled in recent years. Going forward, improving basic and Seychelles, all middle-income countries navigate requirements, increasing educational attainment rates, somewhere in the lower half of the rankings of those and improving education to match the skills needed by pillars that gauge the country’s ability to fully leverage the private sector as well as making the labor market its human resource potential. South Africa, for example, more flexible will be critical for the required structural ranks just 113th in the labor market efficiency pillar transformation (see Box 2). The Africa Competitiveness Report 2013 | 17 1.1: Assessing Africa’s Competitiveness in an International Context Box 1: Evolution of key emergent competitive industries and jobs in Africa A number of emergent sectors of African economies show revenues of more than US$1,380 billion by 2020, effectively ample growth potential, as indicated by the widespread overtaking the resource sector (Figure B). growth across various sectors in 2002–07. Figure A shows Thus, Africa’s consumer sector presents a major that the resource sector has been the main driver of opportunity for growth. Other labor-intensive sectors, such as economic growth in these years. This is followed closely by agri-business and infrastructure, are also projected to offer the wholesale and retail sector, which is projected to generate opportunities for further growth and employment creation. Figure A: Africa’s growth widespread across sectors Sector share of change in real GDP, 2002–07 100 percent = US$235 billion1 Compound annual growth rate, % Resources 7.1 Wholesale and retail 6.8 Agriculture 5.5 Transport, telecommunications 7.8 Manufacturing 4.6 Financial intermediation 8.0 Public administration 3.9 Construction 7.5 Real estate, business services 5.9 Tourism 8.7 Utilities 7.3 Other services2 6.9 0 5 10 15 20 25 Source: McKinsey Global Institute, 2010. 1 In 2005 dollars. The total is the sum of 15 countries for which data were available, and that together account for 80 percent of Africa’s GDP: Algeria, Angola, Cameron, Egypt, Ethiopia, Kenya, Libya, Morocco, Nigeria, Senegal, South Africa, Sudan, Tanzania, Tunisia, and Zimbabwe. 2 Education, Health, Social Services, Household Services. Figure B: Four groups of industries: Potential combined revenue of US$2.6 trillion by 2020 Growth Compound annual Estimated annual revenue, 2020 2008–20, growth rate, US$ billions US$ billions 2008–20, % Consumer 520 4 Resources 110 2 Agriculture1 220 5 Infrastructure2 130 9 Total ~980 4 0 500 1000 1500 2000 2500 3000 Source: McKinsey Global Institute, 2010. 1 We took the 2030 value of $880 billion and calculated straight-line equivalent for 2020. 2 Represents investment; assumes needs remain the same share of GDP through 2020. Source: McKinsey Global Institute, 2010. 18 | The Africa Competitiveness Report 2013 1.1: Assessing Africa’s Competitiveness in an International Context Box 2: Africa’s youth unemployment challenge Despite commendable annual economic growth rates of 5 Africa, Nigeria, and Tanzania, it is around 40 percent, and percent annual average and notable progress achieved in in Kenya and Tunisia around 50 percent. To put this in the area of education, including higher education, Africa has context, in Egypt, government work accounts for over 50 been unable to expand employment opportunities for young percent of employment among those over 30; in Tunisia this people, especially the most educated ones. The mismatch is 35 percent; in South Africa, 25 percent; and in Kenya, 16 between high rates of economic growth and job creation is percent. widening income inequalities and fueling social and political High vacancy rates in the presence of large-scale tensions. unemployment confirm the existence of skills mismatches The current youth employment challenges in Africa and are especially substantial in middle-income countries. are caused by a combination of the remarkable growth of Although there are large numbers of unemployed young an increasingly educated youth population, the slow pace people and a constantly growing labor supply, many of job creation in the formal economy, and persistent low enterprises in Africa struggle to fill open positions. In Egypt, productivity and underemployment in the informal sector. for example, about 1.5 million young people are unemployed, The continent’s youth population is not only growing rapidly, while at the same time private-sector firms cannot fill 600,000 it is also getting better educated. Africa has the most young vacancies. In South Africa the situation is even more extreme, people (15–24 years) in the world, totaling about 200 million, with 3 million young people not in employment, education, or and it is projected to double by 2045. Projections show that training and 600,000 unemployed university graduates versus 59 percent of youth (20–24 years) will have had a secondary 800,000 vacancies. education in 2030, compared with 42 percent today. This The youth employment challenge in Africa is primarily translates into 137 million people with a secondary education structural and therefore needs structural solutions. Given and 12 million with a tertiary education in 2030. the size of the employment problem, any youth employment Unemployment of graduates and underemployment in policy in Africa must place job creation at its center. the informal economy (where most the young people work Governments must focus on removing obstacles to the in low-productive jobs) are factors of instability, especially many small firms in the informal sector, helping them to grow among the youth in post-conflict settings and fragile states. and create decent jobs. At the same time, existing large The recent wave of discontent in North Africa illustrates the firms must be supported to grow further and become more disruptive consequences of youth unemployment in general, competitive. The middle-income countries are facing a great and unemployed graduates in particular. challenge because their employment base is very small and The public sector has been significantly downsized in will need solid growth. The adverse business environment many African countries over the last two decades. According in Africa has disproportionate effects on small firms and to Gallup World Poll data, only 21 percent of those under prevents them from growing. Large firms can cope more 30 years of age with at least a secondary education work easily, but are struggling to be competitive at the international for the government, compared with 37 percent of adults level. Informal entrepreneurs must cope with very high levels aged 30 and over. In Egypt, Morocco, and Uganda, for of risk in addition to access to finance issues. example, the proportion of government workers among young people is only one-third that of adults. In South Source: Adapted from AfDB et al. 2012. THE MOST PROBLEMATIC FACTORS FOR DOING bureaucracy presents the biggest concern in North BUSINESS IN AFRICA Africa. Likewise, business leaders in both regions point The results of the GCI provide a good sense of the many out the lack of a sufficiently skilled workforce. factors that are holding back Africa’s competitiveness. However, business in both regions faces different To complement this analysis, each year the World challenges concerning all other factors. The Executive Economic Forum collects the perspective of top Opinion Survey confirms that the inadequate supply executives about the main bottlenecks to doing business of infrastructure presents a significant obstacle for in their countries. From a list of 16 factors, respondents businesses in sub-Saharan Africa in contrast to North are asked to select the five most problematic among Africa, where it receives a middle ranking. Sub-Saharan them and rank them from 1 (most problematic) to 5. The business leaders are also more concerned with high tax Executive Opinion Survey carried out in 2012 shows that rates than their North African peers. On the other hand, access to financing, inefficient government bureaucracy, government instability and coups coupled with policy and corruption present the most important hindrances uncertainty have become serious concerns for business to doing business in Africa. However, Figure 11 shows leaders in North African countries in stark contrast to the degree to which these impede business varies the last Report, where those factors were ranked at the according to the region. In sub-Saharan Africa, access bottom. to finance represents business leaders’ biggest concern Inflation in sub-Saharan Africa also continues to by a wide margin, confirming the lack of depth of the receive attention from business leaders. This is most financial market in a majority of African economies, as likely the result of rising inflation (particularly in East previously discussed. In contrast, inefficient government Africa) and the increased inflationary pressures—caused The Africa Competitiveness Report 2013 | 19 1.1: Assessing Africa’s Competitiveness in an International Context Figure 11: The most problematic factors for doing business, sub-Saharan and North African averages Access to �nancing Corruption Inadequate supply of infrastructure Inef�cient government bureaucracy Tax rates Inadequately educated workforce Inflation Policy instability Poor work ethic in national labor force Tax regulations Restrictive labor regulations Crime and theft Foreign currency regulations n  Sub-Saharan Africa n  North Africa Insuf�cient capacity to innovate Government instability/coups Poor public health 0 5 10 15 20 Percent of responses Source: World Economic Forum, Executive Opinion Survey 2012. Note: The sample includes sub-Saharan Africa: Benin, Botswana, Burkina Faso, Burundi, Cameroon, Cape Verde, Chad, Côte d’Ivoire, Ethiopia, Gabon, Gambia, Ghana, Guinea, Kenya, Lesotho, Liberia, Madagascar, Malawi, Mali, Mauritania, Mauritius, Mozambique, Namibia, Nigeria, Rwanda, Senegal, Seychelles, Sierra Leone, South Africa, Swaziland, Tanzania, Uganda, Zambia, and Zimbabwe; North Africa: Algeria, Egypt, Libya, and Morocco. by rising food and fuel prices—experienced during discussions about economic development. The question 2011–12 in many sub-Saharan economies. It has to be of sustainable and inclusive growth is an important one noted that, in 2012, more prudent macroeconomic policy for Africa in view of its rapid population growth and youth has contained inflation more successfully, although this unemployment challenge, and also the continent’s vast will be reflected only in next year’s Survey results. It natural resources, which require sound natural resource is interesting to note that, similar to our findings in the management as an integral part of prudent economic 2011 Report, public health receives little attention from policy. Against this backdrop, the World Economic business leaders. This is somewhat counterintuitive given Forum has been developing a sustainability-adjusted the continent’s major health challenges. Global Competitiveness Index with the aim of assessing the “set of institutions, policies, and factors that make TOWARD SUSTAINABLE AND INCLUSIVE GROWTH a nation remain productive over the longer term while Improving competitiveness across the 12 GCI pillars is ensuring social and environmental sustainability� (see a solid foundation for measuring a country’s capacity Box 3). to raise living standards and increase productivity. Figures 12 and 13 show Africa’s performance Yet, although the GCI gauges a country’s capacity to across specific indicators of the social and environmental generate prosperity, it does not tell us everything about sustainability pillars. Africa is compared with OECD the extent to which prosperity is being generated in economies—as a stringent international benchmark—as a sustainable way, taking into account environmental well as with Southeast Asia, which provides a sense stewardship and social sustainability. Events such as of the continent’s performance compared with another the Arab Spring, increased income inequalities, and developing region. These figures are further informed pressure on natural resources have called into question by Tables 6 and 7, which report the data for each of the the received wisdom, accepted throughout the second eight African economies and the three best-performing half of the 20th century, that increasing productivity economies in the sustainability-adjusted GCI. and economic growth for rising prosperity should As Figure 12 shows, Africa trails advanced be the end goal. Instead, concerns about social and economies in providing access to basic necessities, environmental sustainability have taken center stage in such as sanitation and access to improved drinking 20 | The Africa Competitiveness Report 2013 1.1: Assessing Africa’s Competitiveness in an International Context Figure 12: Africa’s performance in the social sustainability pillar in regional comparison Access to sanitation 7 Youth Access to improved unemployment 6 drinking water 5 4 3 Social 2 Accessibility of   OECD mobility healthcare services 1   Southeast Asia   Latin America and the Caribbean   Africa Income Gini Vulnerable employment coef�cient Social safety net protection Extent of informal economy Sources: World Economic Forum, 2012; authors’ calculations. Note: The sample includes Africa: Algeria, Egypt, Kenya, Mauritius, Morocco, Namibia, South Africa, and Tanzania; Southeast Asia: Cambodia, Indonesia, Malaysia, Philippines, and Vietnam; OECD: all OECD economies except for Luxembourg and Puerto Rico; Latin America and the Caribbean: Argentina, Bolivia, Brazil, Chile, Colombia, Costa Rica, Dominican Republic, Ecuador, El Salvador, Guatemala, Guyana, Honduras, Jamaica, Mexico, Nicaragua, Panama, Paraguay, Peru, Suriname, Uruguay, and Venezuela. Figure 13: Africa’s performance in the environmental sustainability pillar in regional comparison Stringency of environmental regulation Quality of 7 Enforcement of natural environment 6 enviromental regulations 5 4 Particulate matter 3 Terrestrial (2.5) concentration biome protection 2   OECD 1   Southeast Asia   Latin America and the Caribbean CO₂ intensity No. of rati�ed international   Africa environmental treaties Forest depletion Agricultural water aggregate intensity Fish stocks overexploited Sources: World Economic Forum, 2012; authors’ calculations. Note: The sample includes Africa: Algeria, Egypt, Kenya, Mauritius, Morocco, Namibia, South Africa, and Tanzania; Southeast Asia: Cambodia, Indonesia, Malaysia, the Philippines, and Vietnam; OECD: all OECD economies except for Luxembourg and Puerto Rico; Latin America and the Caribbean: Argentina, Bolivia, Brazil, Chile, Colombia, Costa Rica, Dominican Republic, Ecuador, El Salvador, Guatemala, Guyana, Honduras, Jamaica, Mexico, Nicaragua, Panama, Paraguay, Peru, Suriname, Uruguay, and Venezuela. The Africa Competitiveness Report 2013 | 21 1.1: Assessing Africa’s Competitiveness in an International Context Box 3: The sustainability-adjusted Global Competitiveness Index The World Economic Forum has been developing a that enable all members of society to experience the best sustainability-adjusted Global Competitiveness Index with possible health, participation, and security; and that maximize the aim of assessing the “set of institutions, policies, and their potential to contribute to and benefit from the economic factors that make a nation remain productive over the longer prosperity of the country in which they live.� Figure A presents term while ensuring social and environmental sustainability.� the conceptual framework of this effort, where the GCI is The adjusted index can thus be considered as an extension adjusted by factors that drive social and environmental of the Global Competitiveness Index (GCI)—that is, while sustainability. the GCI gauges a country’s capacity to generate prosperity, Figures B and C present the indicators that enter the the adjusted Index captures the extent to which prosperity sustainability-adjusted GCI. The environmental sustainability is being generated in a sustainable way, taking into account pillar focuses on the regulatory environmental framework, the environmental stewardship and social sustainability. More extent to which economies manage renewable resources, as specifically, environmental sustainability is defined as the well as the level of pollution. The pillar has been developed “set of institutions, policies, and factors that ensure an in close collaboration with experts from the Center for efficient management of resources to enable prosperity for Environmental Law and Policy (YCLEP) and the Center for future generations.� The Forum’s current definition of social International Earth Sciences Information Network (CIESIN) to sustainability is “the set of institutions, policies, and factors identify the factors that have an impact on competitiveness. Figure A: The structure of the sustainability-adjusted GCI GLOBAL COMPETITIVENESS INDEX (GCI) Social Environmental sustainability sustainability pillar pillar Social Environmental sustainability– sustainability– adjusted GCI adjusted GCI (GCI) × (social (GCI) × (environmental sustainability coefficient) sustainability coefficient) Sustainability- adjusted GCI Source: World Economic Forum, 2012. Note: Please refer to Bilbao-Osorio et al. 2012 for a more detailed presentation of the rationale and methodology. (Cont’d) water and healthcare services. However, there are comparable with that of advanced economies, wide cross-country divergences. As Table 6 shows, whereas it is considered inadequate in all other African only half of the Tanzanian population has access to economies. drinking water, in contrast to almost complete coverage The second subpillar evaluates the vulnerability in Mauritius and Egypt. In a similar fashion, only one of the population to economic exclusion. Overall, the in ten Tanzanians has access to sanitation, compared region fares better in terms of vulnerable employment with almost everyone in Algeria and Egypt. Furthermore, conditions than Southeast Asia, and does slightly worse healthcare accessibility is considered good in Mauritius, in the areas of an informal economy and the extent to 22 | The Africa Competitiveness Report 2013 1.1: Assessing Africa’s Competitiveness in an International Context Box 3: The sustainability-adjusted Global Competitiveness Index (cont’d) It therefore complements the broader analysis of the be included in the latest edition in 2012. Environmental Performance Index (EPI) carried out by these Defining a functional relationship between two organizations. The social sustainability pillar aims to competitiveness and sustainability and identifying and capture the extent to which physiological needs, such as measuring the pillars and variables that are driving access to drinking water and decent healthcare, are being environmental sustainability is not a trivial task, and there met, as well as the need for economic security (job security, is not yet sufficient evidence to suggest what shape this presence of a social safety net). It also aims to measure the takes. In view of the lack of methodological guidance, the extent of social cohesion and opportunity (income inequality, sustainability-adjusted GCI assigns equal weights to each social mobility). It is worth noting that the indicators are individual element in each of the three subpillars. Each pillar by no means exhaustive, and that there are a number of measuring social and environmental sustainability is then areas that should be covered but that are not yet included converted into an “adjustment coefficient� with a range of because of a lack of relevant data (inclusion of minorities, 0.8 to 1.2, and these weights are then used to adjust the GCI working conditions, water pollution, recycling, and waste upward or downward. This results in an adjusted score of a management). Also, based on current data limitations, only a maximum of 20 percent lower or 20 percent higher than the subset of 79 of the 144 countries covered by the GCI could underlying GCI score. Figure B: Summary of indicators for environmental sustainability Environmental policy Use of renewable resources Degradation of the environment • Environmental regulations • Agricultural water intensity • Level of particulate matter (stringency and enforcement) concentration • Forest depletion • Number of ratified international (change in forest cover and forest • CO2 intensity environmental treaties loss) • Quality of the natural environment • Terrestrial biome protection • Fish stocks’ overexploitation Source: World Economic Forum, 2012. Figure C: Summary of indicators for social sustainability Access to basic necessities Vulnerability to shocks Social cohesion • Access to sanitation • Vulnerable employment • Income Gini index • Access to improved • Extent of informal economy • Social mobility drinking water • Social safety net protection • Youth unemployment • Access to healthcare Source: World Economic Forum, 2012. Source: World Economic Forum, 2012. which the social safety net in these countries fails to opportunity in any African economy to improve one’s provide protection from economic insecurity caused economic situation through personal efforts regardless of by job loss or disability. Again, we find a wide disparity the socioeconomic status of one’s parents. across Africa. Vulnerable employment is less relevant Figure 12 also highlights Africa’s profound in the middle-income economies of South Africa and youth employment challenge: the continent’s youth Mauritius, and a smaller portion of these countries’ unemployment rates are significantly higher than those in workforces operate in the informal economy. However, Southeast Asia. This is particularly worrisome in view of Executive Opinion Survey data indicate that there is little its long-term consequences, as most recently witnessed The Africa Competitiveness Report 2013 | 23 1.1: Assessing Africa’s Competitiveness in an International Context Table 6: Social sustainability pillar by indicator Youth Income Gini unemployment Access to Access to coefficient (total sanitation improved Accessibility Vulnerable Extent of [0 = perfect unemployed (percent drinking water of healthcare employment informal Social safety equality; 100 youth to total of total (percent of total services (percent in total economy net protection = perfect Social mobility labor force Country population) population) (1–7, best) employment) (1–7, best) (1–7, best) inequality] (1–7, best) aged 15–24) Kenya 32 59 3.5 63.4 4.1 3.1 42.5 3.6 n/a Mauritius 89 99 5.7 16.0 5.3 3.7 n/a 4.8 21.4 Namibia 32 93 4.0 21.1 4.3 3.5 63.9 4.2 58.9 South Africa 79 91 3.9 10.1 4.6 3.3 63.1 4.1 49.8 Tanzania 10 53 3.3 87.7 3.4 3.6 37.6 3.4 n/a Algeria 95 83 3.9 34.4 2.8 3.2 35.3 3.0 n/a Egypt 95 99 2.7 27.3 3.7 3.0 30.8 3.9 n/a Morocco 70 83 3.5 50.5 3.6 2.9 40.9 4.1 21.9 Three best-performing countries Switzerland 100 100 6.7 9.1 6.1 6.2 29.5 6.3 7.2 Finland 100 100 6.7 9.2 6.2 6.2 25.4 6.5 20.3 Sweden 100 100 6.5 7.0 5.7 5.8 24.1 5.4 25.2 Source: World Economic Forum, 2012. Table 7: Environmental sustainability pillar by indicator Fish stocks overexploited Particulate Agricultural (fraction of matter (2.5) water intensity country’s concentration (agricultural exclusive CO2 intensity (population- No. of ratified water economic (kilograms weighted Stringency of Enforcement of international withdrawal, zone with of CO2 per exposure environmental environmental Terrestrial environmental percent of total overexploited Forest depletion kilogram of to PM2.5 Quality of natural regulation (1–7, regulations biome protection treaties (no. renewable water and collapsed aggregate (1–7, oil equivalent micrograms per environment Country best) (1–7, best) (1–17, best) treaties) resources ) stocks) best) energy use) cubic meter) (1–7, best) Kenya 3.9 3.8 11.4 22 7.1 0.6 4.4 0.6 4.9 4.3 Mauritius 4.0 3.6 4.8 20 17.9 0.8 5.0 3.3 n/a 4.6 Namibia 4.6 4.3 14.1 19 1.2 0.5 3.6 2.2 8.8 5.9 South Africa 4.7 3.8 6.5 21 15.7 0.8 2.5 2.9 8.1 5.3 Tanzania 3.8 3.7 17.0 21 4.8 0.7 2.9 0.3 5.8 4.5 Algeria 2.0 2.0 6.3 18 33.8 0.4 2.9 3.0 5.6 2.8 Egypt 2.8 2.7 5.9 21 103.0 0.6 6.8 3.0 15.9 4.0 Morocco 3.6 3.4 1.5 19 38.0 0.4 4.4 3.2 6.2 4.0 Three best-performing countries Switzerland 6.3 6.2 16.7 22 0.1 n/a 5.9 1.5 6.2 6.5 Finland 6.4 6.4 8.4 23 0.0 0.5 4.2 1.6 0.4 6.6 Sweden 6.1 6.1 7.9 24 0.1 0.7 3.8 1.0 2.6 6.3 Source: World Economic Forum, 2012. 24 | The Africa Competitiveness Report 2013 1.1: Assessing Africa’s Competitiveness in an International Context Table 8: Adjustment to the GCI scores by sustainability indicators SUBINDEXES Social Environmental GCI 2012–2013 Sustainability-adjusted GCI†† sustainability–adjusted GCI** sustainability–adjusted GCI† Country Rank* Score Score Direction Score Direction Score Direction Switzerland 1 5.72 6.85 á 6.83 á 6.87 á Finland 3 5.55 6.36 á 6.45 á 6.26 á Sweden 4 5.53 6.16 ä 6.17 á 6.15 ä Netherlands 5 5.50 6.21 á 6.54 á 5.88 á Germany 6 5.48 6.14 ä 6.37 á 5.92 ä China 29 4.83 4.44 â 4.61 æ 4.27 â Brazil 48 4.40 4.46 à 4.22 à 4.69 ä South Africa 52 4.37 3.80 â 3.83 æ 3.77 â Mauritius 54 4.35 4.03 æ 4.40 à 3.66 â India 59 4.32 3.73 â 3.70 â 3.75 â Russian Federation 67 4.20 3.98 æ 4.09 à 3.87 æ Morocco 70 4.15 3.53 â 3.55 â 3.52 â Namibia 92 3.88 3.53 â 3.22 â 3.84 à Kenya 106 3.75 3.38 â 3.01 â 3.76 à Egypt 107 3.73 3.38 â 3.56 à 3.20 â Algeria 110 3.72 3.16 â 3.31 æ 3.01 â Tanzania 120 3.60 3.24 â 2.88 â 3.6 à Source: World Economic Forum, 2012. Note: Please refer to Appendix B to understand how the coefficients are calculated. *  This is the GCI rank, as presented in Chapter 1.1 of The Global Competitiveness Report 2012–2013 . Only the 79 countries covered by this exercise are included in the table. **  This is the score obtained by multiplying the GCI score by the social sustainability coefficient. †  This is the score obtained by multiplying the GCI score by the environmental sustainability coefficient. ††  This is the average of the social and environmental sustainability scores. Key á = GCI score changes by > +15% to +20% ä = GCI score changes by +5% to +15% à = GCI score remains stable between +5% and –5% æ = GCI score changes by –5% to –15% â = GCI score changes by < –15% to –20% in the North African region. The pillar looks at the income Wide divergences can also be seen in the use Gini coefficient as the most widely used measure of of renewable resources and the degradation of the inequality, where South Africa and Namibia in particular natural environment: North African economies, perhaps report the highest inequality levels in the sample. 21 unsurprisingly, have higher agriculture water intensity Figure 13 breaks down Africa’s performance in than sub-Saharan economies. In terms of forest the environmental sustainability dimension. As the depletion, Mauritius does comparatively well, in contrast spider chart shows, Africa has ratified roughly as many to Tanzania and Algeria. Finally, we see that the quality environmental treaties as advanced economies, and it of the natural environment is considered better in sub- rates the protection of its natural habitats in a similar Saharan Africa than the one in North African economies, way. Regarding habitat protection, Table 7 shows with Algeria ranking last. Going forward, efforts should that Tanzania, Namibia, and Kenya are starkly more be made to ensure environmental sustainability in Africa successful in protecting their biomes than the remaining through economic diversification and development. 22 countries in the sample. Furthermore, environmental Table 8 presents the country-level results of regulation and enforcement in Africa is as stringent as the sustainability-adjusted GCI for the eight African they are in other regions, although the middle score of economies out of a total sample of 79 economies that 4 out of 7 indicates that more should be done across all were covered in the most recent Global Competitiveness countries. Again, there are wide divergences: Namibia is Report. As a reference, the table also shows the five the best performer overall; all North African economies best-performing economies, as well as the bottom two receive considerably lower scores. performers. Switzerland—the number one performer The Africa Competitiveness Report 2013 | 25 1.1: Assessing Africa’s Competitiveness in an International Context in the GCI—would actually receive a higher score if for improved competitiveness. A second cluster of adjusted for its social and environmental sustainability. countries, including Rwanda, Botswana, Seychelles, Indeed, although the effect is less pronounced, this and Morocco, performs better than the Latin American is the case for the other top five best-performing average, while a third and wider set of countries, economies. In contrast, the BRIC economies of China, including Namibia, Gambia, Gabon, Zambia, Ghana, India, and Russia do less well once sustainability Kenya, and Egypt, outperform the sub-Saharan African indicators are taken into account. average and even the North African average. Looking at the African continent, Table 8 shows that In view of these divergences, this year’s chapter the sustainability-adjusted GCI score is more than 0.5 further classified African economies into four specific percentage points lower than the GCI score for Algeria, groups of oil-exporting economies, fragile economies, Morocco, and South Africa. Reflecting findings from the non-fragile low-income economies, and middle-income international comparison above, the table reveals that economies following the IMF’s Regional Economic Algeria, Mauritius, and Morocco are largely affected by Outlook classification. An interesting insight from this their poor performance in the environmental dimension, analysis reveals that those economies heavily focused on while the scores of Kenya, Namibia, and Tanzania are natural resource extraction perform on a par with fragile negatively affected by their performance in the social economies to a large extent, particularly registering sustainability measures. an equally weak performance in the quality of their Sustainable competitiveness is a nascent area institutions. This finding has important implications for of research. The initial work presented in this chapter resource management and how best to use oil revenues has shown the challenges in assessing sustainability, to set their economies on a sustained and more which range from data availability and quality to data diversified growth path. Furthermore, middle-income interpretation and meaningful analysis. 23 Yet the extent to countries have registered improvements in the areas of which economies can grow in a sustained and inclusive domestic and foreign competition, but still have a long manner will be critical moving forward. Africa’s high way to go to lay the basis for more diversified growth. economic growth rates in recent years, coupled with Last but not least, the chapter has looked beyond its still largely agriculture-based economy, provide a the basic drivers of productivity, presenting the World unique opportunity to set the continent on a course for Economic Forum’s work on sustainable competitiveness, sustained and inclusive growth. and integrating the social and environmental factors that are critical for sustained growth. We see that all CONCLUSIONS eight African economies that were covered in this This chapter has analyzed the results of 38 African year’s sustainability-adjusted GCI are shown to be economies of the Global Competitiveness Index less competitive when taking into account factors of 2012–2013 and discussed Africa’s potential for environmental and/or social sustainability. sustained and inclusive growth. It concludes that, This chapter has identified the main competitiveness despite the high economic growth of the past decade, challenges. Chapter 2.1 will examine regional integration Africa continues to be the least competitive region on in more depth by looking at trade constraints. This will be average worldwide, trailing more advanced economies followed by chapters that explore Africa’s infrastructure across all competitiveness indicators. African countries deficit and that offer an innovative solution through find themselves in a development stage where growth poles as unique public-private partnerships basic requirements, such as sound institutions and to boost self-industrialization while simultaneously macroeconomic policies, adequate infrastructure, and addressing the need for infrastructure. a healthy and literate workforce are key to establishing a solid basis for higher-value-added sources of growth. NOTES Yet these are the areas that constitute some of the 1 AfDB 2012. biggest gaps with other regions. Africa's profound and 2 Only one country—Libya (64th)—ranks in the upper half of the persistent infrastructure deficit and poor performance Human Development Index 2011 (out of 187 economies). on education constitute important barriers to increased 3 Devajaran and Fengler 2012. This has been 10 percent of Africa’s GDP compared with 35 percent in East Asia and the Pacific and competitiveness. Changes over time have overall been 16 percent for Latin America and the Caribbean. only gradual. 4 ILO 2013. A more detailed look at the performance of 5 IMF 2012b. individual country groups reveals a competitiveness divide across the continent, as evidenced by wide 6 The 12 pillars are measured using both quantitative data from public sources (such as inflation, Internet penetration, life divergences in performance. As in the past, South Africa expectancy, and school enrollment rates) as well as data from the and Mauritius continue to perform as well as, or better World Economic Forum’s Executive Opinion Survey (the Survey), conducted annually among top executives in all of the countries than, other emerging markets such as Brazil, India, assessed. The Survey provides crucial data on a number of and Russia, indicating that these countries have been qualitative issues (e.g., corruption, confidence in the public sector, quality of schools) for which no hard data exist. relatively successful in putting in place the fundamentals 26 | The Africa Competitiveness Report 2013 1.1: Assessing Africa’s Competitiveness in an International Context 7 In order to capture the resource intensity of the economy, we use 21 As we have shown in The Global Competitiveness Report 2012– as a proxy the exports of mineral products as a share of overall 2013, a number of elements need to be carefully considered when exports according to the sector classification developed by the comparing economies based on this indicator. To start with, the International Trade Centre in their Trade Performance Index. Gini index is not revealing of absolute levels of wealth—that is, In addition to crude oil and gas, this category also contains all hypothetically, even in the case of low inequality, a large part of metal ores and other minerals as well as petroleum products, the population may still be able to cover only basic necessities. In liquefied gas, coal, and precious stones. The data used cover the addition, it is difficult to say what the desirable level of inequality years 2006 through 2010 or most recent year available. Further should be—to what extent, for example, should differences in information on these data can be found at http://www.intracen. skills be reflected in higher income for certain members of society. org/menus/countries.htm. All countries that export more than 70 Finally, although the Gini index measures income inequality on a percent of mineral products are considered to be to some extent scale of 0 ( perfect equality) to 100 (perfect inequality), practically factor driven. The stage of development for these countries is the range in the sample of 79 economies ranges from 24 to 64, adjusted downward smoothly depending on the exact primary indicating that a value of over 60 already reflects strong inequality. export share. The higher the mineral export share, the stronger the adjustment and the closer the country will move to stage 1. 22 It is important to note that the sustainability-adjusted GCI is For example, a country that exports 95 percent of mineral exports a work in progress, heavily depending on and limited by data and that, based on the income criteria, would be in stage 3 will quality and availability. The environmental sustainability pillar, be in transition between stages 1 and 2. The income and primary as it stands, for example, may be better designed to capture exports criteria are weighted identically. Stages of development environmental degradation in countries in more advanced are dictated solely by income for countries that export less than stages of development, where the manufacturing sector plays 70 percent minerals. Countries that export only primary products a more prominent role, rather than those at the lower stages of would automatically fall into the factor-driven stage (stage 1). development that have a higher agricultural sector and/or are reliant on natural resources. Here, the loss of soil fertility and 8 The BRIC economies are Brazil, the Russian Federation, India, and the availability of ground water play a more prominent role. In a China; they exclude South Africa. similar fashion, measuring environmental sustainability necessarily needs to strike a compromise in terms of indicators included— 9 For a detailed description of the Executive Opinions Survey, see deforestation is important for countries whose habitat consists of Browne et al. 2012. forest, but is irrelevant in countries with arid or semi-arid habitat 10 This pillar consists of quantitative data: (1) government budget (North Africa). Going forward, the World Economic Forum hopes balance, (2) gross national savings, (3) inflation, (4) government to include a wider set of African countries in its sustainability- debt and qualitative data on (5) country credit rating. It is important adjusted GCI and analysis in order to support such efforts in the to note that this pillar evaluates the stability of the macroeconomic future. environment, so it does not directly take into account the way 23 See World Economic Forum 2012, Chapter 1.2, for a more detailed in which public accounts are managed by the government. This description. qualitative dimension is captured in the institutions pillar of the GCI. 11 Devajaran and Fengler 2012. REFERENCES Acemoglu, D., S. Johnson, and J. Robinson. 2001. “The Colonial 12 See The Global Information Technology Report 2013 (World Origins of Comparative Development: An Empirical Investigation.� Economic Forum 2013) for a detailed discussion on economic and American Economic Review 91: 1369–401. social impact of ICTs. ———. 2002. “Reversal of Fortune: Geography and Institutions in the 13 World Bank 2012a. 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Geneva: World Economic Forum. 28 | The Africa Competitiveness Report 2013 1.1: Assessing Africa’s Competitiveness in an International Context Appendix A: Computation and structure of the Global Competitiveness Index 2012–2013 This appendix presents the structure of the Global Sources section at the end of the How to Read the Competitiveness Index 2012–2013 (GCI). The numbering Competitiveness Profiles section provides detailed of the variables matches the numbering in the information about these indicators. To make the Competitiveness Profiles. The number preceding the aggregation possible, these variables are transformed period indicates to which pillar the variable belongs (e.g., onto a 1-to-7 scale in order to align them with the variable 1.11 belongs to the 1st pillar and variable 9.04 Survey results. We apply a min-max transformation, belongs to the 9th pillar). which preserves the order of, and the relative distance The computation of the GCI is based on successive between, country scores.c aggregations of scores from the indicator level (i.e., the Indicators that are followed by the designation “1/2� most disaggregated level) all the way up to the overall enter the GCI in two different pillars. In order to avoid GCI score. Unless mentioned otherwise, we use an double counting, we assign a half-weight to each arithmetic mean to aggregate individual variables within instance.d Weight (%) within a category.a For the higher aggregation levels, we use immediate parent category the percentage shown next to each category. This percentage represents the category’s weight within BASIC REQUIREMENTS its immediate parent category. Reported percentages 1st pillar: Institutions................................................25% are rounded to the nearest integer, but exact figures A. Public institutions..................................................... 75% are used in the calculation of the GCI. For example, 1. Property rights........................................................................20% the score a country achieves in the 9th pillar accounts 1.01 Property rights for 17 percent of this country’s score in the efficiency 1.02 Intellectual property protection 1/2 enhancers subindex, irrespective of the country’s stage 2. Ethics and corruption..............................................................20% of development. Similarly, the score achieved on the 1.03 Diversion of public funds subpillar transport infrastructure accounts for 50 percent 1.04 Public trust in politicians of the score of the infrastructure pillar. 1.05 Irregular payments and bribes Unlike the case for the lower levels of aggregation, 3. Undue influence.....................................................................20% 1.06 Judicial independence the weight put on each of the three subindexes (basic 1.07 Favoritism in decisions of government officials requirements, efficiency enhancers, and innovation and 4. Government efficiency.............................................................20% sophistication factors) is not fixed. Instead, it depends 1.08 Wastefulness of government spending on each country’s stage of development, as discussed 1.09 Burden of government regulation in the chapter.b For instance, in the case of Burundi—a 1.10 Efficiency of legal framework in settling disputes country in the first stage of development—the score 1.11 Efficiency of legal framework in challenging regulations in the basic requirements subindex accounts for 60 1.12 Transparency of government policymaking 1.13 Provision of government services for improved business percent of its overall GCI score, while it represents just performance 20 percent of the overall GCI score of Sweden, a country 5. Security..................................................................................20% in the third stage of development. For countries in 1.14 Business costs of terrorism transition between stages, the weighting applied to each 1.15 Business costs of crime and violence subindex is reported in the corresponding profile at the 1.16 Organized crime end of this volume. For instance, in the case of Algeria, 1.17 Reliability of police services currently in transition from stage 1 to stage 2, the B. Private institutions.................................................... 25% weight on each subindex is 59.1 percent, 35.7 percent, 1. Corporate ethics.....................................................................50% and 5.2 percent, respectively, as reported in Algeria's 1.18 Ethical behavior of firms competitiveness profile on page 124. 2. Accountability.........................................................................50% Variables that are not derived from the Executive 1.19 Strength of auditing and reporting standards Opinion Survey (the Survey) are identified by an asterisk 1.20 Efficacy of corporate boards 1.21 Protection of minority shareholders’ interests (*) in the following pages. The Technical Notes and 1.22 Strength of investor protection* The Africa Competitiveness Report 2013 | 29 1.1: Assessing Africa’s Competitiveness in an International Context 2nd pillar: Infrastructure...........................................25% 6th pillar: Goods market efficiency..........................17% A. Transport infrastructure............................................ 50% A. Competition............................................................... 67% 2.01 Quality of overall infrastructure 1. Domestic competition.......................................................variable h 2.02 Quality of roads 6.01 Intensity of local competition 2.03 Quality of railroad infrastructure e 6.02 Extent of market dominance 2.04 Quality of port infrastructure 6.03 Effectiveness of anti-monopoly policy 2.05 Quality of air transport infrastructure 6.04 Extent and effect of taxation1/2 2.06 Available airline seat kilometers* 6.05 Total tax rate* B. Electricity and telephony infrastructure.................. 50% 6.06 Number of procedures required to start a business* i 2.07 Quality of electricity supply 6.07 Time required to start a business* i 2.08 Mobile telephone subscriptions1/2 6.08 Agricultural policy costs 2.09 Fixed telephone lines1/2 2. Foreign competition..........................................................variable h 6.09 Prevalence of trade barriers 3rd pillar: Macroeconomic environment..................25% 6.10 Trade tariffs* 3.01 Government budget balance* 6.11 Prevalence of foreign ownership 3.02 Gross national savings* 6.12 Business impact of rules on FDI 3.03 Inflation* f 6.13 Burden of customs procedures 3.04 Government debt* 6.14 Imports as a percentage of GDP* j 3.05 Country credit rating* B. Quality of demand conditions.................................. 33% 4th pillar: Health and primary education..................25% 6.15 Degree of customer orientation 6.16 Buyer sophistication A. Health........................................................................ 50% 4.01 Business impact of malaria g 7th pillar: Labor market efficiency...........................17% 4.02 Malaria incidence* g A. Flexibility................................................................... 50% 4.03 Business impact of tuberculosis g 7.01 Cooperation in labor-employer relations 4.04 Tuberculosis incidence* g 7.02 Flexibility of wage determination 4.05 Business impact of HIV/AIDS g 7.03 Hiring and firing practices 4.06 HIV prevalence* g 7.04 Redundancy costs* 4.07 Infant mortality* 6.04 Extent and effect of taxation 1/2 4.08 Life expectancy* B. Efficient use of talent................................................ 50% B. Primary education.................................................... 50% 7.05 Pay and productivity 4.09 Quality of primary education 7.06 Reliance on professional management 1/2 4.10 Primary education enrollment rate* 7.07 Brain drain EFFICIENCY ENHANCERS 7.08 Female participation in labor force* 5th pillar: Higher education and training..................17% 8th pillar: Financial market development.................17% A. Quantity of education............................................... 33% A. Efficiency................................................................... 50% 5.01 Secondary education enrollment rate* 8.01 Availability of financial services 5.02 Tertiary education enrollment rate* 8.02 Affordability of financial services 8.03 Financing through local equity market B. Quality of education................................................. 33% 8.04 Ease of access to loans 5.03 Quality of the educational system 8.05 Venture capital availability 5.04 Quality of math and science education 5.05 Quality of management schools B. Trustworthiness and confidence.............................. 50% 5.06 Internet access in schools 8.06 Soundness of banks 8.07 Regulation of securities exchanges C. On-the-job training................................................... 33% 8.08 Legal rights index* 5.07 Local availability of specialized research and training services 9th pillar: Technological readiness...........................17% 5.08 Extent of staff training A. Technological adoption............................................ 50% 9.01 Availability of latest technologies 9.02 Firm-level technology absorption 9.03 FDI and technology transfer B. ICT use...................................................................... 50% 9.04 Internet users* 9.05 Broadband Internet subscriptions* 9.06 Internet bandwidth* 9.07 Mobile broadband subscriptions* 2.08 Mobile telephone subscriptions* 1/2 2.09 Fixed telephone lines1/2 30 | The Africa Competitiveness Report 2013 1.1: Assessing Africa’s Competitiveness in an International Context 10th pillar: Market size.............................................17% higher value indicates a worse outcome (e.g., disease incidence, government debt), the transformation formula takes the following A. Domestic market size............................................... 75% form, thus ensuring that 1 and 7 still corresponds to the worst and 10.01 Domestic market size index* k best possible outcomes, respectively: B. Foreign market size.................................................. 25% country score – sample minimum 10.02 Foreign market size index* l –6 x ( sample maximum – sample minimum ) + 7 INNOVATION AND SOPHISTICATION FACTORS d For those categories that contain one or several half-weight variables, country scores are computed as follows: 11th pillar: Business sophistication.........................50% 11.01 Local supplier quantity (sum of scores on full-weight variables) 1 3 (sum of scores on half-weight variables) 11.02 Local supplier quality 11.03 State of cluster development (count of full-weight variables) 1 3 (count of half-weight variables) 11.04 Nature of competitive advantage 11.05 Value chain breadth e “n/appl.� is used for economies where the railroad network totals 11.06 Control of international distribution less than 50 kilometers. 11.07 Production process sophistication f In order to capture the idea that both high inflation and deflation 11.08 Extent of marketing are detrimental, inflation enters the model in a U-shaped manner 11.09 Willingness to delegate authority as follows: for values of inflation between 0.5 and 2.9 percent, 7.06 Reliance on professional management 1/2 a country receives the highest possible score of 7. Outside this range, scores decrease linearly as they move away from these values. 12th pillar: R&D Innovation.......................................50% 12.01 Capacity for innovation g The impact of malaria, tuberculosis, and HIV/AIDS on competitiveness depends not only on their respective incidence 12.02 Quality of scientific research institutions rates but also on how costly they are for business. Therefore, 12.03 Company spending on R&D in order to estimate the impact of each of the three diseases, 12.04 University-industry collaboration in R&D we combine its incidence rate with the Survey question on its 12.05 Government procurement of advanced technology products perceived cost to businesses. To combine these data we first 12.06 Availability of scientists and engineers take the ratio of each country’s disease incidence rate relative to the highest incidence rate in the whole sample. The inverse of 12.07 PCT patent applications this ratio is then multiplied by each country’s score on the related 1.02 Intellectual property protection 1/2 Survey question. This product is then normalized to a 1-to-7 scale. Note that countries with zero reported incidence receive a 7, regardless of their scores on the related Survey question. In the case of malaria, countries receive a 7 if they have been classified NOTES as non-endemic by the World Health Organization (WHO). a Formally, for a category i composed of K indicators, we have: h The competition subpillar is the weighted average of two components: domestic competition and foreign competition. In K both components, the included variables provide an indication ⌺ indicatork categoryi k=1 of the extent to which competition is distorted. The relative ϭ K importance of these distortions depends on the relative size of domestic versus foreign competition. This interaction between b As described in the chapter, the weights are as specified below. the domestic market and the foreign market is captured by Refer to Table 2 of the chapter for country classification according the way we determine the weights of the two components. to stage of development: Domestic competition is the sum of consumption (C), investment (I), government spending (G), and exports (X), while foreign Stage of development competition is equal to imports (M). Thus we assign a weight of Factor-driven Transition Efficiency- Transition Innovation- (C + I + G + X)/(C + I + G + X + M) to domestic competition and a stage (1) from stage 1 driven from stage 2 driven weight of M/(C + I + G + X + M) to foreign competition. to stage 2 stage (2) to stage 3 stage (3) i Variables 6.06 and 6.07 combine to form one single variable. GDP per capita (US$) thresholds* j For variable 6.14, imports as a percentage of GDP, we first <2,000 2,000–2,999 3,000–8,999 9,000–17,000 >17,000 apply a log-transformation and then a min-max transformation. This indicator was formerly numbered 10.04. It still enters the Weight for basic requirements subindex computation of the market size indexes (see note k). 60% 40–60% 40% 20–40% 20% k The size of the domestic market is constructed by taking the Weight for efficiency enhancers subindex natural log of the sum of the gross domestic product valued at purchased power parity (PPP) plus the total value (PPP estimates) 35% 35–50% 50% 50% 50% of imports of goods and services, minus the total value (PPP Weight for innovation and sophistication factors subindex estimates) of exports of goods and services. Data are then normalized on a 1-to-7 scale. PPP estimates of imports and exports 5% 5–10% 10% 10–30% 30% are obtained by taking the product of exports as a percentage of GDP and GDP valued at PPP. The underlying data are reported in * For economies with a high dependency on mineral resources, GDP per capita is the data tables section of The Global Competitiveness Report not the sole criterion for the determination of the stage of development. See text 2012–2013. for details. l The size of the foreign market is estimated as the natural log of the total value (PPP estimates) of exports of goods and services, c Formally, we have: normalized on a 1-to-7 scale. PPP estimates of exports are country score – sample minimum obtained by taking the product of exports as a percentage of GDP 6 x ( sample maximum – sample minimum ) + 1 and GDP valued at PPP. The underlying data are reported in the data tables of The Global Competitiveness Report 2012–2013. The sample minimum and sample maximum are, respectively, the lowest and highest country scores in the sample of economies covered by the GCI. In some instances, adjustments were made to account for extreme outliers. For those indicators for which a The Africa Competitiveness Report 2013 | 31 1.1: Assessing Africa’s Competitiveness in an International Context Appendix B: Computation and structure of the sustainability-adjusted GCI As described in the text, the two areas of sustainability— STRUCTURE OF THE SUSTAINABILITY PILLARS social and environmental—are treated as independent The computation of the sustainability components is adjustments to each country’s performance in the based on an arithmetic mean aggregation of scores from Global Competitiveness Index (GCI). The adjustment is the indicator level.b calculated according to the following steps. Variables that are not derived from the Executive Opinion Survey (the Survey) are identified by an asterisk AGGREGATION (*) in the following pages. To make the aggregation In the first step, the individual indicators in each area possible, these variables are transformed into a 1-to-7 are normalized on a 1-to-7 scale and aggregated by scale in order to align them with the Survey results. We averaging the normalized scores, such that a social apply a min-max transformation, which preserves the sustainability score and an environmental sustainability order of, and the relative distance between, country score are calculated for each country. scores.c In the second step, these scores are normalized Indicators marked with a “(log)� subscript are again on a 0.8-to-1.2 scale,a which is based on the transformed applying the logarithm (base 10) to the raw distribution of each of the two sustainability components. score. The purpose of this methodology is to reward the Social sustainability pillar countries attaining a relatively good performance on S01 Income Gini index* the two sustainability components while penalizing S02 Youth unemployment* those that register a poor performance. Applying this S03.01 Access to sanitation* d(log) methodology corresponds to transforming actual S03.02 Access to improved drinking water* d averages into coefficients ranging from 0.8 to 1.2. For S03.03 Access to healthcared S04 Social safety net protection example, the worst performer on the social sustainability S05 Extent of informal economy pillar obtains a score of 0.8 and the best performer a 1.2. S06 Social mobility The same calculation is conducted for the environmental S07 Vulnerable employment* sustainability pillar. Environmental sustainability pillar Normalizing on a 0.8-to-1.2 scale and using the S08.01 Stringency of environmental regulation e actual sample maximum and minimum are corroborated S08.02 Enforcement of environmental regulation e by the statistical distribution of the data, so as to ensure S09 Terrestrial biome protection* that the final data are not skewed. In the absence of S10 No. of ratified international environmental treaties* empirical evidence, the selection of the impact limits S11 Agricultural water intensity* (0.8–1.2) relies on the best judgment of the authors S12 CO2 intensity*(log) S13 Fish stocks overexploited*(log) and is based on the assumption that countries can S14.01 Forest cover change* f experience either an opportunity if they manage their S14.02 Forest loss* f(log) resources well or a weakness if they do not. S15 Particulate matter (2.5) concentration*(log) The selection of this methodology is not intended S16 Quality of the natural environment to be scientific, but it represents a normative approach aimed at stimulating discussions on policy priorities and NOTES possibly stimulating scientific research in this field. a Formally we have In the third step, the GCI score of each country country score – sample minimum is multiplied twice: once by its social sustainability 0.4 x ( sample maximum – sample minimum ) + 0.8 coefficient and once by its environmental sustainability coefficient, to obtain two separate sustainability- The sample minimum and sample maximum are, respectively, the lowest and highest country scores in the sample of economies adjusted GCI scores. Finally, an average of the two covered by the sustainability-adjusted GCI in each pillar. scores provides an overall measure of the sustainability adjustment. 32 | The Africa Competitiveness Report 2013 1.1: Assessing Africa’s Competitiveness in an International Context b Formally, for a category i composed of K indicators, we have: K ⌺ indicatork k=1 categoryi ϭ K c Formally, we have: country score – sample minimum 6 x ( sample maximum – sample minimum ) + 1 The sample minimum and sample maximum are, respectively, the lowest and highest country scores in the sample of economies covered by the sustainability-adjusted GCI. In some instances, adjustments were made to account for extreme outliers. For those indicators for which a higher value indicates a worse outcome (e.g., CO2 emission, income Gini index), the transformation formula takes the following form, thus ensuring that 1 and 7 still corresponds to the worst and best possible outcomes, respectively: country score – sample minimum –6 x ( sample maximum – sample minimum ) + 7 d Variables S03.01, S03.02, and S03.03 are combined to form one single variable. e Variables S08.01 and S08.02 are combined to form one single variable. f Variables S14.01 and S14.02 are combined to form one single variable. The Africa Competitiveness Report 2013 | 33 1.1: Assessing Africa’s Competitiveness in an International Context Appendix C: The Global Competitiveness Index 2012–2013: Africa and comparator economies, by subindex SUBINDEXES Innovation and GCI 2012–2013 Basic requirements Efficiency enhancers sophistication factors Country/region Rank Score Rank Score Rank Score Rank Score NORTH AFRICA Morocco 70 4.15 68 4.60 79 3.94 84 3.38 Egypt 107 3.73 110 3.91 101 3.67 96 3.31 Algeria 110 3.72 89 4.22 136 3.08 144 2.31 Libya 113 3.68 102 4.06 131 3.19 127 2.92 North African 3.82 4.20 3.47 2.98 average SUB-SAHARAN AFRICA South Africa 52 4.37 84 4.28 37 4.53 42 3.94 Mauritius 54 4.35 52 4.80 62 4.14 63 3.63 Rwanda 63 4.24 70 4.56 94 3.77 60 3.66 Seychelles 76 4.10 46 4.86 91 3.81 87 3.36 Botswana 79 4.06 78 4.38 89 3.82 82 3.40 Namibia 92 3.88 82 4.33 105 3.64 103 3.25 Gambia, The 98 3.83 103 4.01 114 3.54 54 3.74 Gabon 99 3.82 86 4.25 116 3.52 139 2.64 Zambia 102 3.80 108 3.92 108 3.61 67 3.57 Ghana 103 3.79 112 3.85 95 3.77 102 3.27 Kenya 106 3.75 123 3.62 76 3.97 56 3.68 Liberia 111 3.71 109 3.92 121 3.36 59 3.67 Cameroon 112 3.69 115 3.80 111 3.57 95 3.31 Nigeria 115 3.67 130 3.52 78 3.96 73 3.53 Senegal 117 3.66 120 3.68 106 3.63 65 3.59 Benin 119 3.61 113 3.83 125 3.31 111 3.12 Tanzania 120 3.60 122 3.65 113 3.55 92 3.32 Ethiopia 121 3.56 118 3.74 123 3.33 125 2.96 Cape Verde 122 3.55 100 4.08 128 3.22 119 3.01 Uganda 123 3.53 132 3.48 104 3.66 101 3.27 Mali 128 3.43 125 3.55 127 3.26 114 3.11 Malawi 129 3.38 135 3.40 120 3.37 109 3.16 Madagascar 130 3.38 129 3.52 132 3.18 115 3.08 Côte d’Ivoire 131 3.36 137 3.29 115 3.53 121 2.99 Zimbabwe 132 3.34 127 3.53 135 3.08 128 2.90 Burkina Faso 133 3.34 133 3.45 129 3.22 126 2.94 Mauritania 134 3.32 124 3.60 142 2.88 118 3.01 Swaziland 135 3.28 131 3.49 130 3.21 134 2.80 Lesotho 137 3.19 136 3.32 137 3.05 137 2.72 Mozambique 138 3.17 138 3.22 133 3.10 130 2.89 Chad 139 3.05 139 3.15 141 2.91 129 2.89 Guinea 141 2.90 143 2.80 134 3.10 132 2.82 Sierra Leone 143 2.82 144 2.77 140 2.94 138 2.69 Burundi 144 2.78 142 2.94 144 2.56 142 2.42 Sub-Saharan 3.57 3.72 3.44 3.19 African Average BRICs China 29 4.83 31 5.25 30 4.64 34 4.05 Brazil 48 4.40 73 4.49 38 4.52 39 3.97 India 59 4.32 85 4.26 39 4.48 43 3.94 Russian Federation 67 4.20 53 4.79 54 4.26 108 3.16 BRICs average 4.44 4.70 4.48 3.78 Latin America and the Caribbean average 3.97 4.31 3.86 3.39 Southeast Asian average 4.46 4.82 4.24 3.83 The Africa Competitiveness Report 2013 | 35 1.1: Assessing Africa’s Competitiveness in an International Context Appendix D: The Global Competitiveness Index 2012–2013: Africa and comparator economies, by pillar SUBINDEXES (1st–5th pillars) 3rd pillar: 4th pillar: 5th pillar: 1st pillar: 2nd pillar: Macroeconomic Health and Higher education OVERALL INDEX Institutions Infrastructure environment primary education and training Country/Region Rank Score Rank Score Rank Score Rank Score Rank Score Rank Score NORTH AFRICA Morocco 70 4.15 54 4.12 61 4.14 70 4.62 81 5.53 101 3.58 Egypt 107 3.73 96 3.56 83 3.61 138 3.12 94 5.35 109 3.32 Algeria 110 3.72 141 2.66 100 3.16 23 5.71 93 5.37 108 3.38 Libya 113 3.68 81 3.69 88 3.56 73 4.60 121 4.40 103 3.56 North African average 3.82 3.51 3.62 4.51 5.16 3.46 SUB-SAHARAN AFRICA South Africa 52 4.37 43 4.42 63 4.13 69 4.63 132 3.93 84 3.98 Mauritius 54 4.35 39 4.59 54 4.32 87 4.41 54 5.85 65 4.29 Rwanda 63 4.24 20 5.20 96 3.22 78 4.56 100 5.27 117 3.21 Seychelles 76 4.10 47 4.25 42 4.71 79 4.55 47 5.95 31 4.98 Botswana 79 4.06 33 4.82 87 3.58 81 4.52 114 4.60 95 3.74 Namibia 92 3.88 52 4.19 59 4.18 84 4.50 120 4.44 119 3.13 Gambia, The 98 3.83 35 4.67 82 3.61 129 3.58 126 4.17 94 3.77 Gabon 99 3.82 67 3.94 117 2.71 9 6.25 128 4.11 122 3.05 Zambia 102 3.80 56 4.09 111 2.85 67 4.65 129 4.11 121 3.07 Ghana 103 3.79 75 3.82 110 2.87 108 4.07 112 4.65 107 3.40 Kenya 106 3.75 106 3.43 103 3.09 133 3.39 115 4.58 100 3.59 Liberia 111 3.71 45 4.31 115 2.77 82 4.51 130 4.10 114 3.30 Cameroon 112 3.69 107 3.40 125 2.51 59 4.79 118 4.49 115 3.25 Nigeria 115 3.67 117 3.33 130 2.28 39 5.25 142 3.20 113 3.31 Senegal 117 3.66 90 3.60 124 2.51 92 4.37 125 4.23 116 3.23 Benin 119 3.61 99 3.51 122 2.56 76 4.57 111 4.68 120 3.07 Tanzania 120 3.60 86 3.62 132 2.27 107 4.12 113 4.60 132 2.71 Ethiopia 121 3.56 74 3.83 119 2.65 114 3.92 116 4.56 134 2.67 Cape Verde 122 3.55 57 4.07 114 2.80 121 3.80 71 5.66 99 3.65 Uganda 123 3.53 102 3.49 133 2.27 119 3.83 123 4.35 127 2.86 Mali 128 3.43 120 3.31 107 2.96 74 4.59 141 3.36 130 2.77 Malawi 129 3.38 76 3.82 135 2.19 136 3.30 124 4.30 129 2.81 Madagascar 130 3.38 136 2.94 137 2.13 95 4.33 110 4.68 133 2.67 Côte d'Ivoire 131 3.36 129 3.16 102 3.10 130 3.48 140 3.40 123 2.99 Zimbabwe 132 3.34 101 3.50 128 2.40 122 3.77 119 4.47 118 3.14 Burkina Faso 133 3.34 83 3.66 136 2.18 85 4.48 139 3.48 137 2.50 Mauritania 134 3.32 122 3.29 113 2.82 89 4.40 133 3.88 142 2.23 Swaziland 135 3.28 88 3.61 99 3.17 128 3.60 135 3.57 125 2.95 Lesotho 137 3.19 121 3.30 126 2.50 113 3.93 136 3.54 135 2.65 Mozambique 138 3.17 112 3.35 129 2.36 125 3.66 137 3.52 138 2.39 Chad 139 3.05 140 2.73 140 1.89 45 5.12 144 2.85 140 2.34 Guinea 141 2.90 128 3.18 142 1.86 142 2.63 138 3.52 136 2.60 Sierra Leone 143 2.82 95 3.56 138 2.09 143 2.47 143 2.95 141 2.30 Burundi 144 2.78 142 2.59 141 1.87 137 3.15 127 4.16 143 1.98 Sub-Saharan 3.57 3.72 2.81 4.15 4.21 3.08 African average BRICs China 29 4.83 50 4.22 48 4.46 11 6.22 35 6.11 62 4.32 Brazil 48 4.40 79 3.78 70 4.00 62 4.73 88 5.43 66 4.27 India 59 4.32 70 3.91 84 3.60 99 4.25 101 5.27 86 3.97 Russian Federation 67 4.20 133 3.09 47 4.52 22 5.80 65 5.75 52 4.59 BRICs average 4.44 3.75 4.15 5.25 5.64 4.29 Latin America and 3.97 3.52 3.60 4.66 5.45 3.98 the Caribbean average Southeast Asian average 4.46 4.22 4.00 5.42 5.64 4.19 36 | The Africa Competitiveness Report 2013 1.1: Assessing Africa’s Competitiveness in an International Context SUBINDEXES (6th–12th pillars) 6th pillar: 7th pillar: 8th pillar: 9th pillar: 11th pillar: Goods market Labor market Financial market Technological 10th pillar: Business 12th pillar: efficiency efficiency development readiness Market size sophistication Innovation Country/Region Rank Score Rank Score Rank Score Rank Score Rank Score Rank Score Rank Score NORTH AFRICA Morocco 69 4.27 122 3.84 63 4.12 75 3.71 57 4.11 81 3.80 97 2.95 Egypt 125 3.76 142 3.06 102 3.67 91 3.43 29 4.77 83 3.77 109 2.84 Algeria 143 2.99 144 2.79 142 2.39 133 2.59 49 4.34 144 2.54 141 2.09 Libya 137 3.45 137 3.46 140 2.68 110 3.11 102 2.86 116 3.35 129 2.50 North African average 3.62 3.29 3.22 3.21 4.02 3.37 2.98 SUB-SAHARAN AFRICA South Africa 32 4.68 113 3.94 3 5.72 62 4.01 25 4.85 38 4.34 42 3.55 Mauritius 27 4.80 70 4.38 35 4.65 63 3.98 109 2.74 41 4.30 98 2.95 Rwanda 39 4.54 11 5.10 49 4.44 113 3.04 128 2.28 70 3.91 51 3.40 Seychelles 70 4.27 48 4.54 94 3.79 66 3.88 142 1.38 87 3.74 93 2.98 Botswana 78 4.20 60 4.46 53 4.39 106 3.17 97 2.94 95 3.66 73 3.13 Namibia 87 4.16 74 4.33 47 4.45 104 3.23 120 2.57 102 3.57 101 2.93 Gambia, The 94 4.10 31 4.72 69 4.07 109 3.13 141 1.42 59 4.09 52 3.38 Gabon 126 3.73 63 4.43 106 3.62 86 3.53 110 2.74 141 2.93 136 2.35 Zambia 42 4.53 111 3.97 50 4.43 115 2.96 111 2.71 75 3.84 61 3.30 Ghana 76 4.20 97 4.08 59 4.21 108 3.13 70 3.57 101 3.57 95 2.96 Kenya 93 4.10 39 4.62 24 4.74 101 3.27 75 3.52 67 3.96 50 3.41 Liberia 40 4.54 61 4.45 74 4.03 132 2.62 144 1.24 62 3.99 54 3.34 Cameroon 89 4.15 58 4.48 105 3.64 126 2.73 87 3.18 104 3.52 79 3.09 Nigeria 88 4.16 55 4.50 68 4.07 112 3.08 33 4.63 66 3.96 78 3.10 Senegal 77 4.20 80 4.27 84 3.89 95 3.37 105 2.83 72 3.89 62 3.29 Benin 132 3.66 67 4.40 112 3.55 124 2.75 122 2.45 125 3.23 84 3.01 Tanzania 110 3.89 47 4.55 85 3.87 122 2.77 77 3.50 106 3.51 75 3.12 Ethiopia 120 3.79 87 4.18 129 3.24 140 2.48 66 3.64 129 3.18 114 2.73 Cape Verde 105 3.93 126 3.72 121 3.37 90 3.43 143 1.25 118 3.34 120 2.68 Uganda 103 3.95 23 4.83 62 4.14 117 2.93 85 3.22 105 3.52 82 3.02 Mali 111 3.87 118 3.89 113 3.53 119 2.90 118 2.57 126 3.22 88 2.99 Malawi 112 3.86 43 4.58 75 4.00 134 2.54 123 2.41 115 3.38 99 2.94 Madagascar 115 3.84 54 4.50 138 2.88 135 2.54 113 2.66 122 3.28 106 2.88 Côte d'Ivoire 122 3.78 71 4.38 103 3.65 99 3.32 94 3.05 123 3.28 115 2.71 Zimbabwe 133 3.63 139 3.40 109 3.60 120 2.83 135 1.90 128 3.21 127 2.59 Burkina Faso 118 3.80 64 4.42 117 3.43 137 2.52 114 2.64 140 3.01 107 2.87 Mauritania 135 3.58 131 3.60 136 3.04 123 2.75 131 2.07 117 3.35 121 2.68 Swaziland 107 3.92 119 3.87 89 3.82 128 2.69 133 2.00 124 3.26 137 2.33 Lesotho 102 3.97 116 3.92 122 3.36 136 2.53 136 1.86 135 3.11 138 2.33 Mozambique 124 3.77 128 3.72 134 3.09 121 2.80 101 2.86 131 3.14 122 2.63 Chad 141 3.08 95 4.12 137 3.01 143 2.23 112 2.70 138 3.04 113 2.74 Guinea 127 3.71 56 4.49 135 3.07 142 2.45 129 2.27 139 3.03 125 2.62 Sierra Leone 116 3.84 114 3.92 125 3.34 141 2.46 138 1.76 136 3.10 139 2.27 Burundi 139 3.28 112 3.97 144 2.31 144 2.22 140 1.57 143 2.67 140 2.17 Sub-Saharan 3.98 4.26 3.78 2.95 2.62 3.47 2.90 African average BRICs China 59 4.31 41 4.60 54 4.31 88 3.50 2 6.82 45 4.25 33 3.85 Brazil 104 3.94 69 4.39 46 4.45 48 4.43 9 5.63 33 4.51 49 3.42 India 75 4.21 82 4.24 21 4.90 96 3.36 3 6.24 40 4.31 41 3.56 Russian Federation 134 3.62 84 4.23 130 3.19 57 4.13 7 5.76 119 3.31 85 3.01 BRICs average 4.02 4.37 4.21 3.86 6.11 4.10 3.46 Latin America and 3.98 4.01 3.94 3.71 3.52 3.83 2.96 the Caribbean average Southeast Asian average 4.47 4.61 4.33 3.82 4.03 4.16 3.50 The Africa Competitiveness Report 2013 | 37 Part 2 Connecting Africa’s Markets in a Sustainable Way CHAPTER 2.1 African countries have registered high growth rates in the past 10 years and have weathered the global economic Enabling African Trade: crisis rather favorably compared with other emerging economies. Yet, as discussed in Chapter 1.1, the level of Findings from the Enabling gross domestic product (GDP) per capita and the pace of GDP growth have not reached levels found in other Trade Index regions, such as developing Asia. From 2002 to 2012, GDP growth in developing Asia was on average 8.5 MARGARETA DRZENIEK HANOUZ percent, while sub-Saharan Africa experienced growth CAROLINE KO rates of 5.7 percent. 1 A key difference between these World Economic Forum two regions is their participation in global trade and investment flows. While trade in developing Asia more than doubled between 1995 and 2010, trade in sub- Saharan Africa over the same period remained at below 2 percent of total world trade. 2 Two distinct observations are of particular importance when discussing Africa’s trade performance: the export base of most countries is undiversified, and regional integration is extremely low. THE STATE OF AFRICAN EXPORTS Despite efforts aimed at diversifying the export base, African exports remain highly focused on commodities. Fuels and mining products account for over half of sub- Saharan exports, compared with only about 10 percent for developing Asia and advanced economies. Indeed, when broken down to the country level, the share of mineral products accounts for more than 30 percent of total exports in more than half of all African economies, and for over 90 percent in a few cases (see Figure 1). 3 High dependence on commodity exports means that terms of trade fluctuate with commodity prices, which may have a negative effect on the country’s growth. Government finances also fluctuate with commodity prices, possibly jeopardizing governments’ fiscal stability and leeway. In sub-Saharan Africa alone, for example, 10 economies are fiscally dependent on natural resources. 4 In contrast, another set of countries—including Burundi, Côte d’Ivoire, Ethiopia, and Malawi—are highly dependent on agricultural exports (see Figure 2). Against this backdrop, export diversification—both in goods and services and also across geographies—is key to raising Africa’s resilience to external shocks. Many regional trading initiatives have been launched on the continent over the last several decades, yet Africa’s markets remain poorly connected with each other. The share of Africa’s intra-regional goods trade in total goods exports is just 12 percent, compared with 25 percent in the Association of Southeast Asian Nations, 65 percent in the European Union, and 49 percent in the North American Free Trade Agreement bloc in 2011, 5 although these estimates probably underreport the actual volume of trade because of the high levels of unregistered cross-border activity. Survey results suggest that informal border flows may comprise up to 90 percent of trade. 6 Finally, regional integration is closely linked to food security and poverty reduction. Because of their The Africa Competitiveness Report 2013 | 41 2.1: Enabling African Trade Figure 1: Exports of mineral products as a share of total exports, 2006–10 average Angola Algeria Libya Equatorial Guinea Chad Nigeria Rep. Congo Sudan Gabon Botswana Burkina Faso Guinea Mauritania Congo, Dem. Rep. Cameroon Sierra Leone Niger Central African Rep. Gambia, The Egypt Benin Rwanda Seychelles Namibia Côte d'Ivoire Senegal Zimbabwe Lesotho South Africa Liberia Tanzania Mozambique Togo Morocco Madagascar Djibouti Kenya Uganda Burundi Cape Verde Swaziland Ghana Mauritius Somalia Mali Ethiopia Malawi 0 20 40 60 80 100 Percent Source: ITC, April 2012. 42 | The Africa Competitiveness Report 2013 2.1: Enabling African Trade Figure 2: Export share in total exports by category, 2010 Angola Libya Algeria Botswana Lesotho Nigeria Guinea Gabon Tunisia Zambia Cape Verde South Africa Mali Morocco Mozambique Mauritania Ghana Madagascar Mauritius Tanzania Namibia Senegal Togo Rwanda Seychelles Benin Gambia, The Swaziland Burkina Faso Zimbabwe Cameroon Kenya Uganda Ethiopia Côte d'Ivoire Malawi Burundi 0 20 40 60 80 100 Percent n Agriculture  n  Fuels and mining   n Manufactures  n Services Source: Authors’ calculations, based on data from the World Trade Organization’s Statistical Database, Time Series on Merchandise and Commercial Services 2000–2011. Notes: Chad, Liberia, and Sierra Leone do not report data on their merchandise breakdown. Note that the sum of shares does not necessarily add up to 100 because the world total merchandise trade includes other commodities and transactions that are not part of the three main commodity groups—agriculture, fuels and mining, and manufacturing. These commodities are gold, arms and ammunition, and commodities and transactions not classified elsewhere (following the United Nations Statistics Division standard international trade classification (SITC) Rev.3, section 9). Chad, Liberia, and Sierra Leone do not report data on their merchandise breakdown. Data in Figure 2 may not exactly match Figure 1. For example, more than two-thirds of exports in Botswana are pearls and precious stones, classified as mineral exports in Figure 1 and manufactures in Figure 2. The Africa Competitiveness Report 2013 | 43 2.1: Enabling African Trade high transaction costs and consequent low regional Box 1: Priorities for deepening regional trade integration, African economies import agricultural integration in Africa products from global markets instead of from within their own regions. Indeed, according to a recent World Bank Although Africa’s exports have grown significantly over report, African farmers produce a mere 5 percent of the past decade and its trade has started to recover from the global financial crisis, the impact of this growth Africa’s cereal imports. 7 With the market of food staples on unemployment and poverty has been disappointing and production estimated at US$50 billion per year, or for many African countries. This situation reflects export three-quarters of the total agricultural output, this means growth that is typically fueled by a limited number of that enormous growth opportunities remain unexploited. 8 mineral and primary commodities that have only narrow impacts on the wider economy, and formal sectors that This large share of non-African staple imports exposes remain small. African economies to volatile food prices. This exposure The key trade objectives for Africa, therefore, are to not only affects the income of the poor, who need to diversify the export base and to implement policies that spend a higher income share on basic food supply, but allow more people to benefit from trade. Increasing and more youthful populations heighten the need for more also adversely affects macroeconomic stability through inclusive and employment-intensive trade and offer a real rising inflation, as was seen in East Africa in 2011 and opportunity for Africa to harness a significant potential early 2012. Furthermore, because they are small buyers, comparative advantage that can drive productivity growth most African economies have only limited bargaining over a sustained period. Effective regional integration in Africa would play power to negotiate prices on a global scale. Regional a key role in delivering more diverse, inclusive, and integration is, thus, key to feeding Africa’s growing sustained trade growth. With African leaders now calling population in a sustained fashion by facilitating trade for a continental free trade area by 2017 to boost trade from food-abundant areas to areas with a food deficit. and investment, a recent World Bank report shows that countries are losing out on billions of dollars in potential trade every year because of high trade barriers with their AFRICA’S POOR REGIONAL INTEGRATION: CAUSES own neighbors, and that it is often easier for Africa to trade AND PRIORITIES with the rest of the world than with itself. 1 According to the In view of the benefits to be had, why is Africa’s regional report De-Fragmenting Africa: Deepening Regional Trade integration so poor? The reasons are complex and many. Integration in Goods and Services, there are enormous opportunities for increased cross-border trade in food Historically, most countries have been geared toward products, basic manufactures, and services and for a trade with developed economies. Policies, measures, larger regional market to provide a springboard to global and investments were often focused on improving competitiveness in a wider range of products to reach a access to developed-country markets because of the larger number of markets. However, these benefits are not being realized because the regional market is fragmented high demand in those countries. At the same time, and cross-border production networks that have spurred regional integration efforts on the continent were usually economic dynamism in other regions, especially East Asia, not fully implemented, so many barriers between regional have yet to materialize in Africa. markets remain in place. 9 One factor, as discussed To reduce fragmentation, three main changes are needed: in subsequent chapters in this Report, is Africa’s pronounced infrastructure deficit, which is particularly • Improve conditions for cross-border trade, especially pertinent for connecting markets within Africa (see those faced by small traders—many of whom are women—by simplifying border procedures, limiting the Chapter 2.2 for a more detailed discussion). number of agencies at the border, and increasing the Trade policies, as well as the institutional and professionalism of officials. regulatory environment, also need to be taken into • Remove non-tariff barriers to trade such as restrictive account. World Bank data show that in sub-Saharan rules of origin, import and export bans, and onerous Africa it takes an average of 37 days to import goods and costly trade-licensing procedures. and 31 days to export, compared with less than 20 • Streamline regulations and immigration rules that limit days to export and to import in North Africa, Latin the potential for cross-border trade and investment in America, and Southeast Asia. The problem is even both goods and services. more pronounced for landlocked Africa, where it takes Regional integration is a core element in both the an average of almost 50 days to import and 40 days World Bank’s Africa Strategy and its Trade Strategy, which to export. 10 Other factors, such as border corruption are designed to help countries create trade opportunities and multiple road blocks, are a further impediment. For for their transformation and sustained growth. The World example, a truck driver on the Koutiala–Dakar corridor Bank doubled its support for regional integration from US$2.1 billion in 2008 to US$4.2 billion in 2011, and between Mali and Senegal has to pass through almost increased it further to US$5.7 billion in 2012. 100 checkpoints and border posts and is required to pay about US$437 in bribes along the route. 11 In Source: Contributed by the World Bank, International Trade Department. Mali, on the Bamako–Ouagadougou route, every 100 kilometers drivers have to face about 4.5 checkpoints Note and have to pay about US$25 in bribes. 12 Furthermore, 1 World Bank 2012. non-tariff measures (NTMs) in the form of quotas, 44 | The Africa Competitiveness Report 2013 2.1: Enabling African Trade charges, discriminatory labeling, and health and sanitary Maersk, the Panama Canal Authority, Royal Vopak, regulations play an important role in undermining trade Stena AB, Swiss International Air Lines, Transnet, UPS, the region. Although data on NTMs are generally scarce, Volkswagen, and AB Volvo. a recent study by the World Bank puts a price tag to The ETI measures the extent to which individual their costs and shows that NTMs affected one-fifth of economies have developed institutions, policies, and regional exports, or US$3.3 billion of regional trade in services facilitating the free flow of goods over borders 2008 in Southern African Development Community and to destination. 14 The structure of the Index reflects (SADC) countries. Assuming that NTMs are equivalent the main enablers of trade, breaking them into four to a 40 percent ad valorem tariff, this amounts to an overall issue areas, captured in the subindexes: estimated cost of US$1.3 billion per year. 13 Finally, 1. The market access subindex measures the crossing borders does not affect only goods and extent to which the policy framework of the services, but also people. The lack of physical security country allows foreign goods into the economy when crossing borders, for instance, plays a critical role, and enables access to foreign markets for its particularly for women traders in the Great Lake region. exporters. The following analysis of the results of the Enabling Trade Index (ETI) sheds additional light on the key 2. The border administration subindex assesses the barriers that prevent Africa from reaping the full benefits extent to which the administration at the border of international trade. Although the ETI does not permit facilitates the entry and exit of goods. an analysis of barriers to regional integration, it does 3. The transport and communications infrastructure indicate the barriers and enablers that exporters and subindex takes into account whether the country importers in each country face, and thereby informs has in place the transport and communications policy choices. Box 1 complements the analysis by infrastructure necessary to facilitate the movement identifying priority action areas that have been identified of goods within the country and across the by the World Bank for enhancing regional integration. border. USE OF THE GLOBAL ENABLING TRADE REPORT 4. The business environment subindex looks at The Global Enabling Trade Report (GETR) has become the quality of governance as well as at the a widely used reference since its introduction in 2008. overarching regulatory and security environment It forms part of the toolbox of many countries in their impacting the business of importers and efforts to increase trade, and it helps companies with exporters active in the country. their investment decisions. The Report is also the basis Each of these four subindexes is composed in turn for many high-level public-private dialogues facilitated of a number of pillars of enabling trade, of which there around the world each year by the World Economic are nine in all. These are: Forum. These dialogues focus on practical steps that can be taken by both governments and the private 1. Domestic and foreign market access sector to overcome particular trade barriers in a country 2. Efficiency of customs administration or region. In building a coalition for change, it has 3. Efficiency of import-export procedures become evident that establishing an “open borders� 4. Transparency of border administration mindset in a joint and holistic effort to tackle obstacles 5. Availability and quality of transport infrastructure to the movement of both goods and people is often the 6. Availability and quality of transport services most effective approach. 7. Availability and use of ICTs 8. Regulatory environment THE ENABLING TRADE INDEX 9. Physical security The ETI was developed within the context of the World Each of these pillars is made up of a number Economic Forum’s Industry Partnership Programme of individual variables. The dataset includes both for the Supply Chain and Transport Industry, and hard data and survey data from the World Economic was first published in the 2008 GETR. A number of Forum’s Executive Opinion Survey (the Survey). The Data Partners have collaborated in this effort: the hard data were obtained from publicly available Global Express Association (GEA), the International Air sources and international organizations active in the Transport Association (IATA), the International Trade area of trade (such as IATA, the ITC, the International Centre (ITC), the United Nations Conference on Trade Telecommunication Union (ITU), UNCTAD, the UN, and and Development (UNCTAD), The World Bank, the World the World Bank). The Survey is carried out annually by Customs Organization (WCO), and the World Trade the World Economic Forum in all economies covered Organization (WTO). We have also received significant by our research. 15 It captures the views of top business input from companies that are part of this industry executives on the business environment and provides partnership program, namely Agility, Brightstar, Deutsche unique data on many qualitative aspects of the broader Post DHL, DNB Bank ASA, FedEx Corp., A.P. Möller The Africa Competitiveness Report 2013 | 45 2.1: Enabling African Trade Figure 3: Composition of the four subindexes of the ETI Transport and Market Border communications access administration infrastructure Domestic and foreign Efficiency of customs Availability and quality of market access administration transport infrastructure Destination Border Efficiency of import- Availability and quality of export procedures transport services Transparency of Availability and border administration use of ICTs Business environment Subindex Regulatory Physical Pillar environment security Source: World Economic Forum, 2012b. business environment, including a number of specific pair would be associated with a 4 percent increase in issues related to trade. For detailed descriptions of all the bilateral trade, all else being equal. indicators included in the ETI, please see Appendix C. Country coverage The nine pillars are grouped into the four Overall, the 2012 edition of the GETR covers 132 subindexes described above, 16 as shown in Figure 3, economies and 31 African countries, of which three are and the overall score for each country is derived as an in North Africa. In an effort to expand country coverage, unweighted average of the subindexes. 17 The details two new African countries were added to the Index of the composition of the ETI are shown in Appendix (Angola and Rwanda) as new data became available. A. It is important to note that, although the pillars are Although Tunisia was covered in the GETR 2012, it was separated out in the Index for presentational purposes, excluded from The Global Competitiveness Report they are intrinsically linked. For example, the regulatory 2012–2013 because of a structural break in the data. To environment is linked to transparency at the border and remain consistent with this decision, we do not report the availability of transport services, as it contains data or discuss data on Tunisia in this chapter. As Libya was on the level of competition in a country. Furthermore, the not covered in the ETI 2012 because of lack of data, the use of ICTs has an impact on the efficiency of border North Africa average reported below is composed of administration, as ICTs have proven instrumental for three countries out of the five that make up the region. making border clearance more efficient. The selected North African countries account for 60 As econometric tests of the ETI 2009 demonstrated, percent of total merchandise trade in the subregion. the ETI has explanatory power with respect to a country’s trade performance. 18 The analysis has shown Results by subregion and selected countries that a 1 percent increase in the ETI score in an exporting Figure 4 shows the ETI results for Africa on a map of country is associated with an increase of 1.7 percent in the continent. It illustrates the varying ability of countries that country’s exports. This effect is even higher with across the African continent to enable trade, and shows respect to an importing country: the model predicts the results for some European and Middle Eastern that a 1 percent improvement in an importer’s ETI countries for comparison. score would lead to a 2.3 percent rise in imports. Taken Table 1 shows the ETI results—both ranks and together, these two effects predict that a 1 percent scores—for the 2012 and 2010 editions. The middle increase in the average ETI score of any given country column further shows the 2012 rank based on the 46 | The Africa Competitiveness Report 2013 2.1: Enabling African Trade Figure 4: The ETI framework: Map of Africa Cyprus Syria Lebanon Iran, Morocco Islamic Rep. Algeria Egypt Saudi Arabia Qatar Mauritania Mali United Arab Emirates Chad Senegal Yemen Gambia Burkina Faso Nigeria Uganda Ethiopia Côte d’Ivoire Cameroon Ghana Rwanda Kenya Benin Mauritius Burundi Tanzania ETI 2012 score* n  [5.00,6.14†] Angola Malawi n  [4.50,5.00[ Zambia n  [4.00,4.50[ Namibia n  [3.50,4.00[ Botswana Madagascar n  [3.16,3.50[ n  [Min††,3.16[ Mozambique n  Not covered Zimbabwe South Africa Lesotho Source: World Economic Forum, 2012b. * The interval [x ,y [ is inclusive of x but exclusive of y. † Highest value; †† lowest value. 2010 constant sample. In the 2012 edition of the GETR, although the three North African countries perform Mauritius (36th), Rwanda (51st), Botswana (54th), South on average somewhat better than their sub-Saharan Africa (63rd), and Morocco (64th) emerge as the best neighbors (with a score of 3.7, versus 3.5 for the latter), performers within the region out of 132 economies the spread in performance is as important in North Africa covered by the Report (see Table 1). However, Mauritius as it is in sub-Saharan Africa (ranging from Morocco at declines by three places in 2012, following slight falls 64th to Algeria at 120th). North Africa performs in line across all four subindexes. Botswana stays constant, with the average of the BRIC economies and those in the whereas South Africa and Morocco move up by 10 Latin American region in terms of enabling trade, but has and 12 positions, respectively, considering the constant not yet achieved the level of Southeast Asia. Southeast sample. In South Africa, the improvement is mainly Asia has been very successful in facilitating trade and attributable to better transport services and a higher promoting regional integration, which is reflected in the level of physical security. 19 Furthermore, Morocco good ETI results achieved by this region. improves by 12 places, based on more efficient handling The comparison of Africa with Southeast Asia and of import-export procedures than in previous years, Latin America and the Caribbean in Figure 5 shows that, as well as more transparent border administration and although the region underperforms both comparators improvements in the availability and quality of transport on the majority of the ETI pillars, it is doing relatively well infrastructure and in the regulatory environment. 20 in terms of physical security, where it reaches the level Overall, these three countries have made great found in Southeast Asia, and the regulatory environment, strides toward enabling trade, and their results on the where it performs at the level of Latin America and the aggregate ETI indicator reach levels close to those Caribbean. A number of African countries achieve good found in European countries, above the majority of BRIC scores on this indicator: for example, Senegal ranks economies. 38th, Botswana 39th, and Rwanda 15th. At the same However, Africa is also home to some of the time, the gaps are the largest in the efficiency of import- weakest performers in terms of enabling trade, such as export procedures and the availability and use of ICTs, Chad or Burundi, which occupy the last two positions where Africa performs significantly less well than the in the ETI sample. A comparison of the trends shows other regions. that, for the majority of African countries covered, Figure 6 offers yet another view of Africa’s the performance in the ETI has deteriorated. Overall, performance in the ETI by comparing the region’s The Africa Competitiveness Report 2013 | 47 2.1: Enabling African Trade Figure 5: Africa’s performance in regional comparison Domestic and foreign market access 7 6 Ef�ciency of Physical security customs administration 5 4 3 Regulatory Ef�ciency of import- 2   Southeast Asia environment export procedures 1   Latin American and the Caribbean  Africa  BRICs Availability and Transparency of use of ICTs border administration Availability and quality Availability and quality of transport services of transport infrastructure Source: World Economic Forum, 2012b. Notes: Performance on the ETI is measured by scores on a scale of 1 to 7, with 7 being best. BRIC countries are Brazil, Russian Federation, India, and China. Figure 6: Africa’s performance over time 7 6 n 2009  n 2012 5 ETI score (1–7, best) 4 3 2 1 Domestic and Ef�ciency Ef�ciency of Transparency Availability Availability Availability Regulatory Physical foreign of import-export of border and and and use environment security market access customs procedures administration quality of quality of of ICTs administration transport transport infrastructure services Source: World Economic Forum, 2012b. Note: The constant sample includes the following economies: Algeria, Benin, Burkina Faso, Burundi, Cameroon, Chad, Côte d’Ivoire, Egypt, Ethiopia, Gambia, Ghana, Kenya, Lesotho, Madagascar, Malawi, Mali, Mauritania, Mauritius, Morocco, Mozambique, Namibia, Nigeria, Senegal, South Africa, Tanzania, Tunisia, Uganda, Zambia, and Zimbabwe. 48 | The Africa Competitiveness Report 2013 2.1: Enabling African Trade Table 1: The Enabling Trade Index 2012 rankings and 2010 comparison ETI 2012 ETI 2010 Country/Economy or region Rank/132 Score Constant sample rank 2012 Rank* Score Mauritius 36 4.6 36 33 4.7 Rwanda 51 4.3 n/a n/a n/a Botswana 54 4.3 53 53 4.2 South Africa 63 4.1 62 72 3.9 Morocco 64 4.1 63 75 3.9 Namibia 75 3.9 74 70 4.0 Malawi 85 3.8 83 83 3.8 Zambia 88 3.8 86 85 3.8 Egypt 90 3.8 88 76 3.9 Gambia, The 91 3.7 89 82 3.8 Senegal 92 3.7 90 90 3.7 Tanzania 94 3.7 91 97 3.6 Mozambique 97 3.7 94 93 3.7 Uganda 98 3.6 95 94 3.7 Ghana 99 3.6 96 96 3.6 Kenya 103 3.5 100 105 3.5 Ethiopia 106 3.5 103 107 3.5 Madagascar 107 3.5 104 86 3.8 Lesotho 113 3.4 110 101 3.6 Benin 115 3.4 112 106 3.5 Cameroon 118 3.3 114 115 3.3 Algeria 120 3.2 115 119 3.1 Mali 121 3.2 116 111 3.4 Burkina Faso 122 3.1 117 110 3.4 Nigeria 123 3.1 118 120 3.1 Mauritania 125 3.1 120 117 3.3 Côte d'Ivoire 126 3.0 121 123 2.9 Angola 127 3.0 n/a n/a n/a Zimbabwe 129 3.0 122 122 3.0 Burundi 131 2.9 124 125 2.8 Chad 132 2.6 125 124 2.9 African average 3.5 North Africa 3.7 Sub-Saharan Africa 3.5 Latin America and the Caribbean 3.9 Southeast Asia 4.4 Sources: World Economic Forum, 2010, 2012b. Notes: Latin America and the Caribbean countries: Argentina, Bolivia, Brazil, Chile, Colombia, Costa Rica, Dominican Republic, Ecuador, El Salvador, Guatemala, Guyana, Haiti, Honduras, Jamaica, Mexico, Nicaragua, Panama, Paraguay, Peru, Uruguay, and Venezuela; North African countries: Algeria, Egypt, Morocco; Southeast Asian countries: Cambodia, Indonesia, Malaysia, Philippines, Singapore, Thailand, and Vietnam; sub-Saharan African countries: Angola, Benin, Botswana, Burkina Faso, Burundi, Cameroon, Chad, Côte d’Ivoire, Ethiopia, Gambia, Ghana, Kenya, Lesotho, Madagascar, Malawi, Mali, Mauritania, Mauritius, Mozambique, Namibia, Nigeria, Rwanda, Senegal, South Africa, Tanzania, Uganda, Zambia, and Zimbabwe. * The 2010 rank is out of 125 countries. Seven new countries were added to the 2012 Index: Angola, Haiti, Iran, Lebanon, Moldova, Rwanda, and Yemen. performance between 2009 and 2012. Here it is of border administration has stalled—despite Africa’s noteworthy that Africa’s overall performance in the fairly low score on these two pillars. market access pillar has slightly deteriorated, whereas Analysis by subindex and pillar improvements have been made in the efficiency of Figure 7 shows the spread in performance across customs administration, transport infrastructure, African countries on all nine pillars of the ETI and and ICTs, albeit the latter from a very low base. The details the performance of comparators as well as the comparison over time further reveals that, when it subregional groups of sub-Saharan Africa, North Africa, comes to border administration, the efficiency of and landlocked countries from the region. customs administration has improved but progress in the efficiency of import-export procedures and transparency The Africa Competitiveness Report 2013 | 49 2.1: Enabling African Trade Box 2: Customs reform through increased visibility: Individual performance contracts in Cameroon Outdated and bureaucratic border clearance processes • An increase in the average revenues per customs imposed by customs and other agencies are increasingly declaration was recorded: revenues increased by more seen as posing greater barriers to trade than tariffs do. than 6.9 billion CFA francs (about US$17.25 million) in Cumbersome systems and procedures and poor infrastructure 2011, all other things being equal. both increase transaction costs and lengthen delays for • Possibly suspicious practices have been drastically the clearance of imports, exports, and transit goods, with reduced: notably, reroutings (manually changing the negative impacts on competitiveness. This is especially true control channel from the one selected by the automated in poor countries, and in Africa the difficulties are particularly system to the other—for example, document verification severe, with excessive physical inspections being a major to physical inspection) fell from 5 percent of the total source of delays. Countries confront a deep dilemma between number of declarations in 2009 to 1.6 percent in 2010 facilitating trade and securing control, particularly because (in Douala Port I). their need for customs revenue is still significant. This scenario has been changing recently, with many The activity catalyzes the following positive initiatives: African governments adopting major reforms in their border management systems. Among these efforts, the case of • The concept of performance-linked treatment is being Cameroon Customs is one of the most interesting: the agency applied to declarants/economic operators. Performance- has undertaken a challenging strategy that relies on technology contracted importers enjoy a trade facilitation and improvements in visibility, ensuring a double continuity environment: for example, a shorter port dwell time through visualized performance measurement and human that is 4 days shorter than the average 19 days. resource management based on the measured performance. Cameroon’s customs administration has suffered from • Performance contracts have had a major impact on corruption and struggled to identify options for improving importers and are creating the start of a virtuous circle governance. A customs reform program was introduced that between customs brokers and importers. For successful sought to reduce corruption while simultaneously raising importers (those who reached the agreed performance revenue collection and facilitating trade. The reform included targets), performance contracts have been the starting the installation of ASYCUDA++ (an automated customs point of revising internal procedures for the clearing clearance system) that would enable the administration not processes. only to track the processing of each consignment, but also to • The culture of collecting and monitoring performance measure performance against a number of criteria relevant to indicators is increasingly accepted. Institutional the reform. performance data are becoming publicly available. With the support of the Trade Facilitation Facility, 1 Stakeholder dialogues are being based on objective data, these efforts have continued with the introduction in 2009 and the progress and achievements of efforts become of individual performance contracts, making Cameroon publically accountable. the first country in the world to adopt such an approach. These performance contracts use objective and quantifiable • Several countries, such as Benin and Togo, are following performance data from the automated computer system. Cameroon’s successful approach to customs reform. The objectives of customs administration (facilitation and enforcement) are complemented by specific objectives Source: Contributed by the World Bank, International Trade that aim at abolishing bad practices. With this mechanism, Department. individual customs officers as well as their managers have Note become aware of their performance data vis-à-vis those of 1 The Trade Facilitation Facility (TFF) is a rapid-response trust fund other colleagues, and they receive rewards or sanctions as a with the objective of helping developing countries reduce trade result of their performance. costs and enhance their ability to move goods and services The activity has far achieved several significant across borders rapidly, cheaply, and predictably. It is designed to outcomes since the start of its implementation: finance activities that will make immediate, direct, and effective • Processing time for customs declaration at Douala Port I improvements in trade facilitation systems by modernizing infrastructure, institutions, and policies and improving regulations. by customs officers dropped from about 11 hours in 2010 The TFF finances activities at country, regional, and global levels to 2 hours in the third trimester of 2011. including projects and project-preparation activities, advisory work, • Customs revenues increased by 22 percent from the and technical assistance. first trimester of 2010 to the first trimester of 2011, while growth of activity during the same period was 17 percent. In terms of market access, which captures both access to markets is relatively constrained. For North access to domestic markets and access to foreign African markets, this constraint to access is more severe, markets for the country’s exporters, the region is while landlocked African countries enjoy levels of market characterized by a relatively large spread in performance. access similar to those of Africa and sub-Saharan Africa Although some African countries perform better than overall and perform far better than North Africa. comparators in Southeast Asia and Latin America and Interestingly, significant differences can be observed the Caribbean, in the majority of African countries, across African countries in this respect. A number of 50 | The Africa Competitiveness Report 2013 2.1: Enabling African Trade Figure 7: Enabling Trade Index score dispersion among African economies 7 African average Landlocked Africa Sub-Saharan Africa North Africa Latin America and Carribean Southeast Asia 6 5 ETI score (1–7) 4 3 2 1 Domestic Ef�ciency Ef�ciency Transparency Availability Availability Availability Regulatory Physical and of of of and and and environment security foreign customs import-export border quality quality use market administration procedures administration of of of access transport transport ICTs infrastructure services Source: World Economic Forum, 2012b. Notes: The sample includes the following economies: landlocked Africa: Botswana, Burkina Faso, Burundi, Chad, Ethiopia, Lesotho, Malawi, Mali, Rwanda, Uganda, Zambia, and Zimbabwe; Latin America and the Caribbean: Argentina, Bolivia, Brazil, Chile, Colombia, Costa Rica, Dominican Republic, Ecuador, El Salvador, Guatemala, Guyana, Haiti, Honduras, Jamaica, Mexico, Nicaragua, Panama, Paraguay, Peru, Uruguay, and Venezuela; North Africa: Algeria, Egypt, Morocco; Southeast Asia: Cambodia, Indonesia, Malaysia, Philippines, Singapore, Thailand, and Vietnam; sub- Saharan Africa: Angola, Benin, Botswana, Burkina Faso, Burundi, Cameroon, Chad, Côte d’Ivoire, Ethiopia, Gambia, Ghana, Kenya, Lesotho, Madagascar, Malawi, Mali, Mauritania, Mauritius, Mozambique, Namibia, Nigeria, Rwanda, Senegal, South Africa, Tanzania, Uganda, Zambia, and Zimbabwe. The blue bars reflect the dispersion in performance across African economies in the nine dimensions analyzed in the Enabling Trade Index, the end points presenting the highest and the lowest score in the sample, respectively. countries have liberalized their domestic markets and more efficient than they are in Southeast Asia or in Latin have fairly free access to key developed-country markets America and the Caribbean (see Appendix B). However, as a result of trade preference schemes such as those on average, there is some room for improvement in under the African Growth and Opportunity Act put in Africa. The benefits of customs reform are considerable: place by the United States or Economic Partnership in addition to speeding up the clearance process at the Agreements with the European Union. The foreign border, more efficient customs contribute to a better market access component of the Index takes into collection of tariff and tax revenues, more formal cross- account the trade preferences countries enjoy abroad border trading activity, and lower levels of corruption. by capturing the margin of preference to which countries Important efforts have been undertaken in recent years are entitled. Because of the preferential schemes in toward reforming customs administrations in African place, two African countries—Malawi and Mauritius— countries (see Box 2 for customs reform efforts in enjoy the highest margin of preference in target markets Cameroon). within the entire ETI sample. In most countries, however, customs performs In the case of North Africa, the results show that only one part of the border clearance process, and the region’s trade performance is negatively affected other agencies are tasked with the import or export by limited domestic and foreign market access. Further procedure components. These agencies include entities reduction of domestic tariffs and tariffs in key export that enforce sanitary and phytosanitary standards as markets would enable trade in the region. This may be well as technical requirements and entities that grant a reflection of the still fairly high tariffs in the region, the import licenses. It is therefore crucial for reforms in this low number of regional trading agreements into which field to take a holistic view and consider the import countries have entered, and the fact that the region does and export procedures as a whole, ensuring that the not benefit from as many trade preferences as sub- linkages between the different agencies involved in the Saharan Africa. import-export process present a minimum of friction and Border administration takes into account the delays. In many cases, information technology (IT)-based efficiency of customs and the transparency and systems have proven successful in facilitating procedures efficiency of the entire clearance process. The results across different agencies. For example, the Automated show that, in a number of African countries, customs are System for Customs Data (ASYCUDA) was implemented The Africa Competitiveness Report 2013 | 51 2.1: Enabling African Trade Box 3: Overcoming landlockedness: Faster border management through customs data sharing across countries Delays at border crossings across sub-Saharan Africa have that has already been verified by one customs authority long been identified as one of the largest non-tariff barriers to ensures data integrity and, more importantly, traceability trade. Some contributing factors include inefficient paperwork of the declarations across borders, which is critical for and processes, lack of advance notification of goods, poor reconciliation and risk management. Uganda and Kenya have and fraudulent declarations, lack of cross-border information been at the forefront of an initiative to share data between exchange between customs, and out-of-date or nonexistent their customs administrations. In 2009, the two countries transit and trade statistics. One solution to this problem lies worked with USAID in developing a system to interconnect in developing a platform for efficient customs and transit their customs systems. The interconnecting system, known data exchange, management, and reporting and, even as the Revenue Authorities Digital Data Exchange (RADDEx), more importantly, ensuring that the information exchanged transmits customs transit declaration data in near-real time is actually used to improve daily operations. For example, from a point of initial lodging (seaport, border post, etc.) in addition to improving connectivity through infrastructure, through all relevant transit points to final destination. RADDEx documents, and procedures, countries in East Africa have was first installed at the Malaba border post between the also recently electronically interconnected their customs two countries, and enabled the sharing of data between the systems to facilitate trade. border-crossing point and the main transit port of Mombasa Traders typically lose a great deal of time because in Kenya. The border management requirements of the two agencies in each country re-enter trade-related information countries already had in common several data elements. For in their computer systems for customs and other border- example, for Uganda transit declarations in Kenya 38 data control purposes. Re-entering data also makes the process elements were already captured in Kenya with the declarant vulnerable to the risk of input errors and fraud; border adding or modifying only three elements (including declarant’s management measures to combat this risk can further name) in Uganda. RADDex has led to significant time delay the clearance process. Starting from a document reductions in preparation and processing the declarations by: Figure A: Change in border-crossing time at Malaba, November 2011–March 2012 30 24 —  Average outbound —  Standard deviation, average outbound —  Average inbound   18 —  Standard deviation, average inbound Hours 12 6 0 November December January February March (Cont’d) in 42 African countries, including Botswana, Ethiopia, communication between the agencies. Within the African Ghana, and Rwanda. 21 continent, the efficiency of import-export procedures is Despite rising awareness of this issue and progress the area where we see the largest differences across achieved on the customs administration front, many countries and across the three subregional country African countries still lag behind international standards groupings we present in this Report. While Mauritius, the in terms of the efficiency, cost, and timeliness of best-performing country in Africa on this pillar, performs the overall clearance process, mainly because the better than Southeast Asia on average and comes in at process is still burdened with red tape and insufficient 52 | The Africa Competitiveness Report 2013 2.1: Enabling African Trade Box 3: Overcoming landlockedness: Faster border management through customs data sharing across countries (cont’d) • avoiding duplicate data entry by declarants at different The Malaba border is one of the busiest in sub-Sahara border posts, Africa, with a daily average of 650 heavy commercial trucks crossing from Kenya to Uganda. The border post • enabling pre-arrival declaration and data processing, was congested and border management agencies were • sending advance notice for document preparation, and operating near capacity. The reforms adopted at the end of 2011 promoted a change in the behavior and operational • facilitating the verification. arrangements of the logistics service providers that could be made possible only through IT developments. Together, the However, for maximum benefit, the system has been reforms at the border post between Kenya and Uganda have complemented by and been part of other reforms that include resulted in some of the shortest border crossing times in sub- improved risk management and better coordination between Saharan Africa (Figure A). The figure shows the dramatic fall in agencies when required, vetting clearing agents, streamlining border dwell times when the cocktail of measures took effect traffic flow, and imposing strict parking rules for truck drivers in late 2011 into early 2012. Average border dwell times per to decongest the customs control zone. The system for truck fell from over 12 hours to about 3 hours. managing the physical movement of traffic through the border IT can certainly help to improve transit for landlocked post is called the Customs Reconciliation System (CURES). It countries, but it is by no means a panacea. Several was developed in-house by the Uganda Revenue Authority to complementary measures are also needed, and IT is often capture information on the physical movement of trucks and the last to be put into place so as not to substitute for real containers. Using the CURES system, the authorities are able reforms. Done properly, reforms and judicious automation can to keep track of trucks and cargo entering and leaving the significantly reduce the resources required for infrastructure control zone. improvements. Source: Contributed by the World Bank, International Trade Department. a solid 29th out of 132 countries (see Appendix B), Chad however, and overcoming them has great potential for represents the weakest performer in the entire sample. significantly bettering the situation (see Box 3). 23 Landlocked African countries do not have in place In terms of transparency at the border, the results the necessary attributes to facilitate the administrative are fairly even across the subregions, although significant processes related to importing and exporting goods. differences exist across countries, with Mauritius According to 2012 World Bank data, 22 it costs almost occupying a good 46th position and Chad ranking a US$5,000 to import a container to Rwanda, and it takes low 131st. Corruption at the border favors illegal or illicit 29 days and 8 documents. Interestingly, countries that trade and is a key impediment to participation in global have the least efficient border administration on the trade, as it contributes to making border clearance time continent are the landlocked countries, which face many unpredictable and may represent a prohibitive trade disadvantages because of their geographical situation. barrier for businesses that are committed not to pay Many efforts have been made to establish access to port bribes. Corruption at the border is a trade barrier that is infrastructure in neighboring countries through corridors, particularly damaging to the domestic economy because infrastructure projects, and international agreements. it often reflects illegal or illicit trade activities and because However, our data show that, on average, the inefficient the benefits accrue to a small group of well-connected import-export procedures in these countries constitute a public officials who abuse their power for private much more important trade barrier than limited access gain. The goals of African countries in terms of trade to ports. Indeed, on a scale of 1 to 7, these landlocked development cannot be achieved without major efforts to countries achieve a score of 2.47 for efficiency of tackle corruption at domestic borders. border administration, while access to a port receives a Transport and ICT infrastructure is another key significantly higher value of 3.59. Although the ETI is not element that contributes to the cost of trading in Africa. a tool designed to identify the binding constraints to a Relevant elements include not only the availability and country’s trade performance, it provides an indication of quality of transport infrastructure (see Chapter 2.2), but the order of magnitude and importance of the different also whether logistics and transportation services are problems. The results of the ETI support the finding that available. This availability is increasingly becoming a key improving the efficiency of border agencies and their factor for exporters, as it determines a significant share collaboration may provide higher payoffs than improving of the trade cost. For landlocked countries, access to access to international maritime networks for landlocked ports in neighboring countries is also crucial. The ETI countries in Africa. Both areas present serious obstacles, results show that landlocked countries do lag behind the African average as well as the sub-Saharan African The Africa Competitiveness Report 2013 | 53 2.1: Enabling African Trade Figure 8: The most problematic factors for exporting in Africa Access to trade �nance Identifying potential markets and buyers Dif�culties in meeting quality/quantity requirements of buyers Inappropriate production technology and skills Burdensome procedures and corruption at foreign borders High cost or delays caused by domestic transportation Access to imported inputs at competitive prices High cost or delays caused by international transportation l  Landlocked sub-Saharan Africa Tariff barriers abroad l  North Africa n  Sub-Saharan Africa Technical requirements and standards abroad Rules of origin requirements abroad 0 5 10 15 20 25 Percent Source: World Economic Forum, Executive Opinion Survey 2012; authors’ calculations. Notes: From a list of ten factors, respondents were asked to select the five most problematic for exporting in their country and rank them between 1 (most problematic) and 5. The bars in the figure show the responses weighted according to their rankings. The most problematic factors sample includes all African countries that were covered in the Executive Opinion Survey 2012. The sample includes the following groups of economies: landlocked: Botswana, Burkina Faso, Burundi, Chad, Ethiopia, Lesotho, Malawi, Mali, Swaziland, Uganda, Zambia, and Zimbabwe; North Africa: Algeria, Egypt, Libya, and Morocco; sub-Saharan Africa: Benin, Botswana, Burkina Faso, Burundi, Cameroon, Cape Verde, Chad, Côte d’Ivoire, Ethiopia, Gabon, Gambia, Ghana, Guinea, Kenya, Lesotho, Liberia, Madagascar, Malawi, Mali, Mauritania, Mauritius, Mozambique, Namibia, Nigeria, Senegal, Seychelles, Sierra Leone, South Africa, Swaziland, Tanzania, Uganda, Zambia, and Zimbabwe. average in terms of availability and quality of transport the best performer from the region, South Africa, reaches infrastructure. On the other hand, transport infrastructure the level found in Southeast Asia and ranks 26th, logistics appears to be well developed across North Africa, which services are underdeveloped in the vast majority of sub- has reached levels that are on a par with those found Saharan countries. in Southeast Asia. The three North African economies The rising importance of global value chains has tend to perform better in terms of availability of transport raised the importance of ICT connectivity for goods infrastructure (with a score of 5.1 out of 7), while the trade because producing parts of a good requires more quality of infrastructure is still insufficient (a score of exchange on product specification, production-related 3.8). Although Morocco and Egypt are well connected data, delivery times, and, in some cases, also training. to global maritime routes (16th and 17th, respectively, Furthermore, ICTs have become key for business-to- on the transshipment connectivity index), port quality in business and business-to-consumer customer relations Algeria is poor, ranked 113th. as well as for identifying buyers, which remains the Although North African economies perform second most important barrier to exporting, according to well on the infrastructure component of the ETI, the data on the most problematic factors for trade obtained assessment of logistics services does not keep up with from the World Economic Forum’s Executive Opinion these good results. Most African countries show room Survey (the Survey) (analyzed in detail in the next section). for improvement in the various indicators of logistics None of the countries from the region reaches the level quality, such as logistics competence and how easy and of ICT connectivity found in Southeast Asia or Latin affordable it is to arrange international shipments. Maritime America. The best-performing African country, Mauritius, services are widely available in countries of the subregion, ranks a low 79th. Although North Africa is relatively well as shown in the good results achieved on the Liner connected in international comparison, trade in landlocked Shipping Connectivity Index in Algeria (33rd), Morocco countries on the continent—and in sub-Saharan Africa (18th), and Egypt (19th). Improving the logistics services in as a whole—would benefit from better connectivity. This sub-Saharan Africa, including in the landlocked countries, could be achieved through improvements to mobile and would further reduce the cost of trade from and to this broadband penetration and a greater use of the Internet region. The World Bank estimates that reform leading to a and other ICTs by business and government. The use of more competitive transport sector could halve the cost of ICTs is important for the degree to which administrative moving staples in West Africa over 10 years. 24 Although processes related to importing and exporting can be IT 54 | The Africa Competitiveness Report 2013 2.1: Enabling African Trade Figure 9: The most problematic factors for importing in Africa Burdensome import procedures Tariffs and non-tariff barriers High cost or delays caused by international transportation Corruption at the border Domestic technical requirements and standards High cost or delays caused by domestic transportation l  Landlocked sub-Saharan Africa Crime and theft l  North Africa n  Sub-Saharan Africa Inappropriate telecommunications infrastructure 0 5 10 15 20 25 Percent Source: World Economic Forum, Executive Opinion Survey 2012; authors’ calculations. Notes: From a list of eight factors, respondents were asked to select the five most problematic for importing in their country and rank them between 1 (most problematic) and 5. The bars in the figure show the responses weighted according to their rankings. The most problematic factors sample includes all African countries that were covered in the Executive Opinion Survey 2012. The sample includes the following groups of economies: landlocked: Botswana, Burkina Faso, Burundi, Chad, Ethiopia, Lesotho, Malawi, Mali, Swaziland, Uganda, Zambia, and Zimbabwe; North Africa: Algeria, Egypt, Libya, and Morocco; sub-Saharan Africa: Benin, Botswana, Burkina Faso, Burundi, Cameroon, Cape Verde, Chad, Côte d’Ivoire, Ethiopia, Gabon, Gambia, Ghana, Guinea, Kenya, Lesotho, Liberia, Madagascar, Malawi, Mali, Mauritania, Mauritius, Mozambique, Namibia, Nigeria, Senegal, Seychelles, Sierra Leone, South Africa, Swaziland, Tanzania, Uganda, Zambia, and Zimbabwe. based, which in turn is key to making them more efficient regulations are fairly open to welcoming foreign labor and more transparent. More importantly, ICTs could and investment. contribute to overcoming the particular challenges related Last but not least, the fairly high levels of physical to being landlocked by developing the export of business security are an advantage for the African continent, in or tourism services, for example. particular when compared with Latin American countries, The overall business environment is the 4th which perform significantly less well on this dimension. subindex of the ETI. It consists of the regulatory The best-performing country, Rwanda, occupies an environment for trade-related activities, which includes excellent 15th position and is followed by Senegal at factors such as general governance indicators, 38th and Botswana at 39th. Not surprisingly, very low openness to investment, ease of hiring foreign labor, levels of security are found in some countries, such as and the availability of trade finance. A number of Nigeria (119th), Kenya (120th), and Burundi (124th). African countries have made great strides in improving their regulatory environment. For example, Botswana, THE MOST PROBLEMATIC FACTORS FOR TRADE IN Rwanda, and Mauritius—despite many differences in AFRICA their regulatory environments—have all made significant The World Economic Forum’s Survey asks top improvements in this respect and come in within the top executives to rate the main bottlenecks for exporting and 40 on this pillar. Their governments are considered by importing in their countries. Respondents were asked the business community to be more efficient than those to choose and rank in order of importance from a list of other countries in the region, and their relevant rules of factors (ten factors for exports and eight for imports) and regulations are supportive of foreign investment. those five that they believe have the highest impact on At the same time, a number of African countries still the ease of exporting and importing in the country in suffer from very poor institutions that affect their trade which they operate. For exports we included a wide performance. Chad (126th), Angola (129th), and Burundi range of factors that may inhibit export development, (130th) are the weakest performers in the region on such as supply-side constraints, technical requirements, this pillar. Key issues across the continent include the rules of origin, and administrative procedures. The import insufficient definition and protection of property rights for factors mirror the structure of the ETI to the extent physical and intellectual property, widespread corruption, possible, providing an indication of the importance of and undue influence. At the same time, countries’ The Africa Competitiveness Report 2013 | 55 2.1: Enabling African Trade the pillars of the ETI for the trading environment of these the importance of trade facilitation at multilateral and countries. bilateral levels, but also the potential of countries for These two questions concerning exports and facilitating trade through practical measures within their imports identify the most important bottlenecks to trade government’s purview. and supply-chain connectivity across the economies covered in the Survey. In addition, the results can CONCLUSIONS provide insight about the most important bottlenecks to This chapter has analyzed how African countries perform trade globally and inform multilateral trade negotiations in terms of enabling trade by using the World Economic about priority areas for liberalization. Figures 8 and 9 Forum’s Enabling Trade Index. The 31 countries covered show that the most important impediments to trade are in the 2012 edition of The Global Enabling Trade Report largely the same across the three African subregions. were included in the analysis, which covered the four Overall, insufficient access to trade finance is the most main categories of the Index: market access, border important bottleneck to increased exports (although the administration, infrastructure, and business environment. importance of this factor is less pronounced for North The analysis differentiated among three categories of Africa than for the rest of the continent), followed by the countries within the continent: North Africa, sub-Saharan difficulty in identifying potential markets and buyers. The Africa, and a subgroup of landlocked countries. limitations in access to trade finance are probably linked The results show that, although a number of African to the underdeveloped financial markets in most of the countries have facilitated market access domestically countries, as discussed in Chapter 1.1. 25 Other factors— and for their exporters abroad and have achieved high such as difficulties in meeting quality and quantity levels of physical security, they lag behind across a requirements of buyers and inappropriate production number of areas assessed by the Index. There is room technology and skills—are cited by at least 10 percent of for improvement in terms of the efficiency of import respondents among more than one subregion. and export procedures, the transparency of border The data thus corroborate findings from the administration, and the use of ICTs. Furthermore, ETI analysis above: burdensome border procedures logistics services and insufficient infrastructure add to and corruption, for example, are considered a more the cost of trading and act as a barrier to higher levels of important barrier than tariff barriers or NTMs in the regional integration. narrow sense (compliance with technical and quality By improving their performance across the standards certificates, etc.). Furthermore, the data dimensions of the ETI, African countries could better confirm the need for more regional integration: high prepare their economies to benefit from international costs or delays caused by poor domestic transportation trade. For landlocked countries, the two challenges that are considered a higher burden than those incurred need to be tackled are streamlining border administration by international transportation. This may point to to reduce the cost of procedures and delays during bottlenecks at border crossings to neighboring countries, clearance and improving the coordination of the for example, or inappropriately connected infrastructure. clearance process. Equally important is the promotion The most problematic factors for exporting yield a slightly of access and use of ICTs, which is poor not only in different priority in North Africa: similar to sub-Saharan landlocked countries but also across all of sub-Saharan Africa, identifying potential markets and buyers is listed Africa. As pointed out in other chapters of this Report, as the second most important impediment. However, countries in the region could benefit from increased difficulties in meeting quality/quantity requirements infrastructure investment in the area of ICTs. of buyers, inappropriate production technology and In the case of North Africa, transparency of border skills, and foreign technical requirements play a more administration appears to be the most important prominent role for North African countries, whereas factor limiting trade in goods in the three North African access to trade finance is considered less problematic. countries assessed—Algeria, Egypt, and Morocco. On the import side, Figure 9 confirms the results These countries could also benefit from more open from the ETI analysis: from the perception of business access to domestic and foreign markets. leaders, burdensome import procedures emerge as These improvements are necessary for countries the most important impediment to trade across the to more fully participate in global value chains, which continent, nearly on a par with tariffs and non-tariff account for a significant and rising share of trade flows, barriers in the narrow sense. The cost of international and to advance toward a higher degree of regional transportation is the third most important factor, integration. More trade integration within the region followed by corruption at the border. However, the would also contribute to higher food security across figure also reveals that border corruption is much the continent. This chapter provides information on more pronounced in landlocked Africa and North one specific set of measures that could enable African Africa than in sub-Saharan Africa. Crime and theft and countries to further benefit from trade. It is intended to poor telecommunications play a much smaller role be a motivator for change and a foundation for dialogue, throughout the continent. This result underlines not only by providing a yardstick of the extent to which countries 56 | The Africa Competitiveness Report 2013 2.1: Enabling African Trade have in place the factors that facilitate the free flow of 23 Although the ETI elements provide an indication of the potential challenges to be addressed, it has to be noted that these goods and by identifying areas where improvements are elements are highly interrelated. For example, delays in port most needed. clearance may result from issues related to administrative procedures that are captured under border administration. NOTES 24 Bromley et al. 2011. 1 IMF 2012a. 25 Access to trade finance and access to finance overall are most likely strongly correlated for two reasons. First, the availability of 2 Authors’ calculations, based on World Trade Organization time- trade finance depends on the development of the financial system. series data. Second, respondents are likely to judge the overall availability of 3 The definition of minerals follows the sector classification finance for their needs and may not clearly distinguish between developed by the International Trade Centre in their Trade the different instruments. Performance Index. In addition to crude oil and gas, this category also contains all metal ores and other minerals as well as petroleum products, liquefied gas, coal, and precious stones. The REFERENCES data used cover the years 2006 through 2010 or the most recent Ben Barka, H. 2012. Border Posts, Checkpoints, and Intra-African year available. 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Trade Performance Index, April 2012. 13 World Bank 2012b. Available at http://www.intracen. org/menus/countries.htm. 14 We have focused on the flow of trade in goods in the Index for UNCTAD. ASYCUDA (AUtomated SYstem for CUstoms Data). Available expository purposes, although we recognize that enabling in at http://www.asycuda.org/. services is also important. By circumscribing the issue clearly, the World Bank. 2008. Regional Trade in Food Staples: Prospects for Index provides a useful vehicle for analyzing policy on a clearly Stimulating Agricultural Growth and Moderating Short-Term defined part of the issue. Trade in goods accounts for upwards of Food Security Crises in Eastern and Southern Africa. Report No. 80 percent of all trade, and is therefore highly relevant. 46929-AFR. Washington, DC: World Bank. Available at https:// 15 See Browne et al. 2012. openknowledge.worldbank.org/handle/10986/7829. 16 The score of each subindex is derived as an unweighted average ———. 2011. 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The Africa Competitiveness Report 2013 | 57 2.1: Enabling African Trade Appendix A: Composition of the Enabling Trade Index 2012 This appendix provides details about the construction of SUBINDEX A: MARKET ACCESS the Enabling Trade Index (ETI). The ETI is composed of four subindexes: the market Pillar 1: Domestic and foreign market access access subindex; the border administration subindex; the A. Domestic market access transport and communications infrastructure subindex; 1.01 Tariff rate (hard data) and the business environment subindex. These 1.02 Non-tariff measures (hard data) 2 1.03 Complexity of tariffs (hard data) 3 subindexes are, in turn, composed of the nine pillars of Tariff dispersion (hard data) the ETI: domestic and foreign market access, efficiency Tariff peaks (hard data) of customs administration, efficiency of import-export Specific tariffs (hard data) procedures, transparency of border administration, Distinct tariffs (hard data) availability and quality of transport infrastructure, 1.04 Share of duty-free imports (hard data) availability and quality of transport services, availability B. Foreign market access and use of ICTs, regulatory environment, and physical 1.05 Tariffs faced (hard data) security. These pillars are calculated on the basis of both 1.06 Margin of preference in destination markets (hard data) hard data and survey data. The survey data are mainly derived from the responses to the World Economic Forum’s Executive Opinion Survey and range from 1 to 7. In addition, survey data from the SUBINDEX B: BORDER ADMINISTRATION World Bank’s Logistics Performance Index (LPI) have also been included. The hard data were collected from various Pillar 2: Efficiency of customs administration 2.01 Burden of customs procedures recognized sources, such as the World Bank, the World 2.02 Customs services index (hard data) Trade Organization (WTO), the International Trade Centre (ITC), and the United Nations Conference on Trade and Pillar 3: Efficiency of import-export procedures Development (UNCTAD). The data are described in detail 3.01 Efficiency of the clearance process 4 3.02 Time to import (hard data) in Appendix C. All of the data used in the calculation of the 3.03 Documents to import (hard data) ETI can be found in the data tables on the website of The 3.04 Cost to import (hard data) Global Enabling Trade Report 2012 (www.weforum.org/ 3.05 Time to export (hard data) getr). 3.06 Documents to export (hard data) The hard data indicators used in the ETI, as well as 3.07 Cost to export (hard data) the results from the LPI survey, are normalized to a 1-to-7 Pillar 4: Transparency of border administration scale in order to align them with the Executive Opinion 4.01 Irregular payments in exports and imports Survey results.1 Each of the pillars has been calculated 4.02 Corruption Perceptions Index (hard data) as an unweighted average of the individual component variables. The subindexes are then compounded as unweighted averages of the included pillars. In the case of the domestic and foreign market access pillar, the score in the domestic market subpillar accounts for two-thirds and the score in foreign market access accounts for one-third of the overall pillar. In the case of the availability and quality of transport infrastructure pillar, which is itself composed of two subpillars (availability of transport infrastructure and quality of transport infrastructure), the overall pillar is the unweighted average of the two subpillars. The overall ETI is then calculated as the unweighted average of the four subindexes. The variables and the composition of pillars are described below. If a variable is one of hard data, this is indicated in parentheses after the description. 58 | The Africa Competitiveness Report 2013 2.1: Enabling African Trade SUBINDEX C: TRANSPORT AND NOTES COMMUNICATIONS 1 The standard formula for converting each hard data variable to the INFRASTRUCTURE 1-to-7 scale is Pillar 5: Availability and quality of transport infrastructure country score – sample minimum A. Availability of transport infrastructure 6x ( sample maximum – sample minimum ) +1 5.01 Airport density (hard data) 5.02 Transshipment connectivity index (hard data) The sample minimum and sample maximum are the lowest and 5.03 Paved roads (hard data) highest scores of the overall sample, respectively. For those hard data variables for which a higher value indicates a worse outcome B. Quality of transport infrastructure (e.g., tariff barriers, road congestion), we rely on a normalization 5.04 Quality of air transport infrastructure formula that, in addition to converting the series to a 1-to-7 scale, 5.05 Quality of railroad infrastructure reverses it, so that 1 and 7 still correspond to the worst and best 5.06 Quality of roads possible outcomes, respectively: 5.07 Quality of port infrastructure country score – sample minimum Pillar 6: Availability and quality of transport services 6.01 Liner Shipping Connectivity Index (hard data) –6 x ( sample maximum – sample minimum ) +7 6.02 Ease and affordability of shipment 4 In some instances, adjustments were made to account for 6.03 Logistics competence 4 extreme outliers in the data. 6.04 Tracking and tracing ability 4 6.05 Timeliness of shipments in reaching 2 This indicator is not included in the pillar calculation. 4 destination  3 Complexity of tariffs is the average of the other four variables. 6.06 Postal services efficiency 6.07 GATS commitments in the transport 4 The LPI data are derived from the World Bank’s Logistics sector (hard data) Performance Index Survey, which is based on a 1-to-5 scale. LPI data were normalized to a 1-to-7 scale using the above formula in Pillar 7: Availability and use of ICTs order to align it with the Executive Opinion Survey results. 7.01 Extent of business Internet use 7.02 Mobile telephone subscriptions (hard data) 5 These variables are composite indicators comprising multiple 7.03 Broadband Internet subscribers (hard data) variables used in the World Economic Forum’s Global 7.04 Government Online Service Index (hard data) Competitiveness Index. For details, see The Global 7.05 Internet users (hard data) Competitiveness Report 2010–2011. 6 Openness to foreign participation is the average of the other four variables. SUBINDEX D: BUSINESS ENVIRONMENT Pillar 8: Regulatory environment 8.01 Property rights 5 8.02 Ethics and corruption 5 8.03 Undue influence 5 8.04 Government efficiency 5 8.05 Domestic competition 5 8.06 Efficiency of the financial market 5 8.07 Openness to foreign participation 6 Ease of hiring foreign labor Prevalence of foreign ownership Business impact of rules on FDI Openness to multilateral trade rules (hard data) 8.08 Availability of trade finance Pillar 9: Physical security 9.01 Reliability of police services 9.02 Business costs of crime and violence 9.03 Business costs of terrorism The Africa Competitiveness Report 2013 | 59 2.1: Enabling African Trade Appendix B: The Enabling Trade Index 2012: Africa and comparator economies, by pillar PILLARS 2nd pillar: 3rd pillar: 4th pillar: Efficiency of customs Efficiency of import- Transparency of border Domestic market access, Foreign market access, administration, export procedures, administration, OVERALL INDEX 1–7 (best) 1–7 (best) 1–7 (best) 1–7 (best) 1–7 (best) Country/Region Rank Score Rank Score Rank Score Rank Score Rank Score Rank Score NORTH AFRICA Morocco 64 4.08 120 3.44 31 3.80 39 4.64 41 5.09 65 3.39 Egypt 90 3.78 123 3.34 34 3.75 80 3.85 55 4.88 94 2.83 Algeria 120 3.22 117 3.55 123 1.90 116 2.92 93 4.00 120 2.41 North African average 3.69 3.45 3.15 3.81 4.66 2.88 SUB-SAHARAN AFRICA Mauritius 36 4.62 6 5.95 24 4.02 55 4.41 29 5.35 46 4.04 Rwanda 51 4.35 20 5.37 35 3.69 22 5.26 115 2.79 37 4.66 Botswana 54 4.31 19 5.41 85 2.36 34 4.74 112 3.01 35 4.75 South Africa 63 4.10 49 4.83 90 2.18 33 4.92 100 3.69 47 3.97 Namibia 75 3.92 45 4.87 59 2.96 106 3.12 103 3.49 50 3.84 Malawi 85 3.79 78 4.79 1 5.42 83 3.79 120 2.45 83 3.00 Zambia 88 3.78 33 5.11 29 3.81 63 4.24 122 2.38 85 2.98 Gambia, The 91 3.74 127 3.10 62 2.92 79 3.86 67 4.69 62 3.51 Senegal 92 3.72 111 3.63 60 2.95 88 3.70 61 4.79 74 3.10 Tanzania 94 3.69 85 4.65 12 4.64 119 2.85 78 4.40 96 2.80 Mozambique 97 3.65 79 4.77 15 4.34 87 3.71 98 3.82 81 3.03 Uganda 98 3.64 47 4.85 6 4.88 51 4.44 116 2.75 112 2.54 Ghana 99 3.59 104 4.01 80 2.50 108 3.06 75 4.44 71 3.13 Kenya 103 3.52 41 4.99 42 3.49 129 2.59 110 3.27 121 2.41 Ethiopia 106 3.49 122 3.40 18 4.08 60 4.30 119 2.63 90 2.92 Madagascar 107 3.48 87 4.58 7 4.81 130 2.57 77 4.40 110 2.56 Lesotho 113 3.41 91 4.51 27 3.93 123 2.81 108 3.31 86 2.98 Benin 115 3.39 118 3.55 84 2.39 113 2.96 94 3.99 103 2.65 Cameroon 118 3.28 116 3.56 57 3.02 92 3.50 111 3.04 109 2.56 Mali 121 3.18 105 3.97 83 2.44 117 2.90 113 2.93 119 2.43 Burkina Faso 122 3.15 107 3.94 74 2.67 102 3.29 126 1.96 98 2.78 Nigeria 123 3.13 108 3.82 127 1.55 115 2.93 106 3.41 116 2.48 Mauritania 125 3.06 115 3.58 63 2.92 127 2.78 104 3.42 118 2.43 Côte d’Ivoire 126 3.02 113 3.59 120 2.03 109 3.05 117 2.74 124 2.39 Angola 127 3.01 109 3.72 52 3.21 128 2.69 124 2.21 122 2.40 Zimbabwe 129 2.96 132 2.18 48 3.37 98 3.44 129 1.82 91 2.91 Burundi 131 2.95 36 5.06 49 3.35 125 2.79 125 2.01 128 2.21 Chad 132 2.63 124 3.28 79 2.56 120 2.84 132 1.56 131 2.01 Sub-Saharan African average 3.52 4.25 3.30 3.48 3.24 2.98 BRICs China 56 4.22 97 4.26 92 2.13 45 4.50 37 5.17 59 3.59 Brazil 84 3.79 101 4.05 68 2.82 99 3.41 101 3.69 57 3.69 India 100 3.55 130 2.77 88 2.27 70 4.10 79 4.38 84 2.99 Russian Federation 112 3.41 125 3.19 82 2.45 89 3.66 114 2.90 113 2.53 BRICs average 3.74 3.57 2.42 3.92 4.04 3.20 Latin America and the 3.88 4.99 3.66 3.86 4.27 3.22 Caribbean average Southeast Asian average 4.42 4.84 4.44 4.37 5.24 3.43 Source: World Economic Forum, 2012b. 60 | The Africa Competitiveness Report 2013 2.1: Enabling African Trade PILLARS 5th pillar: 6th pillar: Availability 7th pillar: 8th pillar: Availability and and quality of transport Availability and use of Regulatory 9th pillar: quality of transport services, ICTs, environment, Physical security, infrastructure, 1–7 (best) 1–7 (best) 1–7 (best) 1–7 (best) 1–7 (best) Country/Region Rank Score Rank Score Rank Score Rank Score Rank Score NORTH AFRICA Morocco 52 4.59 49 3.93 84 3.38 48 3.99 66 4.87 Egypt 55 4.48 51 3.91 81 3.43 58 3.78 104 3.88 Algeria 65 4.24 96 3.27 105 2.63 123 2.88 106 3.86 North African average 4.44 3.71 3.14 3.55 4.20 SUB-SAHARAN AFRICA Mauritius 40 4.86 89 3.36 79 3.49 37 4.36 56 5.02 Rwanda 124 2.95 78 3.48 111 2.46 24 4.79 15 5.97 Botswana 69 4.16 45 4.04 90 3.13 33 4.43 39 5.35 South Africa 63 4.32 26 4.45 85 3.34 36 4.36 100 4.08 Namibia 46 4.71 113 2.96 104 2.64 43 4.17 63 4.91 Malawi 107 3.26 88 3.36 130 1.93 68 3.68 71 4.79 Zambia 101 3.36 115 2.92 113 2.44 57 3.81 67 4.86 Gambia, The 78 3.85 117 2.90 100 2.81 39 4.29 50 5.17 Senegal 104 3.34 87 3.38 98 2.91 94 3.47 38 5.37 Tanzania 110 3.18 105 3.07 114 2.35 87 3.53 93 4.22 Mozambique 99 3.38 126 2.64 118 2.29 107 3.30 101 4.07 Uganda 128 2.63 95 3.30 115 2.35 73 3.62 108 3.81 Ghana 100 3.37 111 2.98 102 2.66 61 3.73 65 4.88 Kenya 87 3.71 109 3.00 95 3.00 75 3.61 120 3.57 Ethiopia 121 2.99 93 3.33 128 2.10 90 3.50 61 4.97 Madagascar 105 3.29 114 2.95 126 2.14 121 3.01 116 3.62 Lesotho 125 2.74 123 2.74 119 2.25 111 3.19 92 4.23 Benin 115 3.08 63 3.75 109 2.47 88 3.51 76 4.70 Cameroon 122 2.97 121 2.83 117 2.34 103 3.33 79 4.63 Mali 123 2.96 120 2.84 121 2.24 106 3.30 89 4.35 Burkina Faso 131 2.24 119 2.89 127 2.11 108 3.30 77 4.68 Nigeria 114 3.08 97 3.27 106 2.62 91 3.49 119 3.57 Mauritania 120 3.04 125 2.71 122 2.19 122 2.91 110 3.79 Côte d’Ivoire 113 3.11 100 3.19 107 2.53 120 3.01 113 3.68 Angola 129 2.50 127 2.52 120 2.25 129 2.60 78 4.66 Zimbabwe 116 3.07 108 3.02 123 2.16 119 3.03 83 4.59 Burundi 132 2.24 132 2.05 131 1.74 130 2.58 124 3.31 Chad 130 2.31 130 2.47 132 1.55 126 2.72 112 3.75 Sub-Saharan African average 3.24 3.08 2.45 3.52 4.45 BRICs China 53 4.49 21 4.73 72 3.60 38 4.31 62 4.95 Brazil 109 3.19 48 3.98 53 4.23 70 3.66 81 4.62 India 76 3.96 59 3.82 97 2.97 50 3.95 87 4.45 Russian Federation 56 4.46 72 3.57 42 4.64 117 3.07 107 3.84 BRICs average 4.03 4.02 3.86 3.74 4.47 Latin America and the 3.76 3.24 3.59 3.49 3.85 Caribbean average Southeast Asian average 4.42 4.38 3.88 4.17 4.63 The Africa Competitiveness Report 2013 | 61 2.1: Enabling African Trade Appendix C: Technical notes and sources for the Enabling Trade Index 2012 This appendix provides detailed information, including 1.03b Tariff peaks computation methods and sources, on all the indicators Share of tariff lines with domestic peaks (percentage) | 2011 or most recent year available that enter the Enabling Trade Index (ETI). For each This indicator is the ratio of the number of tariff lines exceeding indicator, the title appears on the first line, preceded by three times the average domestic tariff (across all products) to its number to allow for quick reference. The numbering the most favored nation (MFN) tariff schedule. The tariff schedule is equal to the total number of tariff lines for each country. These matches the one used in Appendix A. tariffs are revised on a yearly basis. Below is a description of the indicator or, in the case Source: International Trade Centre of the Executive Opinion Survey data, the full question and associated responses. 1.03c Specific tariffs Share of tariff lines with specific tariffs (percentage] | 2011 or most recent year available Pillar 1: Domestic and foreign market access This indicator is the ratio of the number of Harmonized System (HS) tariff lines with at least one specific tariff to the total number 1.01 Tariff rate of HS tariff lines. A specific tariff is a tariff rate charged on a fixed Trade-weighted average tariff rate | 2011, 2010 or most recent amount per quantity (as opposed to ad valorem taxes, which are year available based on the assessed value of the property). This indicator is calculated as a weighted average of all the applied tariff rates, including preferential rates that a country Source: International Trade Centre applies to the rest of the world. The weights are the trade patterns of the importing country’s reference group (2010 data). 1.03d Number of distinct tariffs An applied tariff is a customs duty that is levied on imports of Number of distinct tariffs for all sectors | 2011 or most recent merchandise goods. year available This indicator reflects the number of distinct tariff rates applied by Source: International Trade Centre a country on its imports across all sectors. 1.02 Non-tariff measures (included yet not part of the index) Source: International Trade Centre Index of non-tariff measures (NTMs] | 2011 or most recent year available 1.04 Share of duty-free imports This index is constructed as the average of two NTM-related Duty-free imports as a share of total imports | 2011, 2010 or variables. NTMs may take the form of quotas, charges, most recent year available discriminatory labeling, or health standards and other restrictive Share of trade, excluding petroleum, that is imported free of conditions. The variables included are the percentage of trade tariff duties, taking into account most-favored nation tariffs and affected by NTMs and the average number of notifications for preferential agreements. Tariff data are from 2011 or most recent products affected by NTMs, for products with imports larger than year available and imports data are from 2010. 0. A notification is a transparency obligation requiring member governments to report trade measures to the relevant World Source: International Trade Centre Trade Organization (WTO) body if the measures might have an effect on other members. NTMs that apply to all products are 1.05 Tariffs faced excluded from the calculations because they do not represent Trade-weighted average tariff faced in destination markets | discrimination on particular goods. Also, politically motivated 2011, 2010 or most recent year available NTMs, such as embargos, have been excluded. This indicator is calculated as the average of the applied tariff rates, including preferential rates that the rest of the world applies Source: Authors’ calculations based on International Trade Centre to each country. data Source: International Trade Centre 1.03 Complexity of tariffs Index of the complexity of tariffs | 2011 or most recent year 1.06 Margin of preference in destination markets available Index of margin of preference in destination markets | 2010 This variable is calculated as the average of the following This indicator measures the percentage by which particular indicators: tariff dispersion (1.03a), tariff peaks (1.03b), specific imports from one country are subject to lower tariffs than the tariffs (1.03c), and number of distinct tariffs (1.03d). See below for most-favored nation (MFN) rate. It is calculated as the average the description of the single underlying indicators. of two components: (1) the trade-weighted average difference between the MFN tariff and the most advantageous preferential 1.03a Tariff dispersion duty (advantage score), and (2) the trade-weighted average of the Standard deviation of tariff rates | 2011 or most recent year ratios of the advantageous score to the tariff level. This allows the available indicator to capture both the absolute and the relative margin of This indicator reflects differences in tariffs across product preference. categories in a country’s tariff structure. The variance is calculated Source: International Trade Centre across all the tariffs on imported merchandise goods, at the 6-digit level of the Harmonized Schedule. Source: International Trade Centre 62 | The Africa Competitiveness Report 2013 2.1: Enabling African Trade Pillar 2: Efficiency of customs administration 3.03 Documents to import Number of all documents required to import goods | 2011 2.01 Burden of customs procedures This variable takes into account all documents required to import How would you rate the level of efficiency of customs the goods that are recorded. It is assumed that the contract procedures (related to the entry and exit of merchandise) in has already been agreed upon and signed by both parties. your country? [1 = extremely inefficient; 7 = extremely efficient] Documents include bank documents, customs declaration and | 2010, 2011 clearance documents, port filing documents, import licenses, and other official documents exchanged between the concerned Source: World Economic Forum, Executive Opinion Survey 2010, parties. Documents filed simultaneously are considered different 2011 documents but with the same time frame for completion. 2.02 Customs services index Source: The World Bank, Doing Business 2012 Extent of services provided by customs authorities and related agencies | 2009 or most recent year 3.04 Cost to import This variable is based on 15 Global Express Association Cost (US$ per container) associated with all the procedures customs barriers survey questions capturing different aspects required to import goods | 2011 of the services offered by customs and related agencies. The This variable measures the fees levied on a 20-foot container in services included are the following: clearance of shipments US dollars. All the fees associated with completing the procedures via electronic data interchange; separation of physical release to export or import the goods are included. These include costs of goods from the fiscal control; full-time (24 hours/7 days a for documents, administrative fees for customs clearance and week) automated processing; customs working hours adapted technical control, terminal handling charges, and inland transport. to commercial needs; fee for services in normal service hours; The cost measure does not include tariffs or trade taxes. Only inspection and release of goods arriving by air by the operator’s official costs are recorded. facility; automated risk assessment as primary basis for physical Source: The World Bank, Doing Business 2012 examination of shipments; multiple inspections (inspections by agencies other than customs), and the promptness of 3.05 Time to export those inspections; exemptions from full customs formalities for shipments of minimal value; exemptions from a duties and taxes Number of days necessary to comply with all procedures for shipments of minimal value; clearance of shipments by a required to export goods | 2011 third party; appeal of customs decisions to a higher level or an The time calculation for a procedure starts from the moment it independent tribunal; and use of reference prices or arbitrary is initiated and runs until it is completed. If a procedure can be uplifts to invoice values. The maximum score an economy can accelerated for an additional cost, the fastest legal procedure is obtain is 12. chosen. It is assumed that neither the exporter nor the importer wastes time and that each commits to completing each remaining Source: Global Express Association procedure without delay. Procedures that can be completed in parallel are measured as simultaneous. The waiting time between procedures—for example, during unloading of the cargo—is Pillar 3: Efficiency of import-export procedures included in the measure. 3.01 Efficiency of the clearance process Source: The World Bank, Doing Business 2012 Efficiency of the clearance process by customs and border control agencies [1 = very low; 5 = very high] | 2012 3.06 Documents to export This variable assesses the effectiveness and efficiency of the Number of documents required to export goods | 2011 clearance process by customs and other border control agencies This variable takes into account all documents required to in the eight major trading partners of each country. Respondents export the goods are recorded. It is assumed that the contract to the Logistics Performance Index (LPI) survey were asked has already been agreed upon and signed by both parties. to evaluate the effectiveness and efficiency of clearance in Documents include bank documents, customs declaration and the country in which they work, based on their experience in clearance documents, port filing documents, import licenses, international logistics, on a 1-to-5 scale compared with generally and other official documents exchanged between the concerned accepted industry standards or practices. parties. Documents filed simultaneously are considered different documents but with the same time frame for completion. Source: The World Bank, Logistics Performance Index 2012 Source: The World Bank, Doing Business 2012 3.02 Time to import Number of days necessary to comply with all procedures 3.07 Cost to export required to import goods | 2011 Cost (US$ per container) associated with all the procedures The time calculation for a procedure starts from the moment it required to export goods | 2011 is initiated and runs until it is completed. If a procedure can be This variable measures the fees levied on a 20-foot container in accelerated for an additional cost, the fastest legal procedure is US dollars. All the fees associated with completing the procedures chosen. It is assumed that neither the exporter nor the importer to export or import the goods are included. These include costs wastes time and that each commits to completing each remaining for documents, administrative fees for customs clearance and procedure without delay. Procedures that can be completed in technical control, terminal handling charges, and inland transport. parallel are measured as simultaneous. The waiting time between The cost measure does not include tariffs or trade taxes. Only procedures—for example, during unloading of the cargo—is official costs are recorded. included in the measure. Source: The World Bank, Doing Business 2012 Source: The World Bank, Doing Business 2012 Pillar 4: Transparency of border administration 4.01 Irregular payments in exports and imports In your country, how common is it for firms to make undocumented extra payments or bribes connected with imports and exports? [1 = common; 7 = never occurs] | 2010, 2011 Source: World Economic Forum, Executive Opinion Survey 2010, 2011 The Africa Competitiveness Report 2013 | 63 2.1: Enabling African Trade 4.02 Corruption Perceptions Index 5.06 Quality of roads Index of the perceived level of public-sector corruption [0 = How would you assess roads in your country? [1 = extremely very high; 10 = very low] | 2011 (Note that the information used underdeveloped; 7 = extensive and efficient by international is based on survey data gathered between December 2009 and standards] | 2010, 2011 September 2011) Source: World Economic Forum, Executive Opinion Survey 2010, The Corruption Perceptions Index score relates to perceptions 2011 of the degree of public-sector corruption as seen by business people and country analysts and ranges between 0 (high) and 10 (low). 5.07 Quality of port infrastructure How would you assess port facilities in your country? [1 = Source: Transparency International extremely underdeveloped; 7 = well-developed and efficient by international standards]. For landlocked countries, this measures the ease of access to port facilities and inland Pillar 5: Availability and quality of transport waterways | 2010, 2011 infrastructure Source: World Economic Forum, Executive Opinion Survey 2010, 5.01 Airport density 2011 Number of airports per million population | 2010 Number of airports with at least one scheduled flight in 2010 per Pillar 6: Availability and quality of transport services million population Source: International Air Transport Association, SRS Analyser 6.01 Liner Shipping Connectivity Index Quantity of services provided by liner companies (maximum 5.02 Transshipment connectivity index value in 2004 = 100) | 2011 or most recent Type of transshipment connections available to shippers from This indicator captures how well countries are connected to each country/economy on bilateral routes [0 = low connectivity; global shipping networks. It is based on five components of 100 = high connectivity] | 2011 the maritime transport sector: number of ships, their container- carrying capacity, maximum vessel size, number of services, and This index aims at reflecting the geographical aspects of the number of companies that deploy container ships in a country’s liner service supply. In the absence of direct liner shipping ports. For each component, a country’s value is divided by the between two countries, the cargo will have to be transshipped maximum value of each component in 2004, the five components in a port of a third or even fourth country in order to reach the are averaged for each country, and the average is divided by the destination country. The index score is the weighted sum of the maximum average for 2004 and multiplied by 100. The index four connection types: the number of first-order connections generates a value of 100 for the country, with the highest average (connection without transshipment) multiplied by 1, the number index achieved in 2004. of second-order connection (connection with one transshipment) multiplied by 0.5, the number of third-order connections Source: United Nations Conference and Trade and Development (connections with two transshipments) multiplied by 0.33, and the number of fourth-order connections (connection with three 6.02 Ease and affordability of shipment transshipments) multiplied by 0.25. Where the weights represent Ease of arranging competitively priced international shipments the efficacy of the connections, Landlocked countries are [1 = very low; 5 = very high] | 2012 excluded from the index calculation. This variable assesses the ease and affordability associated with Source: United Nations Conference and Trade and Development arranging international shipments. Respondents to the Logistics Performance Index (LPI) survey were asked to evaluate the ease 5.03 Paved roads and affordability associated with arranging international shipments Paved roads as a percentage of total roads | 2008 or most to or from eight countries (major trading partners) with which recent year available they conduct business. Performance was evaluated using a 5-point scale (1 for the lowest score, 5 for the highest), based on Paved roads are those surfaced with crushed stone (macadam) their experience in international logistics and in accordance with and hydrocarbon binder or bituminized agents, with concrete, generally accepted industry standards or practices. or with cobblestones. This indicator shows paved roads as a percentage of all the country/economy’s roads, measured in Source: The World Bank, Logistics Performance Index 2012 length. Source: The World Bank, World Development Indicators Online 6.03 Logistics competence (retrieved on December 23, 2011); national sources Competence and quality of logistics services (e.g., transport operators, customs brokers) [1 = very low; 5 = very high] | 2012 5.04 Quality of air transport infrastructure This variable evaluates the competence of the local logistics How would you assess passenger air transport infrastructure industry. Respondents to the Logistics Performance Index in your country? [1 = extremely underdeveloped; 7 = extensive (LPI) survey were asked to evaluate the competence of the and efficient by international standards] | 2010, 2011 local logistics industry in the eight countries (major trading partners) with which they conduct business. Performance was Source: World Economic Forum, Executive Opinion Survey 2010, evaluated using a 5-point scale (1 for the lowest score, 5 for the 2011 highest), based on their experience in international logistics and in accordance with generally accepted industry standards or 5.05 Quality of railroad infrastructure practices. How would you assess the railroad system in your country? Source: The World Bank, Logistics Performance Index 2012 [1 = extremely underdeveloped; 7 = extensive and efficient by international standards] | 2010, 2011 Source: World Economic Forum, Executive Opinion Survey 2010, 2011 64 | The Africa Competitiveness Report 2013 2.1: Enabling African Trade 6.04 Tracking and tracing ability 7.02 Mobile telephone subscriptions Ability to track and trace consignments [1 = very low; 5 = very Mobile telephone subscriptions per 100 population | 2010 or high] | 2012 most recent year available This variable assesses the ability to track and trace international According to the World Bank, mobile cellular telephone shipments (consignments). Respondents to the Logistics subscriptions are subscriptions to a public mobile telephone Performance Index (LPI) survey were asked to evaluate the ability service using cellular technology, which provides access to track and trace international shipments (consignments) when to switched telephone technology. Postpaid and prepaid shipping to or from eight countries (major trading partners) with subscriptions are included. This can also include analogue which they conduct business. Performance was evaluated using a and digital cellular systems but should not include non-cellular 5-point scale (1 for the lowest score, 5 for the highest), based on systems. Subscribers to fixed wireless, public mobile data their experience in international logistics and in accordance with services, or radio paging services are not included. generally accepted industry standards or practices. Source: International Telecommunication Union, ITU World Source: The World Bank, Logistics Performance Index 2012 Telecommunication/ICT Indicators Database 2011 (December 2011 edition) 6.05 Timeliness of shipments in reaching destination Frequency of shipments reaching the consignee within the 7.03 Broadband Internet subscribers scheduled delivery [1 = very low; 5 = very high] | 2012 Total broadband Internet subscribers per 100 population | 2010 This variable assesses how often shipments reach the consignee or most recent year available within the scheduled delivery time. Respondents to the Logistics The International Telecommunication Union considers broadband Performance Index (LPI) survey were asked to evaluate the to be any dedicated connection to the Internet of 256 kilobits timeliness of shipments in reaching destination when arranging per second or faster, in both directions. Broadband subscribers shipments to eight countries (major trading partners) with which refers to the sum of DSL, cable modem, and other broadband they conduct business. Performance was evaluated using a (for example, fiber optic, fixed wireless, apartment LANs, satellite 5-point scale (1 for the lowest score, 5 for the highest), based on connections) subscribers. their experience in international logistics and in accordance with Source: International Telecommunication Union, ITU World generally accepted industry standards or practices. Telecommunication/ICT Indicators Database 2011 (December Source: The World Bank, Logistics Performance Index 2012 2011 edition) 6.06 Postal service efficiency 7.04 Government Online Service Index To what extent do you trust your country’s postal system to The Government Online Service Index assesses the quality of have a friend mail a small package worth US$100 to you? [1 = government’s delivery of online services [0 = low; 1 = high] | do not trust at all; 7 = trust completely] | 2010, 2011 2012 This index captures a government’s performance in delivering Source: World Economic Forum, Executive Opinion Survey 2010, online services to the citizens. There are four stages of service 2011 delivery (Emerging, Enhanced, Transactional, and Connected). Online services are assigned to each stage according to 6.07 GATS commitments in the transport sector their degree of sophistication, from the more basic to the Index of commitments in the transport sector under the more sophisticated. In each country, the performance of the General Agreement on Trade in Services (GATS) | 2010 or most government in each of the four stages is measured as the number recent year available of services provided as a percentage of the maximum services This indicator measures the extent of commitments for trade- in the corresponding stage. Examples of services include online related services in the transportation sector under the General presence, deployment of multimedia content, governments’ Agreement on Trade in Services (GATS). It covers the following solicitation of citizen input, widespread data sharing, and use sectors: air transport services, maritime transport services of social networking. For more details about the methodology (only for non-landlocked countries), rail transport services, road employed and the assumptions made to compute this indicator, transport services, and services auxiliary to all modes of transport. please consult the UN’s Global E-Government Survey 2012’s Passenger transport has been excluded across all sectors. Only dedicated page at http://www2.unpan.org/egovkb/global_ subsectors where commitments to opening up completely have reports/12report.htm been taken into account, and the results have been weighted by Source: United Nations, UN E-Government Survey 2012: 2010 global trade data. E-Government for the People Source: International Trade Centre and authors’ calculations 7.05 Internet users Percentage of individuals using the Internet | 2010 Pillar 7: Availability and use of ICTs Internet users are people with access to the worldwide network. 7.01 Extent of business Internet use Source: International Telecommunication Union, ITU World To what extent do companies within your country use the Telecommunication/ICT Indicators Database 2011 (December Internet in their business activities (e.g., buying and selling 2011 edition) goods, interacting with customers and suppliers)? [1 = not at all; 7 = extensively] | 2010, 2011 Source: World Economic Forum, Executive Opinion Survey 2010, 2011 The Africa Competitiveness Report 2013 | 65 2.1: Enabling African Trade Pillar 8: Regulatory environment 8.05 Domestic competition Composite indicator measuring the intensity of domestic 8.01 Property rights competition and the quality of related policies from the Global Composite indicator capturing the degree of protection of Competitiveness Index 2011–2012. property rights and intellectual property from the Global This indicator is the average of eight variables: Intensity of local Competitiveness Index 2011–2012 competition: How would you assess the intensity of competition in This indicator is the average of two variables: Property rights: How the local markets in your country? (1 = limited in most industries; would you rate the protection of property rights, including financial 7 = intense in most industries); Extent of market dominance: How assets, in your country? (1 = very weak, 7 = very strong) and would you characterize corporate activity in your country? (1 = Intellectual property protection: How would you rate intellectual dominated by a few business groups; 7 = spread among many property protection, including anti-counterfeiting measures, in firms); Effectiveness of anti-monopoly policy: To what extent your country? (1 = very weak, 7 = very strong).This composite does anti-monopoly policy promote competition in your country? variable corresponds to composite indicator 1.A.1 from the Global (1 = does not promote competition; 7 = effectively promotes Competitiveness Index 2011–2012. competition); Extent and effect of taxation: What impact does the level of taxes in your country have on incentives to work or invest? Source: World Economic Forum, The Global Competitiveness (1 = significantly limits incentives to work or invest; 7 = has no Report 2011–2012 impact on incentives to work or invest); Total tax rate, defined as a combination of profit tax (% of profits), labor tax and contribution 8.02 Ethics and corruption (% of profits), and other taxes (% of profits); Number of Composite indicator assessing the level of ethical standards procedures to start a business; Time required to start a business, and corruption from the Global Competitiveness Index 2011– defined as number of days required to start a business; and 2012. Agricultural policy costs: How would you assess the agricultural This indicator is the average of two variables: Diversion of public policy in your country? (1 = it is excessively burdensome for the funds: In your country, how common is diversion of public funds economy; 7 = it balances the interests of taxpayers, consumers, to companies, individuals, or groups due to corruption? (1 = very and producers). This composite variable corresponds to indicator common; 7 = never occurs) and Public trust of politicians: How 6.A.1 from the Global Competitiveness Index 2011–2012. would you rate the level of public trust in the ethical standards Source: World Economic Forum, The Global Competitiveness of politicians in your country? (1 = very low; 7 = very high). This Report 2011–2012 composite variable corresponds to composite indicator 1.A.2 from the Global Competitiveness Index 2011–2012. 8.06 Efficiency of the financial market Source: World Economic Forum, The Global Competitiveness Composite indicator measuring the efficiency of the domestic Report 2011–2012 financial sector from the Global Competitiveness Index 2011– 2012 8.03 Undue influence This indicator is the average of five variables: Financial market Composite indicator capturing the degree of undue influence sophistication: How would you assess the level of sophistication in the judicial system and among government officials from the of financial markets in your country? (1 = poor by international Global Competitiveness Index 2011–2012. standards; 7 = excellent by international standards); Financing This indicator is the average of two variables: Judicial through local equity market: How easy is it to raise money by independence: To what extent is the judiciary in your country issuing shares on the stock market in your country? (1 = very independent from influences of members of government, citizens difficult; 7 = very easy); Ease of access to loans: How easy is it or firms? (1 = heavily influenced; 7 = entirely independent) and to obtain a bank loan in your country with only a good business Favoritism in decisions of government officials: To what extent plan and no collateral? (1 = very difficult; 7 = very easy); Venture do government officials in your country show favoritism to well- capital availability: In your country, how easy is it for entrepreneurs connected firms and individuals when deciding upon policies with innovative but risky projects to find venture capital? (1 = very and contracts? (1 = always show favoritism; 7 = never show difficult; 7 = very easy); and Strength of investor protection index favoritism). This composite variable corresponds to composite on a scale of 0–10 (best), defined as a combination of the extent indicator 1.A.3 from the Global Competitiveness Index 2011– of disclosure index (transparency of transactions), the extent of 2012. director liability index (liability for self-dealing), and the ease of shareholder suit index (shareholders’ ability to sue officers and Source: World Economic Forum, The Global Competitiveness directors for misconduct). This composite variable corresponds to Report 2011–2012 indicator 8.A from the Global Competitiveness Index 2011–2012. 8.04 Government efficiency Source: World Economic Forum, The Global Competitiveness Report 2011–2012 Composite indicator capturing the efficiency of the government from the Global Competitiveness Index 2011–2012. 8.07 Openness to foreign participation This indicator is the average of five variables: Wastefulness of government spending: How would you rate the composition of This variable is calculated as the average of four variables: public spending in your country? (1 = extremely wasteful; 7 = Ease of hiring foreign labor, Prevalence of foreign ownership, highly efficient in providing necessary goods and services); Burden Business impact of rules on FDI and Openness to multilateral of government regulation: How burdensome is it for businesses trade rules. in your country to comply with governmental administrative requirements (e.g., permits, regulations, reporting)? (1 = extremely 8.07a Ease of hiring foreign labor burdensome; 7 = not burdensome at all); Efficiency of legal To what extent does labor regulation in your country limit the framework in setting disputes: How efficient is the legal framework ability to hire foreign labor? [1 = very much limits hiring foreign in your country for private businesses to settle disputes? (1 labor; 7 = does not limit hiring foreign labor at all] | 2011, 2012. = extremely inefficient; 7 = highly efficient); Efficiency of legal framework in challenging regulations: How efficient is the legal Source: World Economic Forum, Executive Opinion Survey 2010, framework in your country for private businesses to challenge the 2011 legality of government actions and/or regulations? (1 = extremely inefficient; 7 = highly efficient); and Transparency of government 8.07b Prevalence of foreign ownership policymaking: How easy is it for businesses in your country to How prevalent is foreign ownership of companies in your obtain information about changes in government policies and country? [1 = very rare; 7 = highly prevalent] | 2010, 2011 regulations affecting your industry? (1 = impossible; 7 = extremely easy). This composite variable corresponds to composite indicator Source: World Economic Forum, Executive Opinion Survey 2010, 1.A.4 from the Global Competitiveness Index 2011–2012. 2011 Source: World Economic Forum, The Global Competitiveness Report 2011–2012 66 | The Africa Competitiveness Report 2013 2.1: Enabling African Trade 8.07c Business impact of rules on FDI 9.02 Business costs of crime and violence To what extent do rules governing foreign direct investment Does the incidence of crime and violence impose costs on (FDI) encourage or discourage it? [1 = strongly discourage FDI; businesses in your country? [1 = significant costs; 7 = no costs] 7 = strongly encourage FDI] | 2010, 2011 | 2010, 2011 Source: World Economic Forum, Executive Opinion Survey 2010, Source: World Economic Forum, Executive Opinion Survey 2010, 2011 2011 8.07d Openness to multilateral trade rules 9.03 Business costs of terrorism Openness to multilateral trade rules index [0 = lowest; 100 = Does the threat of terrorism impose costs on businesses in highest] | 2011 your country? [1 = significant costs; 7 = no costs] | 2010, 2011 This index evaluates the overall participation of countries in Source: World Economic Forum, Executive Opinion Survey 2010, multilateral trade rules or instruments (MTRs). These rules are all 2011 internationally elaborated legal standards currently regulating trade in specific areas. MTRs are primarily comprised of conventions and treaties that countries ratify or accede to, and international model laws that are incorporated into national law. The index is based on ITC’s Trade Treaties map–LegaCarta system, which analyzes the position of each country (in terms of accession/ nonaccession and incorporation/nonincorporation) regarding some 280 MTRs as well as 450 protocols or amendments overseen by 28 different international organizations. For the purposes of this index, 40 core MTRs were selected, and each was rated with a score depending on its importance and relevance to trade. The 40 core instruments belong to seven categories (contracts, customs, dispute resolution, governance, intellectual property, investment, and air transport). Each category is given an equal weight in the calculation of the index. Selection of the core instruments is based on their importance and relevance to trade and their universality. The importance and relevance to trade of an instrument is determined by taking into account several criteria including: the impact of its provisions on international trade (reduction of transactional costs, trade facilitation, harmonization, transparency, predictability, creation of a business-friendly business climate, support of private-sector activities, and encouragement of foreign direct investment), the opinion of international legal experts, and the views of the international bodies administering these instruments. Universality means that the selected MTRs can potentially be applied by all countries, notwithstanding their geographical position or economic level. For example, maritime transport conventions, however important, were not taken into account because of their weak relevance for landlocked countries; treaties dealing with securities and insider trading were not included because they do not represent a priority in countries that have not developed sophisticated financial markets. Accession to the World Trade Organization (WTO) Agreements is not taken into account in this index because WTO accession does not depend exclusively on the will of a non-member state to join the WTO. Source: International Trade Centre, based on data from the Trade Treaties map–LegaCarta database 8.08 Availability of trade finance In your country, how easy is it to obtain trade finance at affordable cost (trade credit insurance and trade credit such as letters of credit, bank acceptances, advanced payments, open account arrangements) [1 = common; 7 = never occurs] | 2010, 2011 Source: World Economic Forum, Executive Opinion Survey 2010, 2011 Pillar 9: Physical security 9.01 Reliability of police services To what extent can police services be relied upon to enforce law and order in your country? [1 = cannot be relied upon at all; 7 = can always be relied upon] | 2010, 2011 Source: World Economic Forum, Executive Opinion Survey 2010, 2011 The Africa Competitiveness Report 2013 | 67 CHAPTER 2.2 As seen in the previous chapters of this Report, Africa suffers from a pronounced infrastructure deficit. Developing Africa’s Compared with countries in other regions, African countries have a low stock of infrastructure, particularly Infrastructure for Enhanced in energy and transportation, and the potential for information and communication technologies (ICTs) has Competitiveness not been fully harnessed. Coupled with burdensome trade regulations (as noted in Chapter 2.1), these PETER ONDIEGE deficiencies have constrained gains in domestic JENNIFER MBABAZI MOYO productivity and present a critical bottleneck to more AUDREY VERDIER-CHOUCHANE regional integration. African Development Bank Against this backdrop, this chapter examines the link between infrastructure development and competitiveness in Africa in greater detail. This connection is analyzed while remembering that competitiveness is determined by a number of interrelated factors, policies, and institutional capabilities, as well as the initial conditions as discussed in Chapter 1.1. This chapter focuses on energy, transportation, and ICTs. It examines the state of infrastructure in these sectors and the challenges to infrastructure development in Africa, including its regulatory environment. It also analyzes the impact of infrastructure development on Africa’s competitiveness and provides the way forward. The chapter draws on 16 country studies undertaken by the African Development Bank (AfDB), the results of which inform the analysis, conclusions, and recommendations presented here. Inadequate infrastructure has raised the transaction costs of business in most African economies. Today African countries exhibit the lowest levels of productivity of all low-income countries and are among the least competitive economies in the world (see Chapter 1.1). Inadequate infrastructure has been estimated to shave off at least 2 percent of Africa’s annual growth.1 With adequate infrastructure, African firms could achieve productivity gains of up to 40 percent.2 Infrastructure that is sufficient and works properly is crucial for Africa’s economic integration. African economies can begin the process of deep integration if their infrastructure networks are designed in such a way as to link production centers and distribution hubs across the continent, as the networks of developed economies do. Such infrastructure will enable Africa to compete effectively, tap into regional markets, and This chapter focuses on three sectors—energy, transportation (including roads, railways, air transport, and ports), and ICTs—and is based on 16 infrastructure country studies undertaken by the African Development Bank (AfDB): Algeria, Egypt, and Morocco (North Africa); Cameroon and Chad (Central Africa); Burkina Faso, Ghana, Nigeria, and Senegal (West Africa); Ethiopia, Kenya, Tanzania, and Uganda (East Africa); and Mozambique, South Africa, and Zambia (Southern Africa). The indi- vidual country studies were prepared by the following AfDB staff: Gilbert Galibaka, Thierry Kangoye, Succès Assyongar Masra, Ralf Kruger, Audrey Verdier-Chouchane, Jennifer Mbabazi Moyo, Daniel Isooba, Jacqueline Odula, Peter Ondiege, Emílio A. F. Dava; and the following consultants: Ishmael Abeyie, John Luiz, and Thierry Urbain Yogo. The authors also gratefully acknowledge the very useful comments provided by Steve Kayizzi-Mugerwa, Director, AfDB Development Research Department; Issa Faye, Manager, AfDB Research Division; Emelly Mutambatsere and Anthony Simpasa, AfDB Development Research Department; and the above-mentioned individual country study authors. The Africa Competitiveness Report 2013 | 69 2.2: Developing Africa’s Infrastructure for Enhanced Competitiveness benefit from globalization through investment and competitiveness; the following section focuses on the trade. To achieve this calls for the construction of an state of Africa’s infrastructure and the challenges this efficient and secure national and cross-border physical presents, and on its regulatory environment in these infrastructure as well as a coherent system of regulation three sectors. The final section provides the conclusion for business transactions.3 and way forward. Infrastructure is also critical for the promotion of inclusive and sustainable growth. Rural infrastructure— THE IMPACT OF INFRASTRUCTURE DEVELOPMENT notably feeder roads and transmission lines that connect ON AFRICA’S COMPETITIVENESS rural communities to national grids—enable individuals, Well-developed energy, transportation, and households, communities, and small businesses to communication infrastructure networks are a prerequisite embark on income-generating activities thanks to for linking less-developed communities to markets in a improved access to electricity and links to markets. The sustainable way. Effective modes of transport—including use of renewable energy or environment-friendly sources quality roads, railroads, air transport, and ports—enable of energy—including solar, wind, geothermal, and entrepreneurs to get their goods and services to markets hydropower, with all of which Africa is well endowed— in a secure and timely manner, facilitate the movement would contribute to making growth sustainable. of workers to the workplace, and encourage foreign A considerable investment in infrastructure that direct investment. Economies also depend on electricity uses innovative sources of funding is needed to address supplies that are free from interruptions and shortages Africa’s low level of competitiveness (see Chapter 1.1). so that businesses and factories can work unimpeded. In Indeed, the Programme for Infrastructure Development addition, a solid and extensive telecommunication network in Africa (PIDA) estimates that Africa will need to invest allows for a rapid and free flow of information, which up to US$93 billion annually until 2020 for both capital increases overall economic efficiency by ensuring that investment and maintenance.4 Given the substantial businesses can communicate and make timely decisions, amounts involved, governments will need to be taking into account all available relevant information. innovative in the search for sustainable approaches to Infrastructure, competitiveness, and the cost of infrastructure development as well as financing. The doing business private sector will need to play an increasingly important Empirical research has shown that there is a positive role. Governments will do well to create conditions where relationship between infrastructure investment and private-sector engagement is encouraged, probably economic growth. Several researchers demonstrate through public-private partnerships (PPPs). Efficiency the beneficial impact of infrastructure investments on gains from performance improvements in infrastructure growth in African economies; this occurs because solid provision are themselves a significant source of finance,5 infrastructure accelerates annual growth convergence and the development of infrastructure bonds as a rates by as much as 13 percent and also increases financing vehicle will need to be encouraged. per capita annual growth by almost 1 percent.6 In fact, Adequate maintenance plans are prerequisites some of this work argues that the strongest impact for sustainable infrastructure. Maintenance is not only comes from telecommunications, followed by roads corrective but also preventative because it inspects and electricity. For example, it has been estimated that assets and reduces the risk of failure. Costs associated investing an additional 1 percent of gross domestic with statutory maintenance can be substantial—even product (GDP) in transportation and communications on considerably larger than the value of the asset—yet a sustained basis increases the GDP per capita growth providing for these maintenance costs is crucial. Without rate by 0.6 percent.7 adequate maintenance, infrastructure deteriorates Productivity growth—and thus increasing quickly and is unsustainable. competitiveness—is higher in countries with an adequate Indeed, the longer-term performance of the ICT supply of infrastructure services.8 Infrastructure sector should be reviewed in light of the adequacy of therefore plays a critical role in enhancing a country’s maintenance plans. Thus far, ICT sector performance competitiveness and in easing the cost of doing has been good, albeit from a low base. It is noteworthy, business,9 as discussed in Chapter 1.1. The flipside of however, that although ICT infrastructure is relatively new, this relationship is that, in countries with inadequate it could rapidly become obsolete and downgraded if infrastructure, firms are burdened with high costs as maintenance plans are not in place and implemented. It is they try to provide infrastructure themselves, suffer therefore critically important to make adequate provisions potentially huge inefficiencies, or are simply unable to to ensure maintenance is undertaken in a timely manner, conduct activities for which infrastructure services are thereby making gains from ICTs sustainable. a prerequisite. The beneficial effects of infrastructure on The rest of this chapter will elaborate on issues of competitiveness are captured in Box 1. African infrastructure and competitiveness, focusing on the energy, transportation, and ICT sectors. The next section considers the impact of infrastructure on country 70 | The Africa Competitiveness Report 2013 2.2: Developing Africa’s Infrastructure for Enhanced Competitiveness Box 1: Infrastructure development indicators and competitiveness, selected countries (2012–13) Infrastructure, through improved connectivity, changes infrastructure scores were obtained by averaging the the incentive structure and impacts market prices, thereby scores of the two subpillars of the infrastructure pillar of improving consumer welfare and reducing the cost of the Global Competitivenes Index (GCI): Transport doing business. It is well documented in the literature that infrastructure (encompassing the quality of overall infrastructure development reduces the asymmetry of infrastructure, the quality of roads, the quality of railroad information and agricultural market efficiencies in Africa. infrastructure, the quality of port infrastructure, the quality Improved access to price information through better transport of air transport infrastructure and the available airline seat or ICT networks reduces marketing costs, improves farm-gate kilometers) and Electricity and telephony infrastructure prices and lessens their volatility, and enhances productive (encompassing the quality of electricity supply, mobile efficiency.1 telephone subscriptions and fixed telephone lines). The This box illustrates the reciprocal relationship that scores range from 1 to 7, with 7 being the best outcome. competitiveness in countries has with infrastructure. Overall As shown in Figures A1 and A2, weak general Figure A1: Cost to export 6,000 TCD 5,000 Cost to export (US$ per container) 4,000 UGA 3,000 ZMB BFA ETH KEN BRA 2,000 ZAF NGA CMR DZA USA 1,000 IND TZA SEN GHA DEU EGY MAR HKG MOZ 0 1 2 3 4 5 6 7 Overall GCI infrastructure score Figure A2: Cost to import 9,000 TCD 7,500 Cost to import (US$ per container) 6,000 4,500 BFA ZMB UGA 3,000 ETH CMR BRA KEN ZAF SEN 1,500 NGA MOZ IND USA TZA GHA DZA MAR DEU EGY HKG 0 1 2 3 4 5 6 7 Overall GCI infrastructure score Sources: World Economic Forum, 2012; World Bank Doing Business Database 2012/13. Notes: GCI = Global Competitiveness Index. Country labels are as follows: DZA (Algeria), BRA (Brazil), BFA (Burkina Faso), CMR (Cameroon), TCD (Chad), EGY (Egypt), ETH (Ethiopia), DEU (Germany), GHA (Ghana), HKG (Honk Kong SAR), IND (India), KEN (Kenya), MAR (Morocco), MOZ (Mozambique), NGA (Nigeria), SEN (Senegal), ZAF (South Africa), Tanzania (TZA), Uganda (UGA), USA (United States), and ZMB (Zambia). (Cont’d) The Africa Competitiveness Report 2013 | 71 2.2: Developing Africa’s Infrastructure for Enhanced Competitiveness Box 1: Infrastructure development indicators and competitiveness, selected countries (2012–13) (cont’d) infrastructure impedes trade because it results in increased efficient customs procedures (Figure B1). Access to energy costs. is substantially improved in countries with a higher quality of Countries with better infrastructure tend to have more electricity supply (Figure B2). Figure B1: Impact of customs procedures 7 Burden of customs procedures (1–7, best) HKG 6 5 SEN DEU MAR UGA EGY USA BFA ZMB ZAF 4 CMR IND MOZ GHA TZA NGA ETH KEN 3 BRA TCD DZA 2 1 2 3 4 5 6 7 Overall GCI infrastructure score Sources: World Economic Forum, Executive Opinion Survey 2010–2011 weighted average; World Bank data, available at http://data.worldbank.org/indicator/IC.ELC.TIME. Notes: The burden of customs procedures measures business executives’ perceptions of their country’s efficiency of customs procedures, and is computed using answers to the following question: “How would you rate the level of efficiency of customs procedures (related to the entry and exit of merchandise) in your country? [1 = extremely inefficient; 7 = extremely efficient].� GCI = Global Competitiveness Index. For country labels, see the notes to Figures A1 and A2. Figure B2: Impact of access to electricity 300 Time to get electricity (days to get a connection) NGA 250 ZAF 200 BFA DZA 150 KEN SEN MOZ ZMB TZA 100 UGA ETH GHA TCD IND BRA USA CMR MAR EGY 50 HKG DEU 0 1 2 3 4 5 6 7 Quality of electricity supply Sources: World Economic Forum, Executive Opinion Survey 2011–2012 weighted average; World Bank data, available at http://data.worldbank.org/indicator/IC.ELC.TIME. Notes: Quality of electricity supply measures business executives’ perceptions of their country’s efficiency of electricity supply in answer to the Executive Opinion Survey question “How would you assess the quality of the electricity supply in your country (lack of interruptions and lack of voltage fluctuations)? [1 = insufficient and suffers frequent interruptions; 7 = sufficient and reliable].� GCI = Global Competitiveness Index. For country labels, see the notes to Figures A1 and A2. (Cont’d) 72 | The Africa Competitiveness Report 2013 2.2: Developing Africa’s Infrastructure for Enhanced Competitiveness Box 1: Infrastructure development indicators and competitiveness, selected countries (2012–13) (cont’d) The availability of the latest technologies has a positive impact on both the use of mobile cellular phones and on Internet use in developing countries (Figures C1 and C2). Figure C1: Impact of the latest technology: Access to mobile phones 250 Mobile phone subscriptions/100 population HKG 200 150 ZAF DEU BRA EGY MAR DZA USA 100 GHA SEN IND TZA ZMB KEN NGA 50 TCD CMR UGA BFA MOZ ETH 0 3 4 5 6 7 Availability of latest technologies Figure C2: Impact of the latest technology: Access to the Internet 35 Internet subscribers/100 population (fixed broadband) DEU 30 HKG USA 25 20 15 10 BFA BRA ETH TZA 5 ZMB CMR DZA GHA EGY MAR IND ZAF TCD KEN 0 MOZ NGA UGA SEN 3 4 5 6 7 Availability of latest technologies Sources: World Economic Forum’s Executive Opinion Survey 2011–2012 weighted average; ITU 2012. Notes: Availability of latest technology is assessed through a score (positively ranged) that is computed from answers to the Executive Opinion Survey question “To what extent are the latest technologies available in your country? [1 = not available; 7 = widely available].“ GCI = Global Competitiveness Index. For country labels, see the notes to Figures A1 and A2. Sources: Adapted from the World Economic Forum data platform Note (http://www.weforum.org) and World Development Indicators 1 Aker, 2008; Aker and Mbiti, 2010; Muto and Yamano, 2009. online statistics (http://databank.worldbank.org). The Africa Competitiveness Report 2013 | 73 2.2: Developing Africa’s Infrastructure for Enhanced Competitiveness in energy and transport—are estimated to account for Box 2: Planned infrastructure projects and about 30 percent of the productivity handicap faced expenditures in selected African countries by Kenyan firms,10 which are burdened with high costs as they attempt to provide the missing infrastructure or • Kenya: Under Vision 2030 priorities, infrastructure have to forego the activities that require infrastructure. sector financial requirements are estimated to rise In Central African countries, such as Cameroon, from 398.2 billion Kenya shillings (KES) in 2012/13 infrastructure constraints account for about 42 percent to KES 486 billion in 2014/15. The government has prioritized the development of high-quality energy of the productivity gap faced by firms.11 and ICT infrastructure, and established the National The transportation sector Construction Authority in 2012 to enhance the efficiency and effectiveness of government service Reliable transport infrastructure, in all of its four delivery. subsectors—roads, railways, air transport, and Projects include the construction of over 600 ports—is an essential component of all countries’ kilometers of roads, the expansion of two international competitiveness. It is particularly crucial for landlocked airports, the development and expansion of Mombasa Port, the construction of the new Lamu Port, and new countries, for which it is a prerequisite to opening up railway lines. Energy projects emphasize renewable production zones. Reliable transport must be in place energy to increase generation capacity and access to for companies to import and export goods, to fill orders, energy. The ICT projects will include the development and to obtain supplies. For example, 78 percent of of Konza Techno City, which is expected to contribute 2.8 percent of GDP through ICT projects. They also Burkina Faso’s trade is carried by four main roads and include the creation of 30 ICT centers, called digital rail corridors linking the country to the gateway ports in village projects or PASHA centers. Benin, Côte d’Ivoire, Ghana, and Togo.12 Eighty percent • South Africa: Infrastructure plans are estimated at 3.2 of the economic activity in Senegal is concentrated in trillion South African rand (R), of which about a quarter Dakar.13 And in South and East Africa, port congestion are being financed and implemented; the remaining and shipment delays undermine the ability to acquire three-quarters are under assessment. Sixty percent imported production inputs, with resulting production of funding for infrastructure is allocated to electricity projects, and the cost of providing energy and losses and higher production costs.14 transportation for these planned electricity projects is Improvements in infrastructure therefore have the 18 percent of the development costs. potential to open up production zones and facilitate • Tanzania: The 2012/13 budget for infrastructure product delivery while reducing their costs. The lack includes (1) 498.9 billion Tanzania shillings (T Sh) for of a good road network linking the Casamance region electricity; (2) T Sh 1,382.9 billion for transportation, to the other economic zones is hampering the region’s and (3) T Sh 4 billion for ICTs. Moreover, the government will implement the construction of a gas enormous agricultural and horticultural production pipeline from Mtwara to Dar es Salaam with a Chinese potential. Accordingly, Senegal has embarked on an loan of US$1,225.3 million. ambitious program of infrastructure development to • Zambia: The 2013 Zambian budget prioritizes roads, foster competitiveness. The program includes the current rail, and power generation. The government is making flagship road infrastructure project, which involves the efforts to enhance domestic resource mobilization and construction of a 32-kilometer toll highway that will link create the fiscal space needed to support investment Dakar to Diamnadio in the western part of the country. in infrastructure and human capital development, and to improve public service delivery. Domestic revenue This road is part of the Dakar–Njaména–Djibouti corridor, is expected to increase from 19.0 percent of GDP in and will serve the Blaise Diagne International Airport, 2012 to 20.1 percent by 2015. Zambia has also issued currently under construction. a US$750 million Eurobond to raise development The list that follows looks at each of the subsectors finance at one of the lowest prices for a debut issue in sub-Saharan Africa. The funds will be used for energy of transportation in more detail: infrastructure (US$255 million, or 34.0 percent) and • Roads: Infrastructure, particularly roads, facilitates road and rail transport infrastructure (US$430 million, or 57.3 percent). the entry of new firms into the formal sector. Recent research shows a positive correlation between Source: AfDB, forthcoming. better road infrastructure and the number and size of startups.15 Firm-level evidence suggests that more companies offering the same product in one location leads to lower prices and higher productivity. Good roads increase both the number of new firms entering a given location and the geographic size of the relevant market.16 An The energy sector assessment of the impact of the new rural road Infrastructure constraints, particularly in transport and from Daleti to Oda Bildingulu in Ethiopia showed energy, are a significant productivity handicap that how incentives for farmers changed and resulted in undermines competitiveness. In East African countries, a sixfold increase in the production of sesame over such as Kenya, infrastructure shortcomings—mainly 74 | The Africa Competitiveness Report 2013 2.2: Developing Africa’s Infrastructure for Enhanced Competitiveness the 2003/04 to 2007/08 period.17 The ICT sector Development of an adequate-quality ICT infrastructure • Rail transport: Inefficiencies and an inadequate network will enhance productivity, reduce railroad network contribute to high costs of communication costs, and promote financial inclusion doing business in the continent. This area is and regional integration. To this end, AfDB-supported being addressed by several African countries. projects such as the Eastern Africa Submarine System For instance, Zambia’s focus is to improve the (EASSy) cable project (a submarine system of fiber- operational efficiency of the Zambia Railways optic cables connecting Africa to the rest of the world) and the TAZARA Railway (which connects Dar and the Central African Backbone Program (a system es Salaam in Tanzania with Kapiri Mposhi in of fiber-optic cables linking African countries to each Zambia), and promote new railway developments other) are meant to enhance quality and reduce using the PPP framework. The government also communication prices in mobile backhaul and mobile intends to extend the Zambia Railways network to telephony. Such projects facilitate regional integration the Botswana Railways network via the planned and improve outreach to peri-urban and rural areas. Kazungula Bridge, which will facilitate the flow of An assessment of the impact of EASSy, for example, goods and labor. In South Africa, problems with suggests a reduction of wholesale bandwidth prices by rail transport have resulted in an overuse of road at least 60 percent in Tanzania and up to 90 percent transport. As a result, the World Bank’s Doing in Kenya; an increase of 150 percent to 200 percent in Business Database indicates a drop in the country’s international bandwidth utilization within less than six overall ranking from 35 to 39 between 2008 and months of submarine cable availability in these countries, 2013.18 including penetration in rural and un-served areas; and • Air transport: The importance of air transport, high mobile phone penetration rates, which have also particularly for landlocked countries, cannot be improved access to banking services for the unbanked, overemphasized. It is imperative that countries as evidenced by the deployment of the mobile payment enhance this sector’s development to improve system M-PESA in Kenya (see Box 7). The projects may connectivity and safety and to reduce costs in also contribute to the use of ICT applications such as order to promote intra-African and global trade. e-government, e-education, and e-health. Air transport has to be enhanced not only by Improving infrastructure development and the amount and quality of physical infrastructure competiveness: Evidence from selected but also, even more importantly, by the way it African countries is operated with regard to air-traffic control and To address the infrastructure gap, governments—in ground-air communications, which are inadequate in collaboration with the private sector and development much of the region and need to be boosted.19 partners—have put in place policy reforms, programs, • Ports: Enhancing port infrastructure substantially projects, and the necessary financial resources to reduces the cost of production for enterprises. improve on the quantity and quality of infrastructure Accordingly, in West Africa, for instance, as a result (see Box 2). This section highlights a few ongoing and of the recent Dakar Port Container Development planned infrastructure projects and committed resources Project, Senegal has been able to expand its in selected African countries. It is expected that the exposure to international markets. Indeed, recent combination of these efforts will contribute to improving statistics indicate that the volume of the port traffic countries’ productivity and hence their competitiveness has increased by 13.37 percent over the period in the coming years. 2007–11. The average waiting time for ships is Regional infrastructure development: estimated to have dropped from 15 hours to 2 Lessons learned hours, and for trucks from several hours to less In the transportation sector, the AfDB emphasizes the than 30 minutes, significantly reducing the cost of expansion of regional corridors, trunk and rural roads, production for enterprises.20 The port enhancement railways, and urban programs that support or open up project will increase berth capacity by 50 percent economic hubs. In the energy sector, the AfDB focuses and vessel productivity from 20 moves per hour to on energy efficiency, clean and renewable energy, 61 moves per hour. Moreover, the port will operate and the support of regional power pools. In the ICT the terminal continuously, on a 24-hour-a-day sector, priority is given to broadband and backbone basis. Costs have also been reduced by improving infrastructure that connect countries to one another “soft� port infrastructures because the country and to the rest of the world (see Appendix A for some has implemented an electronic customs clearance of the projects in which the AfDB is involved). The AfDB system and liberalized the container shipping also finances infrastructure development geared toward market.21 promoting competitiveness in African countries through regional integration. The lessons learned from the The Africa Competitiveness Report 2013 | 75 2.2: Developing Africa’s Infrastructure for Enhanced Competitiveness Box 3: Regional integration as a catalyst to Africa’s economic transformation and competitiveness Regional integration is essential to achieving structural considered in project design. One example where this transformation in African economies, which can boost both approach has been successful is the Kazungula Bridge, productivity per worker and living standards. The regional a multinational project linking Botswana and Zambia over integration agenda incorporates a range of objectives, which the Zambezi River. include improving African producers’ access to regional • Capacity and skills are critical. At the government and markets and integrating them into more productive regional regional economic community levels, staff who have the value chains; integrating financial markets to enable capital to necessary skills to negotiate and deliver projects are flow more readily among national economies; and ensuring essential. Examples of projects that have had access to the free movement of goods, services, labor, and capital. All the necessary capacity and skills include the Tripartite these objectives require investments at a number of levels. Capacity Building Program, as well as financial and The African Development Bank (AfDB)’s Regional monetary integration programs in the member countries Integration Strategy (RIS) for 2009–2012 focuses on regional of the Common Market for Eastern and Southern Africa infrastructure, trade, and regional public goods. Lessons and the Economic Community of Central African States. learned in implementing the AfDB’s regional program include: • Hard and soft infrastructure must be blended. For • Regional projects are complex but transformational. For example, cross-border road projects must be supported example, the Ethiopia–Kenya Power Interconnector and the by trade facilitation measures such as the One Stop Zambia–Tanzania–Kenya Power Interconnector will link the Border Post and customs modernization, among other Southern Africa Power Pool and the Eastern Africa Power measures. Pool, resulting in a large regional market for electricity. • The private sector can deliver. It is important to get the • Political buy-in is critical. An example of problems private sector involved in regional integration programs. exacerbated by a lack of political buy-in is seen in The private sector has played an essential role in the Rift the protracted negotiations around the Trans-Gambia Valley Railways project that connects Kenya and Uganda, Bridge—the bridge linking Gambia and Senegal—with the for example, as well as in the EASSy cable project that latter complaining about delays on the Gambian side in connects Africa to the rest of the world. finalizing the negotiations. • A holistic and inclusive approach is necessary. Political, Source: AfDB: NEPAD, Regional Integration and Trade Department, economic, and social considerations must all be Regional Integration Strategy (RIS) for 2009–2012. implementation of these regional integration projects are AFRICA’S INFRASTRUCTURE AND REGULATORY highlighted in Box 3. ENVIRONMENT: CURRENT STATE AND CHALLENGES The importance of collaboration Africa has a considerable infrastructure deficit: it lags In May 2012, in line with ongoing efforts to enhance behind other developing regions, particularly in the area infrastructure development, Africa’s development of energy and transportation but also in ICTs. According partners—including the AfDB and the World Economic to the World Bank Enterprises Survey, 26.9 percent of Forum—formed a Business Working Group (BWG) sub-Saharan enterprises identified transportation and that draws on partners from multilateral and regional 49.2 percent identified electricity as major constraints development banks. The aim is to accelerate Africa’s for their business in 2009.23 In fact, only 30 percent of infrastructure delivery through private-sector involvement the population is estimated to have access to electricity with an emphasis on regional integration projects in Africa, compared with 70 percent to 90 percent in (see Box 4). This approach was endorsed by the other developing regions. Furthermore, road access in African Union in January 2013.22 The 20th Ordinary Africa is limited to about 34 percent of the population, Session of the Assembly of the African Union restated compared with 50 percent in other parts of the the need for active collaboration among the African developing world. Although considerable progress has Union Commission, the New Partnership for Africa’s been made in ICTs, as evidenced by the tremendous Development (NEPAD) Planning and Coordinating increase in mobile telephone connections over the last Agency (NPCA), and the AfDB, in conjunction with 10 years, Africa started from a low base and its Internet the World Economic Forum, in revamping the NEPAD penetration rate is only about 6 percent, compared with Infrastructure Project Preparation Facility through an average of 40 percent elsewhere in the developing domestic funding and concerted efforts to increase world.24 Moreover, as shown in Chapter 1.1, results from private-sector involvement in infrastructure development. the World Economic Forum’s Executive Opinion Survey The implementation of BWG projects will bring in much- for 2012–2013 point to substantial gaps that remain in needed private-sector infrastructure development finance technological readiness (pillar 9).25 as well as contribute to improving the productivity and Nonetheless, the state of infrastructure development competitiveness of African economies. varies between and within regions and countries. 76 | The Africa Competitiveness Report 2013 2.2: Developing Africa’s Infrastructure for Enhanced Competitiveness Box 4: AfDB–World Economic Forum partnership: The African Strategic Infrastructure Initiative as a platform for private-sector involvement The Business Working Group (BWG)—a multi-stakeholder create jobs. The private-sector role in Africa’s infrastructure group currently composed of 35 companies and is critical. This partnership was endorsed by African heads of organizations—was conceived in 2012 as a way of getting state, who recognize that effective public-private partnerships international and African business leaders involved in (PPPs) in the delivery of Africa’s infrastructure are part of the accelerating the delivery of Africa’s infrastructure by key to unlocking Africa’s huge economic and development “accelerating the implementation of the PIDA (Program for potential. Infrastructure Development in Africa) ‘Priority Action Plan’ In this context, the BWG has defined a methodology programs and projects.� PIDA—which was developed by for identifying programs that could be accelerated based the African Union Commission (AUC) in partnership with the on criteria that the private sector considers to comprise United Nations Economic Commission for Africa (UNECA), the minimum requirements for them to become involved in African Development Bank (AfDB), and the NEPAD Planning Africa’s infrastructure projects, including PIDA. These BWG and Coordinating Agency (NPCA)—provides a strategic long- criteria focus on the project’s attractiveness and bankability, term framework to enable African stakeholders to build the its technical feasibility, and its potential economic impact from infrastructure necessary to boost trade, spark growth, and the private-sector perspective (see Figure A). In particular, Figure A: BWG methodology for identifying infrastructure programs to be accelerated THRESHOLD-BASED TWO-LENS FINE-TUNE GROUPING PROJECT CLUSTERING PROJECT CLUSTERING Immediate Project A Project E Project B Project F Project C Project G ✘ Project A Project D Project H ✔ Project B Mid-term ✘ Project C Project A Project E ✔ Project D Project B Project F Project C Project G ✘ Project E Project D Project H ✔ Project F Long-term ✔ Project G Project A Project E ✔ Project H Project B Project F Project C Project G Project D Project H Three key thresholds applied: Project realization readiness/capacity: Consider projects well- • Data quality/availability • Project readiness positioned in matrices • Program environment • Regional/country readiness & capacity Further assess public and • Program complexity Project value/impact: BWG support Projects grouped as: • Direct project value Aim for diverse pilots: • Potential immediate • Impact & secondary value creation Sector, region, etc. private-sector acceleration Next step: Identify 1–2 pilots • Potential mid-term in project round tables private-sector acceleration • Long-term project acceleration Source: World Economic Forum, in collaboration with The Boston Consulting Group, 2013, forthcoming. the criteria stress the need for quantitative financial return As a next step, the public-sector support and private- metrics, a good legal and regulatory framework, sufficient sector interest for each program will be confirmed at several funding for project preparation, the establishment of a regional roundtables to be held during 2013 and at the World project-implementing authority, and demonstrated positive Economic Forum on Africa in May 2013 in Cape Town, which economic impacts as well as strong stakeholder consultation will include a major pillar on Boosting Strategic Infrastructure. and involvement and political will, particularly for cross-border The BWG also enables the public sector to benefit from projects. objective, transparent, and informed input from the private Within PIDA, the Priority Action Plan (PAP) focuses on sector on the key issues impacting on Africa’s infrastructure short-term programs expected to be initiated by 2020. PAP delivery. If properly addressed through results-driven presents 51 immediately actionable programs across the dialogue, this could create immense opportunities for private- four sectors of energy, transport, water access and food sector participation in driving infrastructure in Africa. security, and ICTs, all promoting regional integration. Through this methodology, the private sector has identified an initial Source: AfDB: NEPAD, Regional Integration and Trade Department, list of 10 priority projects from PAP for possible acceleration. 2012, World Economic Forum: African Strategic Infrastructure initiative, 2013, forthcoming. The Africa Competitiveness Report 2013 | 77 2.2: Developing Africa’s Infrastructure for Enhanced Competitiveness Box 5: Infrastructure in selected African countries, 2000–10 Considering the infrastructure development by region, as urban areas benefitting considerably more than the rural the figures in this box show, North African countries have, areas. on average, better infrastructure than sub-Saharan African African countries generally exhibit unimpressive progress economies, with the exception of South Africa.1 This can in electricity generation, with South Africa outperforming the be seen with regard to electricity generation and telephone rest and Central African countries lagging even further behind subscribers and also, to a large extent, paved roads. (Figure A). These figures also illustrate the varied level of infrastructure However, telephone subscriptions in North Africa in the development across and within the regions. In fact, within last decade have seen phenomenal growth, and West African sub-Saharan Africa, West Africa appears to have the countries are performing better than other sub-Saharan strongest infrastructure, while Central Africa appears to African countries in that area (Figure B). have the weakest. Within West Africa, however, the Relatively stagnating performances have been typical in infrastructure development of countries such as Burkina road infrastructure improvement in most sub-Saharan African Faso still trails that of others. Even within countries, countries, which are clearly outperformed by North African infrastructure development is highly uneven, with the countries (Figure C). Figure A: Net electricity generation 6,000 5,000 Kilowatt hours per capita (millions) 4,000 Algeria Burkina Faso 3,000 Cameroon Chad Algeria Egypt 2,000 Burkina Faso Ethiopia Cameroon Ghana 1,000 Chad Kenya Algeria Egypt Morocco 0 Burkina Faso Ethiopia Mozambique 2000 2001 2002 2003 2004 Cameroon 2005 Ghana 2006 2007 Nigeria2008 2009 2010 Chad Kenya Senegal Algeria Egypt Morocco South Africa Burkina Faso Ethiopia Mozambique Tanzania Cameroon Ghana Nigeria Uganda Chad Kenya Senegal Zambia Egypt Morocco South Africa Source: AfDB Statistics Department. Ethiopia Mozambique Tanzania Ghana Nigeria Uganda Kenya Senegal Zambia (Cont’d) Morocco South Africa Mozambique Tanzania Nigeria Uganda Senegal Zambia South Africa Tanzania Uganda Chapter 1.1 shows that all African countries improved Zambia infrastructure. The continent’s 15 landlocked countries their Global Competitiveness Index scores at varying are constrained in getting their goods to markets and rates from 2006 to 2012. However, Box 5 indicates that in importing goods because of the lack of multimodal the picture varies according to indicators and countries. infrastructure that can accommodate their particular In general, progress has been very slow or even negative requirements. The role of a network of infrastructure regarding electricity generation and roads paved, while linking producers to markets through a connected improvement in telephone subscriptions has been fast platform including feeder roads, national roads, and impressive during the last decade. airports, and ports in connecting markets, particularly in Landlocked countries in Africa face particular landlocked countries, cannot be overemphasized. challenges arising from the lack of multimodal 78 | The Africa Competitiveness Report 2013 2.2: Developing Africa’s Infrastructure for Enhanced Competitiveness Box 5: Infrastructure in selected African countries, 2000–10 (cont’d) Figure B: Mobile and fixed line telephone subscribers 120 100 Subscribers (% total population) 80 Algeria Burkina Faso 60 Cameroon Chad Algeria Egypt 40 Burkina Faso Ethiopia Cameroon Ghana 20 Chad Kenya Algeria Egypt Morocco 0 Burkina Faso Ethiopia Mozambique 2000 2001 2002 2003 2004 Cameroon 2005 2006 Ghana 2008 2007 Nigeria 2009 2010 Chad Kenya Senegal Algeria Egypt Morocco South Africa Burkina Faso Ethiopia Mozambique Tanzania Cameroon Ghana Nigeria Uganda Chad Kenya Senegal Zambia Egypt Morocco South Africa Source: AfDB Statistics Department. Ethiopia Mozambique Tanzania Ghana Nigeria Uganda Figure C: Paved roads Kenya Senegal Zambia Morocco South Africa Mozambique Tanzania 100 Nigeria Uganda Senegal Zambia 80 South Africa Tanzania Paved roads (% total) Uganda Algeria 60 Zambia Burkina Faso Cameroon Chad 40 Algeria Egypt Burkina Faso Ethiopia 20 Cameroon Ghana Chad Kenya Algeria Egypt Morocco 0 Burkina Faso Ethiopia Mozambique 2000 2001 2002 2003 2004 Cameroon 2006 2005 Ghana 2007 Nigeria2008 2009 2010 Chad Kenya Senegal Algeria Egypt Morocco South Africa Burkina Faso Ethiopia Mozambique Tanzania Cameroon Ghana Nigeria Uganda Chad Kenya Senegal Zambia Egypt Morocco South Africa Source: AfDB Statistics Department. Ethiopia Mozambique Tanzania Ghana Nigeria Uganda Kenya Senegal Zambia Note Morocco South Africa 1 South Africa performs better than North Africa, notably in terms percentage of the population (see Figures A and B). Mozambique of electricity generation per capita and Tanzania telephone subscribers in Nigeria Uganda Senegal Zambia South Africa Tanzania The Africa Competitiveness Report 2013 | 79 Uganda 2.2: Developing Africa’s Infrastructure for Enhanced Competitiveness Energy in South Africa, and later (2010) in North Africa, notably Africa faces a huge energy deficit: the 48 countries in Egypt. Although these blackouts are declining, they of sub-Saharan Africa, with a combined population continue to cause considerable production disruptions of 800 million, are estimated to generate roughly the and losses that damage competitiveness in both low- same power output as Spain, a country of 45 million.26 and middle-income African economies. This energy deficit is the result of the region’s limited Consequently, there is a critical need for innovative generation capacity—the result, in turn, of a lack of investments in the energy sector, including investment long-term financing to cater for the sector’s needs. The from domestically mobilized resources. However, the lack of large-scale investment is a consequence of the attractiveness of this investment is undermined by non– limited participation of private players and the difficulties cost reflective tariffs as well as subsidies that distort in mobilizing long-term financing from African financial relative prices and profitability. Energy facilities across systems to fund big-ticket items such as infrastructure. Africa are in urgent need of new and innovative sources Furthermore, electrification is weak and largely of investment, particularly for generation, transmission uneven, and tariffs make it unaffordable for the poor. lines, and distribution. This much-needed investment The household electrification rate is 42.7 percent, on is held back because across Africa—especially sub- average, for Africa, and 28.3 percent for low-income Saharan Africa—even though tariffs are very high, they African countries. North African countries, with do not reflect actual cost because they account for electrification rates of 94 percent in 2009, fare better only about 50 percent of the historical production costs than sub-Saharan African economies, with rates of 32 (about 44 percent in Zambia, Niger, and Nigeria and percent.27 Within sub-Saharan Africa, the rate often 52 percent in Tanzania).29 In addition, in North African falls to just 10 percent, on average, in rural areas. For countries, such as Egypt, indirect subsidies from the example, in Ethiopia, electricity access is very good in government also undermine investment in energy. In urban areas (86 percent) but very limited in rural ones Mozambique, the single-buyer model (a government (2 percent). In Zambia, access to electricity is only 20 monopoly) currently in place utilizes unattractive fixed percent—less than half the African average, with much electricity tariffs that have been unchanged since 1997, of that power going to the mining sector, crowding out discouraging investment in the sector. domestic consumption. In Chad, access is less than 3 Even beyond the much-needed physical investment, percent, with the capital city of Ndjamena accounting there is an urgent need to invest in the diversification for 80 percent of the total electricity consumption in of the energy mix so as to make the infrastructure the entire country. In Kenya, 31 percent of households sustainable. In East and Southern Africa, overreliance have access to electricity in the best-served province, on hydropower energy makes the economies vulnerable five times more than the least-connected province at to hydrological conditions. The major drought in the 6 percent. Although Africa’s power tariffs vary widely, mid-2000s caused substantial economic losses—as they are all largely unaffordable for the poor, thus limiting high as 4 percent of GDP in Tanzania—and increased access or connectivity for the poor in both urban and the demand for expensive emergency diesel power rural areas. generation. In Northern and Western African countries, System losses compound the energy deficit in the energy mix depends largely on gas and oil reserves Africa. On average, electric power transmission and (thermal energy), which is more reliable than hydropower distribution losses in Africa were estimated at 12 but more costly. Box 6 presents a snapshot of the percent of output in 2010, equivalent to the average AfDB’s green energy initiatives. losses in other low-income developing countries.28 At the regional level, urgent attention should This estimate largely masks differences across Africa. be given to the development of regional energy This problem seems especially pronounced in Central infrastructure to achieve economies of scale. In the Africa, particularly the Democratic Republic of Congo, power sector, only Southern Africa has made the where the losses were estimated at 83 percent in 2010. transition to a competitive regional power market. Only In Southern Africa, the losses were lower but still high, a few major investments have been made in regional at 56 percent in Botswana and 25 percent in Namibia. energy infrastructure on the continent; these include In East, West, and North Africa, system losses have in the Ethiopia–Djibouti and Ethiopia–Kenya connections, general declined, although they remained high at the end as well as the 300 kilovolt (kV) Nigeria–Benin coastal of 2011: 26 percent in Uganda, 24 percent in Ghana, 21 transmission backbone. Other planned regional initiatives percent in Tanzania, 20 percent in Algeria (2010), and 18 include the North–South power transmission corridor percent in Senegal. of 8,000 kilometers covering 11 countries from Egypt to South Africa, and the North Africa transmission Energy sector infrastructure line that will run from Morocco to Egypt. The NELSAP In addition, aging infrastructure and rising demand have project, funded by the AfDB together with other donors, led to intermittent blackouts across all regions of Africa, is another major regional initiative that interconnects undermining competitiveness. The blackouts largely the electric grids of the Nile Equatorial Lakes countries started in the 1990s in East and West Africa, in 2007 80 | The Africa Competitiveness Report 2013 2.2: Developing Africa’s Infrastructure for Enhanced Competitiveness of Burundi, Kenya, the Democratic Republic of Congo, Rwanda, and Uganda. Indeed, developing additional Box 6: Green energy and the AfDB’s initiatives cross-border power pools will help countries achieve economies of scale and provide significant savings. Africa’s huge gaps in conventional energy infrastructure make it well placed to pursue low-carbon solutions. For example, plans to extend the Inga hydropower site Africa has more than half of the world’s renewable energy could lead to a large expansion in low-cost hydropower potential: its wind, geothermal, and hydropower potential for the Democratic Republic of Congo, resulting in has barely been tapped. For example, the Grand Inga Dam energy available for export to countries such as Zambia. in the Democratic Republic of Congo has the potential to produce 100,000 megawatts (MW) of electricity, but Adopting a regional approach could save Zambia currently yields a mere 650 MW to 750 MW. The potential US$160 million annually. Tanzania also has the potential to generate 7,000 MW of geothermal electric power exists to play a significant role in regional power trade within in the Great Rift Valley in Eastern Africa. However, to date, the framework of both the East African Power Pool and only 130 MW has been exploited in Kenya and less than 8 MW in Ethiopia because of high upfront engineering the Southern Africa Power Pool.30 costs and lack of local expertise. Regarding solar energy, Energy sector regulatory challenges many countries have favorable daily radiation levels. Some encouraging initiatives to extend access to lower-income At the national level, legislation is generally adequate to households and public institutions are under way in regulate the industry in countries that have electricity several countries, including Morocco, Tunisia, Mauritius, regulators, but its enforcement should be strengthened Seychelles, and South Africa. For wind energy, countries and the roles of energy administrators clarified. This with good potential include Cape Verde, Eritrea, Kenya, Madagascar, Mauritania, Morocco, South Africa, and will serve to support the principles of regulatory Tunisia. In fact, the Cabeolica wind farm in Cape Verde, independence. For example, Kapika and Ebehard a project that received debt financing from the African state that, in Zambia, although the Energy Regulation Development Bank (AfDB), won the African renewable Board determines all retail electricity tariffs and has the energy project of the year award in 2011. The AfDB has recognized the green energy potential authority to carry out general administrative functions, on the continent and has taken the lead with US$57 the principles of regulatory independence for the million in establishing a fund, with some other contributors, regulator are undermined by its lack of final authority for renewable energy projects across the continent. in decision making.31 In several other countries, such Accordingly, it has developed energy policy with two priority areas: ensuring access to modern energy and as Senegal, the duplication of efforts with several fostering clean energy investments. Going forward, its agencies and institutions involved in the administration of pipeline embraces several green energy projects, including energy issues should be addressed. The administration support to a 2,000 MW solar-thermal power project to should be streamlined and the involvement of different export energy from Tunisia to Europe; the Turkana Wind stakeholders clarified. Project (which has received US$870 million from the joint fund) in Kenya; and, in partnership with other donors, the Moreover, the mandate for planning has to be Menengai Geothermal Plant, also in Kenya, to provide clarified within the sector, particularly in hybrid power clean energy to 500,000 households. markets, to coordinate the planning and procurement Sources: AfDB: NEPAD Regional Integration and Trade functions. Kapika and Ebehard argue that planning Department, Regional Integration Strategy (RIS) for 2009– is crucial for ensuring orderly market entry and the 2012; http://en.wikipedia.org/wiki/Renewable_energy_in_ adequacy and reliability of power supplies.32 In hybrid Africa. power markets such as Zambia’s, where there is a dominant, vertically integrated state-owned utility and also private companies that operate on the margins of the sector, the planning issue can easily become hazy. Those responsible for planning should work closely with policies, strategies, and regulatory gaps also hamper those responsible for procurement processes, so that investments. Although increasing investments is key for the planning of new capacity is coordinated with the closing the energy infrastructure gap, very few countries initiation of new bids. in Africa have managed to implement appropriate In addition, the renewable energy potential has public policies and regulatory mechanisms that provide not been fully harnessed in Africa because of high investors with predictable tariffs, secured off-take installation costs as well as gaps in renewable energy agreements, access to national grids, and business- policies, strategies, and regulatory mechanisms. Indeed, easing measures. In some countries, such as Burkina renewable energy represents an interesting alternative Faso, the regulatory framework for renewable energy that could potentially help reduce the cost of access resources is simply nonexistent, keeping potential to energy for enterprises, though the installation and investors’ risk perception of the sector relatively high. operating costs of some renewable energy–based power At the regional level, it is imperative that planning plants are still high because the related technologies for regional infrastructure projects be coupled with the are not fully mastered in most of the countries. Not only requisite regional legal and regulatory framework. For have these technical considerations been impeding example, in the power sector, regional power pools the development of the sector, but renewable energy need to harmonize with national power regulations and The Africa Competitiveness Report 2013 | 81 2.2: Developing Africa’s Infrastructure for Enhanced Competitiveness Figure 1: Africa’s main road corridors Source: ICA, 2009. develop dispute resolution mechanisms, which to date Road infrastructure has been slow. Although roads are the predominant mode of transport for freight and passengers in Africa, major deficits exist in Transportation road infrastructure throughout the continent. A significant The ensuing discussion of the transportation sector percentage of Africa’s road network is unpaved (52.8 considers the state of the infrastructure and the percent in 2011), isolating people from basic education, challenges confronting the road, rail, air, and port health services, transport corridors, trade hubs, and subsectors, as well as the regulatory framework of the economic opportunities. In Tanzania, more than 92 entire transportation sector. percent of the road network is unpaved and is therefore Africa’s prolonged underinvestment in transportation unusable during the rainy season. In South Africa, about has resulted in a dilapidated transport infrastructure. 80 percent of the road network is unpaved and about 78 Indeed, compared with other developing countries— percent of the national road network is older than the 20 excluding the provision for maintenance—African years for which it was originally designed.34 countries invested 15 percent to 25 percent of GDP Moreover, access to the road network is uneven, in transport infrastructure over the period 2005–12, with rural areas largely underserved. This unequal on average, while India and China invested about 32 access makes the flow of goods and services to and percent and 42 percent of GDP, respectively, in the same from rural areas difficult and expensive. The urban-rural period.33 This underinvestment has resulted in a decrepit disparity in the road network is a concern across all infrastructure and considerably higher transport costs regions of Africa. In Ethiopia, only 10.5 percent of the (by as much as 100 percent) in Africa than experienced rural population lives within two kilometers of an all- by other low-income developing countries. This poses a weather road. In Zambia, Tanzania, and Burkina Faso, fundamental constraint to Africa’s global competitiveness the comparable figures are 17 percent, 24 percent, and and economic growth. 82 | The Africa Competitiveness Report 2013 2.2: Developing Africa’s Infrastructure for Enhanced Competitiveness Figure 2: Railways in Africa Source: AfDB, 2010. less than 25 percent, respectively, which are still very suffer from very high overloading rates (e.g., in Uganda, low. overloading rates are close to 55 percent) as determined Poor road maintenance is prevalent across Africa. at some major static weigh-station locations, pointing to Recognizing that there are several sources of road the need for more weigh stations to be constructed. A funding, including loans and tolling, several African harmonized regional axle load control act—such as the countries now have road funds supported by fuel levies; East Africa Axle Load Control Act, which will soon be others have autonomous road agencies that contract adopted—is also needed. out to specialist maintenance agencies. However, more A high incidence of road fatalities, a consequence of needs to be done. Fuel levies are often too low and road the continent’s poor infrastructure, is prevalent in Africa, funds and agencies do not meet international best- resulting in sizeable losses to the economy. The World design criteria. For example, fuel levies vary considerably Bank estimates that road crashes cost approximately 1 across countries, ranging from US$0.16 to US$0.30 per percent to 3 percent of a country’s annual GDP (US$100 liter, with the latter considered the minimum for adequate billion every year in developing countries).36 For example, road maintenance. Unofficial fees or bribes and delays Uganda has one of the worst road safety records in contribute to low collection rates. In addition, toll roads sub-Saharan Africa, with an average rate of 45 fatalities operate in only a negligible portion of the region’s per 10,000 vehicles. The country is estimated to lose classified road network, and almost all of them are in about 2.7 percent of its GDP through losses of life and South Africa.35 property. This is equivalent to the proportion of GDP Further complicating the issue, roads do not spent on the road sector. last for their planned construction life span because The underdevelopment of the road network has also the overloading of vehicles causes the roads to age resulted in severe traffic congestion in several African prematurely, resulting in high maintenance costs. The capitals, causing direct loss of time and productivity. road network in several African countries continues to Urban traffic congestion is common across the main The Africa Competitiveness Report 2013 | 83 2.2: Developing Africa’s Infrastructure for Enhanced Competitiveness Figure 3: Ports in Africa Source: AfDB, 2010. cities of Africa. Indeed, traffic congestion is estimated to Road regulatory challenges cause direct loss of time and productivity at an annual At the national level, several legal and legislative issues cost of roughly 4 percent of GDP (US$8 billion) in Cairo, regarding roads need to be addressed. Legislation US$19 billion in Lagos, US$0.89 billion in Dar es Salaam, relating to axle overload is needed to tackle overloading and US$0.57 billion in Nairobi.37 Poor air quality and on roads as well the related costing/funding for road road accidents may actually double the direct cost of maintenance. In addition, in some countries (such as congestion. Uganda), although a PPP policy is in place, the relevant The large number of landlocked countries in Africa law has not yet been enacted. With the exception of a (15) and those with a vast hinterland, such as the few countries (including Senegal and South Africa), toll Botswana, the Democratic Republic of Congo, and roads are not yet completed. Going forward, however, Sudan, underlines the importance of the cross-border several countries (including Uganda) are planning corridors. These transport corridors link markets— expressways, so it is imperative that, in addition to a particularly important for landlocked countries—and tolling policy, a tolling law be enacted. enhance intra-African trade. The map in Figure 1 shows Rail infrastructure Africa’s main corridors. The Trans-Africa Highway Outdated infrastructure and limited maintenance (Cairo–Dakar) is the most ambitious road network on have undermined the effectiveness of railways across the continent: it comprises nine interlinked highways Africa. The result has been a significant reduction with a total length of 56,683 kilometers.38 Other planned in useable track. North Africa, particularly Egypt, or ongoing regional projects include the Abidjan– boasts the oldest railway network in Africa, but it has Ouagadougou–Bamako Transport corridor, connecting had only a few upgrades since its inception. In West Côte d’Ivoire, Burkina Faso, and Mali. However, the Africa, as evidenced by Senegal, the rail network has effectiveness of the cross-border links is undermined by deteriorated substantially in recent years because of border inefficiencies, which are discussed in Chapter 2.1. 84 | The Africa Competitiveness Report 2013 2.2: Developing Africa’s Infrastructure for Enhanced Competitiveness Table 1: Air travel cost per passenger, selected cities Origin Destination Distance (km) Average cost (US$) Average cost per 1,000 km (US$) Johannesburg Accra 4,670 1,000 214.13 Nairobi Lagos 3,811 800 209.92 Accra London 5,116 1,000 195.47 Dubai Singapore 5,841 500 85.60 London Moscow 2,498 400 160.13 Dubai London 5,475 800 146.12 Sources: Travel websites Opodo.com, tripadvisor.com, and expedia.com, and authors’ calculations. administrative difficulties, locomotive breakdown, and strong airlines—including Royal Air Maroc, South African lack of investment and maintenance. In Southern Africa, Airways, Kenya Airways, Egypt Air, and Ethiopian the Chinese-built Tanzania–Zambia railway has suffered Airlines—the lack of modern air traffic surveillance from underinvestment for the past 30 years. Overall, technology poses critical challenges for the industry the amount of useable track has declined across Africa in several countries. For example, in Ethiopia, extra between 2005 and 2011, dropping from 58,000 to distance and time separation between aircraft are 50,000 kilometers, underscoring the pressing need for necessary to compensate for the lack of civilian radar. rehabilitation and maintenance in the sector (Figure 2).39 In terms of fleet modernization, Africa’s demand for new Differences in rail gauges (which specify the spacing airplanes represents only 3 percent of the world demand between the tracks in a railway) undermine the regional and is concentrated in three or four companies.40 integration of rail networks. When rail improvements are Progress in several countries is hampered by undertaken, the need for a uniform rail gauge among poor basic airport infrastructure and inadequate air countries cannot be overemphasized. This complication connections. Although the continent boasts some world- highlights the need for a regional approach; addressing it class airports—such as the Johannesburg International effectively will enable trains to cross boundaries. Indeed, Airport—in general, basic airport infrastructure is lacking the variation in the rail gauges is currently a serious in most airports across Africa. For example, because constraint for rail network development, especially of poor airport infrastructure in Tanzania, safe, reliable, between East and Southern Africa. and comfortable air transport services are assured only during the dry season. In addition, there are insufficient Rail regulatory challenges air connections within Africa. Indeed, Eastern Africa and At the regional level, several legal and legislative issues Southern African subregions are more connected than regarding the harmonization of rail gauges in railroads the West African subregion.41 The three major hubs in across countries need to be addressed. Customs sub-Saharan Africa are Addis Ababa, Johannesburg, regulatory framework for the cross-border movement of and Nairobi. Most international carriers fly from Southern goods and services will also need to be put in place to Africa and Eastern Africa, which have more-established facilitate railroad transportation across Africa. national and regional carriers than other regions. Air transport infrastructure Air transport regulatory challenges Air transport in Africa, while crucial, is expensive by Regulatory challenges in the air sector relate mainly to international standards. By providing a quick link to the liberalization of air space. Despite some countries export markets, air transport enables the trade of having liberalized their airspace after the Yamoussoukro time-sensitive, perishable exports such as cut flowers, Declaration of 1988, several countries in Africa—such as vegetables, fruits, meat, and fish, which are becoming Angola and the Democratic Republic of Congo—have increasingly important foreign-exchange earners for not. This limits competition from foreign-owned airlines, African countries. The International Airline Transport resulting in higher prices for international air travel of both Association (IATA) reports that traveling by air is more passengers and freight. costly in Africa than anywhere else. This is mainly because of lower passenger traffic, limited liberalization Port infrastructure of air space, high passenger and airport taxes, safety Many African ports have serious capacity problems issues, and limited infrastructure (airports, runways, and that are accentuated by an ineffective inland transport safety systems). Africa still records the lowest safety system. Figure 3 is a map showing Africa’s major ports, standards in air transport of any region in the world. which include Abidjan (Côte d’Ivoire), Dar es Salaam Table 1 illustrates the high cost of travel in Africa. (Tanzania), Durban (South Africa), Mombasa (Kenya), African airlines have also lagged behind in terms of Port Said (Egypt), and Tangier (Morocco). In North Africa, technological upgrades, notably surveillance equipment ports are more developed and have adequate container- and fleet modernization. Although Africa boasts some handling equipment and faster turnaround times than The Africa Competitiveness Report 2013 | 85 2.2: Developing Africa’s Infrastructure for Enhanced Competitiveness ports in sub-Saharan Africa. In East Africa, Dar es The mobile telephony subsector has been the most Salaam and Mombasa have reached their container- vibrant of all, with the share of population receiving storage limits. New capacity needs to be introduced, mobile signals increasing by a factor of 10 in five years.47 not only in the ports themselves but also in downstream Some African countries, such as Ghana and Nigeria, linkages, to ensure that cargo can be efficiently moved have gone further and are expanding into satellite onto road and rail infrastructure.42 Similar constraints are communication technology. Investment in ICTs, unlike evident in other regions of Africa, such as the ports of investment in the transport subsector, is largely private- Lagos (Nigeria) and Tema (Ghana). sector driven. However, major differences in the levels of Inefficiencies at African ports lead to slow financing available exist between coastal and landlocked processing times and result in higher charges than countries.48 those of comparators. Tariffs in South African ports Nonetheless, access to the Internet is still low tend toward the high end of the global spectrum, yet throughout the continent, and it is expensive and performance is well below international benchmarks. In skewed in favor of urban areas. The penetration rate is East Africa, there are also significant cost differences much higher in North Africa (where 27 percent of the within the region. For example, Mombasa charges population have Internet access, on average) than in considerably more than Dar es Salaam in East Africa, Southern Africa (13 percent), East Africa (12 percent), primarily because Mombasa’s volume of trade is West Africa (9.5 percent), and Central Africa (4.5 considerably higher. percent).49 The situation in Central Africa is illustrated In the port subsector, although private-sector by Chad, where 80 percent of Internet users complain involvement has provided some additional financing, about the slow connection speeds and the very high it has not achieved the same gains in Africa as it cost of bandwidth, which ranges between US$1,600 has elsewhere and volumes fall substantially short and US$2,000 per month—astronomically higher than in of requirements. However, the private sector has Kenya, where it is US$100–US$150, and Burkina Faso, contributed significantly to improving operational where it is about US$600. Across Africa, unequal access performance, leading to the recovery of funds lost is particularly prevalent in rural areas, indicating the need through inefficiency in a variety of areas.43 Nonetheless, for continuing public investment to create incentives to the gains have been undermined by the limited clarity extend services to these areas. of the public sector’s objectives; the lack of close One of the most outstanding innovations in the use coordination among the different institutions involved of ICTs in Africa has been the mobile money sector. This (port institutions, customs, transport ministries, and has seen phenomenal growth in East Africa, primarily labor unions); and the absence of other efficiency- in Kenya. Box 7 presents the case of the successful enhancing factors, such as pro-competitive policies and M-PESA mobile-payments system in Kenya. arrangements in the sector.44 ICT regulatory challenges Port regulatory challenges Although the ICT subsector has been the most vibrant of In the port subsector, ensuring regulatory independence the infrastructure subsectors, progress in some countries will be crucial to maximize gains from previous reforms. has been limited by government monopoly, which has Evidence suggests that reform packages that include resulted in excess costs and undermined the access to regulatory reform and independence of the regulator and quality of ICT services. Consequently, the price of from government interference will allow other ongoing broadband and international calls is excessive, and the policy reforms a greater chance of success.45 absence of competition has a negative impact on both revenue and productivity of public and private firms, ICTs thus undermining investment. This is evident across all The ensuing section considers developments in the regions of Africa, including Ethiopia and South Africa. ICT sector, notably in mobile telephony, Internet, The central challenge for those countries that and undersea and terrestrial cables. It begins with a have not liberalized their ICT sectors is to introduce discussion of the state and challenges of infrastructure competition through a modernized institutional and in the ICT sector and then proceeds with a discussion of regulatory framework. These markets—such as the regulatory framework. Ethiopia—could potentially benefit from licensing ICT infrastructure additional mobile operators, which would accelerate Africa has made progress in ICTs, particularly with regard the expansion of the global system for mobile to laying out the infrastructure using undersea cables communications (GSM) coverage to improve access. and mobile technologies. Indeed, in 2011, 19 undersea While Zambia’s GSM coverage is comparatively low cables connected Africa to the rest of the world—up by regional standards, simulations indicate that more from only 3 in 2005.46 As a consequence, cumulative than 95 percent of Zambia’s population could be capacity increased from 2,900 gigabytes to 102 reached by a GSM signal if measures were taken to terabytes over the period. Africa is leapfrogging fixed-line dismantle behavior that is counter to competition. In networks and moving directly to mobile technologies. addition, establishing a coherent policy framework that 86 | The Africa Competitiveness Report 2013 2.2: Developing Africa’s Infrastructure for Enhanced Competitiveness is not weakened by policy reversals is crucial. Such a framework does not always exist. For example, in Box 7: The success of Safaricom’s M-PESA Zambia, progress in the ICT sector was undermined by the privatization and subsequent renationalization of the The mobile money sector in Kenya consists of M-PESA, Airtel Money, Essar yuCash, and Orange Money. M-PESA, telecommunication and Internet provider Zamtel. a mobile payments system operated by Safaricom, was For the countries that have liberalized, there is launched in March 2007. It was the first mobile money an urgent need to improve private participation in the system to appear in Kenya and is now the most developed information technology backbone infrastructure. In and successful mobile money payment system in the world. M-PESA allows people to transfer funds on a several countries, including Uganda, because of its person-to-person basis, pay bills, purchase goods, and public nature, the backbone project is undertaken by buy airtime. In addition, people can use M-PESA to remit the government. Nonetheless, the introduction of more funds from the United Kingdom to Kenya. Safaricom also competition on the backbone side, as advocated for in launched M-KESHO in March 2010, which allows for the movement of funds to and from an interest-bearing Zambia, will go a long way toward reducing prices and account with Equity Bank. broadening access. M-PESA had 15.2 million subscribers out of the Reforms to address fragmentation and overlap more than 19 million mobile money subscribers in the of regulatory authorities and mandates are necessary country as of the end of October 2012, up from a mere 19,071 subscribers in 2007. M-PESA uses over 45,540 to tackle current market challenges arising from the M-PESA agents across the country. The remaining three convergence of ICT technologies. Rapid technological mobile money service providers have 9,000 agents, of advances in the sector, along with their convergence, whom 6,000 work for Airtel. Of the total estimated mobile underline the need to create and operate in an open, transfers of US$10 billion in 2012, most (90 percent) dynamic, and responsive legal and regulatory framework are undertaken by Safaricom operating on the M-PESA money platform. It has four bank partners for deposits: that supports the development of ICTs. The situation Commercial Bank of Africa, Standard Chartered Kenya, is exemplified in Uganda, where there is considerable CFC Stanbic, and Equity Bank Kenya. overlap between the National Information Technology Source: Ncube and Ondiege, 2012. Authority Uganda—which plays a dual role as an operator of the backbone infrastructure and the regulator in charge of government information infrastructure (including e-government and the government’s master plan)—and the Uganda Communications Commission, increase Africa’s competitiveness and productivity, which regulates telecommunications, broadcasting, lower the cost of doing business, and facilitate trade and postal services. Clearly, there is a strong case for and foreign direct investment as well as deepen regulatory convergence that would result in one regulator economic and social integration and create employment for the ICT sector that deals with the issuance of licenses opportunities. We must address Africa’s infrastructure as well as planning and managing ICT developments. gap to further boost economic growth and foster A periodic review of the operations, provisions, and integration, not only across the region, but also with directives making up the legal and regulatory system the rest of the world. However, Africa needs colossal is key for ICT sector reforms, including convergence in financial investments and support to close the region’s the industry. infrastructure gap and set itself on a par with the rest of While mobile money has seen phenomenal growth, the developing world. the requisite regulatory guidelines and oversight have not African countries must therefore undertake kept in step. As mentioned in Box 7, in several regions infrastructure sector reforms and innovation to generate of Africa, particularly in East Africa, mobile money has more resources for the sector, because traditional become increasingly important: annual transactions sources of finance will not be enough. A regional are estimated to be worth over US$8 billion in Kenya; approach to infrastructure development is key, and monthly transactions were estimated at over US$200 interconnecting infrastructure across country boundaries million in Uganda in 2012. However, regulatory guidelines is the best way to promote trade and regional integration, and clarity are needed to guide the mobile money and thus connect markets in Africa. Possible reforms industry. For example, establishing whether mobile and innovative solutions are outlined below: money is considered to be an information technology service or a financial service will determine the requisite • Energy sector: Given its high unexploited potential regulatory infrastructure. in terms of wind, solar, and hydropower, Africa could easily satisfy its energy needs at no cost to CONCLUSION AND THE WAY FORWARD the environment. Promoting green energy could This chapter has demonstrated that, although Africa has leverage more funds from development partners made some improvements in increasing its infrastructure and private players than investment in non-green stock in recent years, it remains underdeveloped relative energy. Furthermore, given the prevalence of non– to other emerging regions. Improved infrastructure will cost reflective tariffs that undermine investments The Africa Competitiveness Report 2013 | 87 2.2: Developing Africa’s Infrastructure for Enhanced Competitiveness in several African countries, governments should The need for more investment in backbone (fiber commit to having cost-recovery tariffs that will, in optic) to improve connectivity across countries is turn, spur much-needed investment. A regional urgent. Countries also need to put in place carefully approach should be pursued, with urgent attention planned maintenance measures to address the given to the development of regional energy anticipated obsoleteness of ICT infrastructure and infrastructure. technology, because this is a fast-growing and evolving industry. • Transportation sector—Roads: Feeder roads are of great importance for poverty reduction, especially The importance of infrastructure development to in rural areas. Together with the development enhance the continent’s productivity is discussed further of corridors, rural roads provide economic in Chapter 2.3. That chapter focuses on infrastructure opportunities and access to markets. Accordingly, investment policy reform processes in the context of emphasis should be given to developing rural roads developing growth pole projects that would enhance so as to enhance access, and also upgrading Africa’s competitiveness. urban roads, with a focus on those with cross- border connections. Making provisions for adequate NOTES maintenance (both corrective and preventative) 1 Calderón 2008. for roads is vital, as this ensures sustainability. 2 AfDB et al. 2010. In addition, it will be essential to address the 3 Blank and Lee 2009. overloading of vehicles by means that include 4 Mayaki 2012. harmonized legislation in the form of regional 5 Foster and Briceño-Garmendia 2010. axle load control acts. Furthermore, to stem the 6 See Estache and Goicoechea 2005; Boopen 2006; Calderón incidence of road fatalities that result in sizeable 2008; Estache and Woodon 2011; Briceño-Garmendia and losses to the economy, road safety programs need Domínguez-Torres 2011. to be enhanced and adequately funded. 7 Easterly and Rebelo 1993. • Transportation sector—Railroads: Outdated 8 Calderón and Servén 2004. infrastructure and limited maintenance programs 9 Estache and Goicoechea 2005; Calderón 2008. have resulted in a significant reduction in useable 10 Escribano et al. 2009. track and undermine the effectiveness of railways 11 Dominguez-Torres and Foster 2011. across Africa. Addressing these needs will both 12 World Bank 2009. require further investments in the sector and ease 13 APIX 2011. pressure on African roads. A regional approach should be taken, with an emphasis on establishing 14 USITC 2009. uniform rail gauges to enable trains to cross country 15 Shiferaw et al. 2012. boundaries. 16 Siba et al. 2012. • Transportation sector—Air transport: The 17 ERA 2011. importance of air transport, particularly for 18 World Bank’s Doing Business Database. landlocked countries, cannot be overemphasized. 19 AfDB 2011. It is imperative that countries enhance this sector’s 20 AfDB 2010. development to improve connectivity and safety and 21 AfDB 2010. to reduce costs in order to promote intra-African 22 The 20th Ordinary Session of the Assembly of the African Union and global trade. (Heads of State and Government), which met in Addis Ababa on January 27–28, 2013, in their Decision on the Report of the • Transportation sector—Ports: Countries should Heads of State and Government Orientation Committee (HSGOC) put in place measures to address the serious port on the NEPAD —Doc. Assembly/AU/4(XX)—and recalling their earlier approval of PIDA, re-stated the need for active collaboration capacity problems that, coupled with an ineffective among the Commission, the NEPAD Planning and Coordinating inland transport system, abound in Africa. They also Agency, and the AfDB in revamping the NEPAD Infrastructure Project Preparation Fund through domestic funding by Member need to deal with inefficiencies that slow processing States and concerted efforts to increase private-sector times and result in higher charges than those of involvement in infrastructure development in conjunction with the World Economic Forum. comparators. This calls for encouraging private involvement, which can also provide much-needed 23 See the Enterprise Surveys of the World Bank, available at http:// www.enterprisesurveys.org. additional financing. 24 SOFRECO-led Consortium 2011. • ICT sector: Although the ICT sector has made 25 See World Economic Forum 2012. impressive gains, such as the now well-known 26 AfDB 2012. M-PESA mobile money payment system in Kenya, 27 AfDB 2012. overall, the potential of ICTs— for example, to support e-government—has not been fully exploited. 88 | The Africa Competitiveness Report 2013 2.2: Developing Africa’s Infrastructure for Enhanced Competitiveness 28 See the World DataBank, available at http://databank.worldbank. Blank, S. and E. Lee. 2009. “Transportation Infrastructure and org/. Competitiveness.� Report prepared for the Woodrow Wilson Center Mexico Institute and El Colegio de la Frontera Norte 29 See the African Development Bank Group’s AICD Database for research project, “The U.S.-Mexico Border: A Discussion on the power sector, available at http://www.infrastructureafrica.org/ Sub-National Policy Options.� Available at http://stage-wilson. sectors/power. p2technology.com/sites/default/files/BLANK%20LEE%20 30 Shkaratan 2012. INFRASTRUCTURE.pdf. 31 Kapika and Ebehard 2013b, pp. 92–93. Boeing. Current Market Outlook 2012–2031. Available at http://www. boeing.com/boeing/commercial/cmo/. Accessed April 5, 2013. 32 Kapika and Ebehard 2013b, p. 101. Boopen, S. 2006. “Transport Infrastructure and Economic Growth: 33 UNCTAD 2011. Evidence from Africa Using Dynamic Panel Estimates.� The Empirical Economics Letters 5 (1): 37–52. 34 DBSA 2012. Briceño-Garmendia, C. and C. Domínguez-Torres. 2011 “Burkina 35 AfDB 2010. Faso’s Infrastructure: A Continental Perspective.� Policy Research 36 See http://www.worldbank.org/transport/roads/safety.htm. Working Paper No. 5818. Washington, DC: World Bank. 37 Estimates were produced by Hammer 2012; Dina 2012; see also Calderón, C. 2008. “Infrastructure and Growth in Africa.� Africa Kanyabwoya 2010 and IMB 2012, respectively. Infrastructure Country Diagnostic (AICD) Working Paper No. 3. Africa’s Infrastructure: A Time for Transformation. World Bank: 38 AfDB 2010. Washington DC. Available at http://www.infrastructureafrica.org/ system/files/library/2009/10/WP03_Infra_growth.pdf. 39 AfDB 2012. Calderón, C. and L. Servén. 2004. “The Effects of Infrastructure 40 See Boeing’s Current Market Outlook 2012–2031. Development on Growth and Income Distribution.� Policy 41 AfDB 2011. Research Working Paper No. 3400. Washington, DC: World Bank. 42 An example is the One Stop Border at Chirundu—funded by the DBSA (Development Bank of Southern Africa). 2012. 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Geneva: World Economic Forum. 90 | The Africa Competitiveness Report 2013 2.2: Developing Africa’s Infrastructure for Enhanced Competitiveness Appendix A: AfDB infrastructure development projects, selected countries, 2012–14 The African Development Bank (AfDB) has been involved the Turbi–Moyale section, which is part of the Trans- in projects to develop infrastructure on the continent for Africa Highway network. It involves the construction several years. It focuses on projects in areas of need but of 320 kilometers of the road corridor, including the where there is an enabling environment. Some of the 122-kilometer Turbi–Moyale road section in Kenya and main infrastructure development projects currently being the 198-kilometer Hawassa–Ageremariam road section implemented are listed below. in Ethiopia. The project includes transport and trade facilitation consultancy services to harmonize cross- ENERGY border procedures. It will contribute a minimum increase The Menengai Geothermal Development Project of 25 percent in intra-COMESA (Common Market (Kenya): This project is a Scaling-Up Renewable Energy for Eastern and Southern Africa) and increase trade Program (SREP) under the Climate Investment Funds between Kenya and Ethiopia by at least 200 percent for which AfDB Group is an implementing agency. The by 2017; it will also increase household incomes by an project will set the stage for investments that will help average of at least 10 percent by 2020. meet Kenya’s rapidly increasing demand for power and Nacala transport corridor (Mozambique, Malawi, transform the country into a competitive clean energy and Zambia): The project will upgrade a major regional economy; it will also help diversify the country’s sources corridor and convey significant benefits, including of power supply by developing its substantial geothermal reduced user costs, increased access to social services, potential. The Menengai field alone has a potential of up and responses to projected traffic increases. It will to 1,600 megawatts (MW). The AfDB group support will increase the capacity to handle cargo at Nacala port from help develop the steam field for a generation capacity of 0.9 million tons in 2009 to 1.6 million tons in 2015, and up to 400 MW in a first phase, representing a 20 percent reduce transport and transit costs by 25 percent in 2015. increase in Kenya’s installed capacity. The project will result in substantial increase in TRANSPORTATION: RAILROADS the provision of reliable, clean, and affordable energy The Tangiers Marrakech Railroad project (Morocco): equivalent to the current consumption needs of 500,000 The project has the potential of connecting the country Kenyan households (of which 70,000 will be in rural to its North African neighbors. When completed in areas) and 300,000 small businesses, with some 1,000 2016, it is expected to significantly boost rail travel, gigawatt hours (GWh) available for other businesses and with an improvement in rail traffic fluidity and increased industries. The project will also help reduce emissions by frequency of shuttle, mainline, and freight trains; increase some 2 million tons of carbon dioxide per annum. population mobility in the project area; and create direct Senegal Coal Power Plant Project: The project and indirect jobs during project implementation and will generate 925 GWh of electricity, which represents 40 operational phases. percent of 2008 national consumption; reduce annual power shortages from the 176 days reported in 2008 to TRANSPORTATION: AIR 40 days by 2014; improve national electrification coverage Blaise Diagne International Airport project (with a target of increasing from 46 percent in 2008 to 66 (Senegal): This airport will have an annual capacity percent in 2015); and contribute to meeting the projected of 3 million passengers, 80,000 flights, and 53,000 7.8 percent annual growth in energy demand. tons of cargo freight (a 3 percent capacity increase). Subsequent expansions will increase capacity to 10 TRANSPORTATION: ROADS million passengers annually and eliminate over-capacity The Mombasa–Nairobi–Addis Ababa Road Corridor operation at existing airports. It will be served by the new Project, Phase III (Kenya and Ethiopia): The objective toll highway (Dakar–Diamnadio), which will facilitate air of the multinational project is to enhance trade, cargo transportation in reduced time, contributing to the strengthen regional integration, and contribute to poverty reduction of production costs and the improvement of reduction in both countries. This third phase covers business productivity. The Africa Competitiveness Report 2013 | 91 2.2: Developing Africa’s Infrastructure for Enhanced Competitiveness ICTS Other 3 billion Networks (O3b) multinational project: The O3b project will have a constellation of eight medium-orbit satellites in nine countries. The project will deliver affordable, high-bandwidth, high-quality Internet and cellular access to inland markets in developing countries and island economies. O3b is dedicating one- third of its capacity to Africa’s needs. It will reach “white spaces� (unused channels of the wireless spectrum) and fragile states with high-quality ICT infrastructure; it will connect 18 million households (in nine Africa countries) to cellular backhaul, 1.6 million broadband users to global backbone, and 4,000 firms to corporate voice/ data networks. The total cost savings over the equivalent capacity from high-orbit satellites is estimated at US$1.3 billion net present value. The project will promote private-sector development with growth in revenues of the nine African off-takers (those who buy Internet services from the O3b investors) and Internet and telecommunication operators, projected at US$490 million net present value. It will promote regional integration by expanding broadband Internet and cellular access across several Africa countries: Cameroon, the Democratic Republic of Congo, Ghana, Kenya, Malawi, Nigeria, Sierra Leone, and Zambia. Source: AfDB: various infrastructure project reports. 92 | The Africa Competitiveness Report 2013 CHAPTER 2.3 Although some of Africa’s improved economic performance in the past decade has already been driven Growth Poles: Raising by improvements in infrastructure, critical investment and policy coordination challenges remain. As the previous Competitiveness and chapters have highlighted, the balance for growth and competitiveness is likely to come from structural changes Deepening Regional such as (1) reducing costs for building infrastructure; (2) Integration locking in investors from both public and private sectors as risk sharers; and (3) incentivizing the participation, JOHN SPEAKMAN particularly of the local private sector, in these projects.1 MARJO KOIVISTO Furthermore, Africa’s competitive industries—such as World Bank agriculture, mining, and tourism—carry vast potential, and they require sustained support if they are to deliver on the promise of comprehensive competitiveness and economic diversification. Despite the efforts of regional organizations to overcome barriers to trade in products and services, competitiveness continues to be constrained by infrastructure deficits, red tape and slow decision making, difficulty in securing and accessing serviced industrial land, and information failures that prevent the private sector from coordinating investment activity. Growth poles, typically multi-year, public-private investments, are emerging as a key instrument to overcome barriers to investment and to support the agglomeration of economic activity. Growth poles are simultaneous, coordinated investments in many sectors to support self-sustaining industrialization in a country. They bear resemblance to, but are not the same as, special economic zones (SEZs), which are spatially delimited areas within an economy. Examples include export processing zones, economic processing zones, free zones, and foreign trade zones.2 SEZs, as supply-side competitiveness measures, are aimed at overcoming barriers that hinder investment in the wider economy, including restrictive policies, poor governance, inadequate infrastructure, and problematic access to land. Growth poles, on the other hand, usually combine public and private investments and are specifically built around an already-existing resource at a specific location in an economy. Central to the growth pole is a group of dynamic industries connected around a particular resource. These industries are, by virtue of their dimension or negotiation strength, anticipated to have the capacity to innovate and adapt to market conditions. The growth of dynamic industries is anticipated to generate further investment, employment, and distribution of factor payments, including profits that may be reinvested. The growth of dominant industries, in turn, generates external effects that stimulate the growth of other industries due to inter-industry linkages. The contribution of Julien Szabla to the preparation of materials for this chapter is gratefully acknowledged. The Africa Competitiveness Report 2013 | 93 2.3: Growth Poles This chapter will draw from the World Bank’s quite benefits to be realized from growth poles. Experience significant experience in supporting the development of in growth pole engagements shows that both public growth poles in Africa in recent decades. Good-practice and private participation is required to realize results. lessons also emerge from Asia, where, for example, the For example, public-private partnerships (PPPs) for growth poles in Malaysia and Indonesia benefited from constructing and maintaining infrastructure will broaden investments made through ASEAN regional integration the possibilities for private-sector job creation around policies.3 This chapter explains the idea behind growth growth pole projects. Although there is no fixed list of poles in more detail and outlines how they interact best-practice policies to realize private-sector development with infrastructure investments, trade, and regional objectives from growth poles, and specific related reforms integration. It also discusses particular examples of will vary by sector, growth poles show why effective growth poles in Africa and the benefits, challenges, and investment and particularly policy-process coordination will potential pitfalls of making growth pole investments. The make infrastructure projects more productive. chapter then outlines the key policy challenges involved with growth poles and, finally, addresses growth pole GROWTH POLES FOR SHARING PROSPERITY IN financing. AFRICA’S MARKETS As the first part of the chapter explains, the The growth pole approach to economic development underlying assumption about the benefits of growth looks at how infrastructure that will be developed for an poles is that they increase market size so that it becomes existing private investment in mining, agriculture, and profitable for firms to invest. Private-sector investments, so on can be used to encourage spillovers into other in turn, lead to more jobs, higher wages, and economies sectors. This could manifest itself through a development of scale. Growth pole projects also often attract foreign corridor or a special economic zone, or even an direct investment (FDI), are built across borders, and have agglomeration economy in a booming city. A growth pole spillover effects beyond national economies. Thus they will have an existing resource that serves as an inherent can also be a boon to regional integration. revenue producer. A number of challenges characterize growth pole What are growth poles? projects. To set a framework for policymakers to plot the Growth poles, as noted earlier, are comprised of multiple course for growth poles to enhance competitiveness, the simultaneous investments coordinated throughout many chapter next discusses three key policy challenges: sectors with the purpose of supporting self-sustaining • Growth pole coordination challenges concern the industrialization in a country. Growth pole projects are setting up and sustaining of both the spatial and the not oriented around addressing identified market failures, political economy linkages that are required to make but around capitalizing on and augmenting opportunities these poles happen. Tradeoffs and the strategic that already exist in an economy, as Figure 1, illustrating vision are both required in multi-stakeholder the dynamics of building growth poles, suggests. investments and projects such as infrastructure Figure 1 shows how growth poles enhance already- ones, and both need be focused on ensuring that existing opportunities and can multiply them over time, participation is balanced and sustained throughout delivering both quick wins and generating medium- the process. and long-term investments. Indeed, the underlying assumption about the benefits of growth poles is that • Accountability questions concern the push and pull they increase market size so that it becomes profitable of rewards embedded in the contracts stakeholders for firms to invest, with the resulting higher wages and make to design and deliver growth pole projects. economies of scale. If an investment in a project induces The key accountability challenges regarding investment in the following stages of production, it growth poles in Africa today concern the returns is called forward linkage and has outcomes such as of these investments to landlocked countries and diversification in value chains. A backward linkage is coastal countries, as well as to rural and urban a creation of investment in the stages of production populations. Accountability questions also concern leading up to the final product, such as investment into the socioeconomic sustainability that growth pole logistics or the storing of goods. Investment should be investments can promote across the investment pushed into a project that maintains the highest number area and industries. of total linkage investments. • Risk management and risk sharing concern the Furthermore, growth poles, as economic initiatives, endeavors that are put in place to make risks and are spatially targeted investment instruments and sets of rewards commensurate with each other to drive policy for accelerating economic growth in developing good performance as the growth pole is built, countries. As a concept, growth poles are based on managed, and maintained.4 Perroux’s assumption that, for an economy to attain higher income levels, that economy should first develop Finally, the chapter discusses the specific type of within itself one or several regional centers for economic investment arrangements that can significantly improve strength.5 Growth poles, as a spatial planning tool, draw 94 | The Africa Competitiveness Report 2013 2.3: Growth Poles Figure 1: Characteristics of growth pole projects: Quick wins and medium-term investment for long-term development  Current   Quick wins   Medium term   Long term National border Main sector Investment Sourcing (direction of money flow) Secondary sector Exports Growth pole area Local suppliers and entrepreneurs Internal market Source: Authors. Note: Levels of investment are nonexistent for current, low for quick wins, medium for medium term, and significant for long term. on the following concepts: (1) economies of scale, (2) may be reinvested. The growth of dominant industries the nurturing of backward and forward economic supply generates external effects that stimulate the growth of linkages and also fiscal and final demand linkages, and other industries because of inter-industry linkages. (3) economies of agglomeration, which are associated As developing countries advance from largely with spatial clusters and the geographic concentration of agriculture-based economies, the assumption is that it is economic activities. most likely that investments into industry will create the Figure 2 illustrates how to identify potential growth most linkages. It follows that the focus in growth pole poles and shows the specificity of this investment and projects is on externalities and doing many things at the project development process. same time to achieve critical mass. Most growth pole As the steps needed to identify growth poles projects that are focused on infrastructure, regulation, illustrate, the growth pole model of economic capacity-building, and finance for early investors are a development is distinct from the development corridor mix of policies and investments, but the investment and of SEZ investments. Growth poles, considered as policy mix varies depending on perceived constraints investments, often consist of infrastructure projects, to private investment and growth (see Box 1 for an with associated investments and capacity-building example). efforts directed at the private sector. Indeed, although Because of the “big push�–style simultaneous development corridors and SEZs can be component commitment of multiple investments for growth parts of growth poles, growth pole projects are built on poles, the process of identifying key constraints, their the assumption that there is a need for simultaneous, relationships, and the underlying political economy of coordinated investments in many sectors to get self- these constraints is critical for achieving outcomes. sustaining industrialization. As such, growth poles are Growth poles typically bring about large changes in broader than SEZs or development corridors.6 particular locations—they distinctly do not effect marginal Central to the growth pole is a group of dynamic changes. This fact has attracted quite an amount of industries that are connected around a particular academic critique of the growth pole and SEZ types resource. These constellated industries are—by virtue of intervention as concepts for economic development of their dimension or negotiation strength—expected (see Box 2). to have the capacity to innovate and adapt to market Indeed, as other surrounding competitiveness conditions. The growth of these dynamic industries is challenges are addressed, the typical outcomes of expected to generate further investment, employment, growth pole and SEZ types of spatial investments can and distribution of factor payments, including profits that include increased output and/or exports; measurable The Africa Competitiveness Report 2013 | 95 2.3: Growth Poles Figure 2: Growth pole development process elements DIALOGUE ANALYSIS Consultation with key stakeholders Diagnostics focused on competitive industries Developing a growth pole successfully necessitates Several different types of diagnostics should be utilized: developing a dialogue with stakeholders in order to: • Spatial analytics analyze, from a locational perspective, • Understand the current context for development and some of the key economic drivers in play, such as growth, as well as ongoing and future investment potential agribusiness, natural resources, logistics, infrastructure, and existing manufacturing capabilities • Share best practices and African success stories • Sector and subsector analytics, complemented by • Generate new ideas for specific growth pole interventions product space analysis, identify emergent competitive • Test existing ideas advantages • Identify key “champions� for change and develop • Trade competitiveness and services sector diagnostics partnerships identify spillovers between sectors • Define the role of international finance in encouraging • Enterprise surveys include firm-level surveys of localized and inclusive growth a representative sample of an economy’s private • Take key ideas and develop interventions in concert with sector. The surveys cover a broad range of business local partners or champions environment topics including access to finance, corruption, infrastructure, crime, competition, and • Identify projects for funding performance measures • Coordinate among all strategically important initiatives • Business school–style case studies of the top five “gazelles� (dynamic, fast-growing companies) are co-produced with local research institutions to illustrate the methods used by local dynamic enterprises INSTITUTIONS FINANCIAL MODEL Coordination with institutions Combination of financial instruments Dynamic interaction among institutions needs to be Each growth pole is a sum of its parts, and any growth coordinated both horizontally and vertically to produce the pole would have financing from some combination of the desired outcomes: following: Horizontal coordination • Public financing (including donor resources applied • Streamlining institutional arrangements to coordinate through the budget) competitiveness, investment, and other issues between • Donor grants and financing at the sovereign and sub- central and local government, and between public and sovereign level that lie outside the budget private sectors • Public-private partnerships to build and operate/ • A council or team in a ministry could play an important renovate service delivery in the infrastructure and social strategic role in horizontal coordination and temporal and economic development spaces (industrial estates) coherence • Corporate social responsibility–like intervention Vertical coordination • Asset sales/leases (typically using the value of the land • Because of the dynamic nature of a growth pole project, created by the initiative) implementation arrangements in particular should be attended to in detail • Privatization of existing state-owned enterprises with redundant but useful assets • An effective results-based monitoring and evaluation framework, based on multi-stakeholder participation, iterative • Private financing with some risk mitigation learning, and peer group studies of other growth poles • Private financing where all risk is with the private sector should be constructed productivity gains in the enclave from combined discussed, the challenges to commerce and trade in components; and, possibly, spillovers to the rest of the these new markets no longer arise predominantly from economy. These must be considered in the context high tariffs, but rather from barriers behind the borders of the overall location-based development impact of (see Chapter 2.1). Indeed, to trade beyond their countries’ embarking on such projects. Therefore, an emphasis borders, African exporters will benefit not only from on employment generation emerging out of growth pole additional hard infrastructure and technical assistance from projects is a significant focus. their governments and other actors, but also from equally ambitious policy reforms to support the agglomerations of Regional integration and the need for the creation competitive industries and to facilitate trade. of growth pole linkages Successful reforms will result from the efforts of Growth poles emerge as a policy response to the need both the public and private sectors, and will take into to create better spatial and political economy linkages account spatial constraints a country faces, targeting in the new African regional markets. As this Report has landlocked countries in Africa with specific insights. 96 | The Africa Competitiveness Report 2013 2.3: Growth Poles Box 1: What is a growth pole? The case of Madagascar The Madagascar Integrated Growth Poles Project aimed port managed by a private consortium and in operation since at stimulating the growth of three geographical regions of 2009. Investments were also made in road construction to Madagascar centered around the growth poles of Nosy Be, support tourism and to facilitate market access for local Fort Dauphin, and Antananarivo-Antsirabe (Figure A). The production. objective of the poles was to address key constraints to In addition, the project is supporting innovative public- investment, including infrastructure, business environment, private partnerships (PPPs) with Rio Tinto in power generation institutional capacity, skills and access to finance. The poles and transmission—with a guarantee from the Multilateral are multi-sector projects with particular focus on tourism-led Investment Guarantee Agency—and in improving access growth in Nosy Be, mining- and tourism-led growth in Fort to water supply. A partnership with the United Nations Dauphin, and export-led growth in Antananarivo-Antsirabe. Development Programme, Rio Tinto, and other private firms In Nosy Be, the pole focuses on building support has led to the establishment of a vocational training center infrastructure (rehabilitating roads and improving water to bridge local skills gaps. The emphasis on ensuring that supply); strengthening municipal capacity for administration, mining projects have a positive impact on local populations fiscal management, and service delivery; and supporting and on the economy more broadly serves as an example of business environment reforms. The project supports a new what can be done for other mining investments. hotel training school in partnership with other donors and the In Antananarivo-Antsirabe, PPPs have been private sector, and the establishment of a marine reserve to established in skills development for the garments, tourism, protect rare ecological resources vital to the sustainability of and information technology industries. For example, the the tourism industry. growth pole includes a private university and firms in the garments industry, which have collaborated to offer the first textile engineering diploma program in Madagascar. Figure A: Madagascar’s growth pole sites The growth poles in Madagascar are showing positive results, and the main objectives of these investments have not been revised. Until the onset of the political crisis of 2009, the poles were on track to achieve their development objectives and results in terms of private investments and job Nosy Be creation. Private investment increased from US$84 million in 2005 to US$1,045 million in 2007. In 2006–08, some 5,000 new businesses were registered in the three poles. During the same period, an estimated 10,000 formal jobs were created in the three poles, and the number of new hotel rooms in Fort Dauphin and Nosy Be increased by 40 percent and 27 percent, respectively. Regional development plans were adopted and most of the main infrastructure works were completed, leading to major improvements in local infrastructure. Since 2009, Fort Dauphin and Nosy Be continue to show progress, and by 2013, have added over 13,000 formal jobs. The overall business environment in Madagascar has been improved: it is now easier to register a business, trade, Antananarivo-Antsirabe pay taxes, and obtain a license. In Fort Dauphin, it now takes four days to register a new business; before the project was initiated, this took two months. The Economic Development Board of Madagascar regional offices in Nosy Be and Fort Dauphin can now register individually owned enterprises, which has significantly reduced the cost and time required for small business startups. By 2013, following results assessments on the poles, the Antananarivo-Antsirabe pole was deemed less successful and discontinued. Fort Dauphin Overall, indicators from the poles suggest promising private-sector response to the investments made in infrastructure, the improvement in the business environment, and job creation. In Fort Dauphin, the pole is jointly invested in by the government and the mining company Rio Tinto to ensure Source: The World Bank’s Integrated Growth Poles Project, available that large mining investments benefit the local population. at http://www.worldbank.org/projects/P083351/integrated- They co-financed the construction of a new public multiuser growth-poles?lang=en. The Africa Competitiveness Report 2013 | 97 2.3: Growth Poles To fully realize benefits from efforts at regional Box 2: Debating the spatial approach to integration, a number of spatial and political economy economic development linkages need to be established, and need to operate well, to deliver competitiveness and sustainable growth Although there is a long, challenged history around the in Africa. This Report has discussed the prospects of world in using instruments such as SEZs to promote investment in remote regions, the evidence suggests they specific sectors of infrastructure, including energy and the can be highly effective when targeting regions that already ICT sectors, of doing so. The attempt to create regional have natural or economic geography advantages.1 And and national spatial linkages by building infrastructure although SEZs are unlikely to trigger agglomeration in needs to be mindful of the unequal distribution of lagging regions with low population densities, in places such as China, where SEZs targeted coastal trade resources between the coastal and landlocked countries gateways, they have proven to be powerful catalysts for of the continent, and to consider the challenge of growth. Thus, while the World Bank’s World Development spurring equitable growth in both rural and urban areas. Report 2009 suggested SEZs be approached cautiously, One recent example of such efforts is the Lamu Port– it supported the use of such hard and soft infrastructure to reinforce existing geographical advantages.2 South Sudan–Ethiopia Transport (LAPSSET) economic Concerns have also been raised that zones, by and transport corridor, planned to connect the east and and large, have failed to extend benefits outside their west coasts of Africa and to establish reliable access to enclaves or to contribute to the upgrading of skills and the the sea for northern and eastern parts of Kenya, South production base.3 First, however, it is important to separate political support from political objectives in zone projects. Sudan, and Ethiopia (see Box 4). Although strong commitment from the government is needed, projects must be designed carefully on the basis GROWTH POLE POLICY CHALLENGES of clear strategic plans. The zones must be commercially A number of lessons can be distilled from the growth viable, and the case for their construction must be based poles that have been planned and built in Africa over on sustainable sources of competitiveness, not solely on fiscal incentives. Second, despite the concept of zones as the past decade. To start with, growth pole projects enclaves, in practice, their success is almost fully entwined have revealed three kinds of challenges: coordination, with the competitiveness of the national economy and the accountability, and risk management and sharing issues. national investment environment. Coordination Source: Farole, 2011. Infrastructure and competitiveness projects such as Notes growth poles bring about a number of coordination 1 World Bank 2008. challenges. First, not unlike other infrastructure and 2 World Bank 2008. private-sector development initiatives, growth pole 3 See Kaplinsky 1993. coordination challenges concern the setting up and sustaining of both the spatial and the political economy linkages that are required to make the poles happen. More specifically, policy coordination challenges Indeed, success cases—such as that of Mali’s innovation include the question of strategy: how do growth poles in the mango production value chain (see Box 3)—show get chosen, and how do specific transactions get how a country can gain from intra-African trade and chosen? Responding to these challenges requires innovate in infrastructure and private-sector development both institutional (horizontal) coordination and effective policy to realize areas of comparative advantage and (vertical) coordination of implementation arrangements. diversify its economy. Horizontal coordination of growth pole projects In addition to national measures, policies promoted entails streamlining institutional arrangements to and adopted by African regional organizations can also coordinate competitiveness diagnostics and planning, provide an enabling environment for the expansion as well as investment issues, both between central and of markets for African goods. Regional integration local government and between the public and private is a powerful tool that governments can use to spur sectors. It is often the case that a council or a team growth and competitiveness through additional trade in a ministry could play an important strategic role in facilitation measures, such as the harmonization of horizontal coordination and strategic sequencing and safety and quality standards for products and the mutual timing of efforts, including the monitoring and evaluation recognition of educational degrees. The development of activities. These projects usually also benefit from of cross-border financial services is also important, an administrative unit dedicated to growth poles in especially for small- and medium-sized enterprises government. and traders, which often work in the informal sector Vertical coordination requires that special attention and have limited access to credit, banking, and other be paid to the implementation arrangements. A common financial services. Cross-border financial services might challenge is that, even when the right policies and encourage trade expansion for producers and traders regulations are in place, they may not be consistently not already well connected to cross-border trading implemented across individual cases (this situation is networks. captured by the term policy implementation uncertainty). 98 | The Africa Competitiveness Report 2013 2.3: Growth Poles Box 3. Mali’s mangos: Linking farmers to markets through innovations in the value chain Mali, a landlocked country of West Africa, has experienced Moreover, agriculture is a major pillar of Mali’s economy. a spectacular growth in its exports of fresh mangoes, which It accounts for 45 percent of the country’s GDP and employs increased sixfold in volume between 1993 and 2008. As 80 percent of its workforce. Industry represents 17 percent one of the poorest countries in the world, and with over 80 of the country’s GDP, with food processing, construction, percent of the workforce engaged in agriculture, Mali had to and phosphate and gold mining as the principal industrial overcome a number of very serious challenges to achieve activities. Mali’s main exports, since the 1970s, have been such a result. Over a decade, Mali has been able to build on gold, cotton, and livestock. However, as a landlocked country, its comparative advantage and secure access to the fast- Mali was—and still is—highly dependent on the transport growing fresh fruit market in the European Union, generating infrastructure and other logistical arrangements of its increasing revenues for its producers and exporters. neighbors for market access and trade. The key innovation that allowed Mali to overcome The mango fruit was traditionally collected and sold obstacles arising from its situation as a landlocked country mainly for the domestic market. During the 1970s, Mali was and to secure access to this market was the testing the first country in West Africa to focus on opportunities and implementation—through a partnership with private to export fresh mangoes. However, these exports were operators—of a multimodal transportation system for the exclusively via air freight, reaching a volume of between 1,000 export of fresh produce that would provide an alternative and 1,500 tons per year and targeting the niche market of to air freight. Thanks to an intervention, the feasibility and the expensive retail shops selling tropical fruits in France. In profitability of using refrigerated containers all the way to the early 1990s, the government of Mali recognized the need the destination market in Europe, using a combination of to design policies to diversify exports and foreign exchange road, rail, and sea freight rather than shipping by air, was earnings, which had been heavily concentrated for years on demonstrated (Figure A). This innovation basically opened only three export products: gold, cotton, and livestock. the way to accessing the large and growing market of The lack of direct access to a port meant that Mali had sea-freighted export of perishables. This new multimodal to rely on its neighbors’ surface infrastructure as well as approach to transport is also good from an environmental its own. Until the 1990s, the only rail line with international point of view because it drastically reduces the carbon linkages was run inefficiently, leading to uncompetitive footprint of this trade. prices and chronically severe delays: the development Figure A: Transport modes for fresh mangoes from Mali to Europe AIR: 2 days TRUCK/SEA: 25 days MULTIMODAL: 12 days High cost, low volume Lowest cost, low volume Low cost, high volume Farm Farm Farm Smallholder mango Smallholder mango Smallholder mango Truck producers producers producers Air Traders Traders Traders Truck Mail Mail Mail Small traders (pisteurs) Small traders (pisteurs) Small traders (pisteurs) Truck Packers/exporters Packers/exporters Packers/exporters Air Pack houses/exporters Pack houses/exporters Pack houses/exporters Train Côte d’Ivoire Truck Exporters Exporters Côte d’Ivoire Importers Europe Air Exporters Ferke train station Wholesalers Retailers Exporters Importers Europe Sea Importers Wholesalers Retailers Europe Sea Wholesalers Retailers Source: Adapted from Sangho et al., 2010. (Cont’d) The Africa Competitiveness Report 2013 | 99 2.3: Growth Poles Box 3. Mali’s mangos: Linking farmers to markets through innovations in the value chain (cont’d) of an alternative supply chain was of critical importance. high-quality technical and economic work in areas such as However, such development faced three crucial challenges: market research, value chain cost analysis, benchmarking, infrastructure, management, and finance. The paucity and assessment of constraints. Even if, as in the case of of market information for growers and exporters was the mango sector of Mali, the private sector is weak in the exacerbated by poor harvesting practices and post-harvest beginning, it is necessary to start working with existing handling techniques, little or no investment at production private operators and eventually bring in new ones, such level, and an extremely challenged domestic finance market. as the company from Côte d’Ivoire that ran the pilot export Mali’s mango export value chain improvement test for the mangos. There was also a unique public-private (resulting in the transport innovation) was achieved through partnership sharing of risks for all partners involved. a combination of innovation, in-time deployment of the right financing mechanisms, private-sector leadership, and Source: Sangho et al., 2010. In order to avoid the costs that delays or unpredictable intra-regional corridors are developed, fair sharing of policy environment can cause to growth pole projects, benefits is needed. policymakers will do well to pay attention to the Accountability issues then also pertain to formulation of results-based monitoring and evaluation possibilities for the local private sector entailed in a frameworks for growth poles.7 situation where large, private-sector anchor investors internalize the coordination costs of rebuilding Accountability value chains that include smaller industry players. Accountability questions concern the push and pull of The development of export horticulture production rewards embedded in the contracts that stakeholders in Northern Senegal provides a good example of make to design and deliver the infrastructure of growth competitiveness enhancement through trade and poles. Indeed, the political economy of a growth standardization that have also raised the incomes of the pole project is complex because, if the projects are rural poor.8 successful, they will induce large local (or regional) changes, and local effects may vary among different Risk management and risk sharing sites. The challenge of risk management and risk sharing Growth pole projects, and other infrastructure concerns attempts to make risks and rewards investments, can be at once national and regional, commensurate with each other to drive the needed public and private. They are by definition large and risky, private-sector participation. These risks include and entail a large number of players. In this context, contingent risks—(the risk to income when the income the accountability of the set of institutional tools that is largely dependent on others), political predictability reward organizations that consistently perform well for risks (the risk that contracts will not be violated), and the their stakeholders and penalize those that do not is whole raft of technical and market risks that exist in any significant. Infrastructure projects often not only connect PPP. rural regions with urban ones, but regional infrastructure Of particular importance in Africa is how PPPs can projects also often connect more naturally advantaged help in managing life cycle risks. Often governments countries (e.g., those with a coastline and ports) with do not account for life cycle costs, including regular less-advantaged countries (landlocked ones). How then, maintenance and replacement of assets. These costs for example, are spillover benefits to local farmers in can be higher than the initial capital costs of the rural-urban road projects balanced with benefits accrued investments. PPPs are designed to provide services to from a road built to retailers in the city? the users over a longer-term period than the traditional In the case of a road connecting rural and urban procurement methods presented by a construction areas, land will become much more valuable, which contract. Consequently, it becomes critical to plan and will attract outside investors and job seekers. For this allocate resources appropriately to ensure inclusive and reason, an entire ecosystem of checks and balances shared growth over 20–30 years. is needed, including competition commissions, Indeed, the question of financing growth poles infrastructure sector regulators, and concession needs special attention in Africa, as access to finance regulators. Furthermore, when infrastructure is developed is a particular challenge on the continent. This area is to facilitate trade and productive sectors, accountabilities discussed in detail in the next section of this chapter. to the key stakeholders are also produced. Communities that are affected want to participate in the economic FINANCING GROWTH POLES benefits that flow from the project. The local private Growth pole projects are usually large-scale investments sector wants to participate in the relevant markets that require considerable upfront expenditure. As created by the trade of the underlying resource. When such, growth poles present a vast financing challenge. 100 | The Africa Competitiveness Report 2013 2.3: Growth Poles Box 4: The Lamu Port–South Sudan–Ethiopia Transport (LAPSSET) Corridor Project The aim of the LAPSSET corridor is to facilitate trade, regional competitiveness by creating tens of thousands of jobs over an economic integration, and interconnectivity among a number investment period of up to 40 years. of African countries by easing movement from Ethiopia, South The LAPSSET project is indicative of ways regional Sudan, Rwanda, and the Democratic Republic of the Congo integration can fuel economic growth. The project design up to Douala in Cameroon (Figure A). Foreseen combined required to meet the competitiveness challenge for African investments from the governments of Kenya, South Sudan, countries specifically boils down to focusing infrastructure and Ethiopia, along with private investment, are intended to investments spatially on comparative advantages, together allow the construction of a port, a railway line, an oil refinery, with appropriate governance. For projects such as LAPSSET, an oil pipeline, airports, a highway, and resort cities. In such a required combined strategy is often described as the addition to benefits for the economy in particular locations, development of growth poles. the LAPSSET project is expected to spur economic growth in participating countries by increasing annual growth rate from Source: Government of Kenya, 2011. around 6 percent to around 10 percent and to fuel sustained Figure A: The Lamu Port–South Sudan–Ethiopia Transport (LAPSSET) corridor Bangui Yaunde Juba Douala Bambari Nairobi Lamu Mombasa Source: Government of Kenya, 2011. Moreover, ensuring the availability of private financing Growth pole finance differs somewhat from finance for the longer term, which is needed to match the life models specific to infrastructure and to SEZs. The latter, of the assets at a reasonable cost, is a formidable as indicated at the outset, have commonly been supply- task in today’s market conditions. Most investors and side competitiveness measures. Their finance models lenders are receding from new and untested investments have largely been public. See Table 1, which describes because they are too risky to ensure a reasonable revenues for building these zones. return on their investment. In the case of many growth Infrastructure finance includes both public and pole–related investments, the composite projects may PPP models. Public finance models can include not be individually creditworthy and may need additional accruing user fees, property value capture (such as the enhancements, such as government guarantees, acquisition and later sale or lease of excess land), tax extra reserves, and liquidity support, especially during incremental financing, and so on. Still, growth poles, like construction. This is why high-quality PPPs play an infrastructure projects, increasingly see PPPs as their key integral role in growth pole projects. financing model. The Africa Competitiveness Report 2013 | 101 2.3: Growth Poles Table 1: Funding SEZs: Revenue streams in typical SEZ arrangements Revenue stream Description Typical recipient in SEZ regimes Customs revenue Revenues received from charging duties on imports/ National government; note in the case of existing exports regional agreements (such as the East African Community) there may already be a revenue sharing model Corporate tax Taxes of firm profits National and sometimes state/provincial governments (often waived or reduced as fiscal incentive) Municipal taxes Taxes charged on profits, assets, and so on from local Local government (often waived or reduced as fiscal governments incentive and to simplify tax administration for investors) VAT/sales taxes Taxes on production and sales National government and sometimes state/provincial government (often zero-rated or reduced as fiscal incentive) Personal income taxes Taxes on incomes of individuals living in the zone National government Service fees Fees for provision of licenses for operating or carrying SEZ developers; SEZ Authority; individual government out specific activities agencies Land/facilities sales and lease Leases for land plots or rents for prebuilt facilities in SEZ developers the zone Source: Dobronogov and Farole, 2012. A number of questions need to be answered during some would be better suited for private development. the course of planning any PPP project. In infrastructure Therefore, the final set of challenges and opportunities projects, for example, the specific challenge concerns to be discussed in this chapter pertains to risk whether development for the infrastructure to be management and risk sharing around growth pole and built should be bid out competitively or should be infrastructure projects. sole sourced. What measures should be taken for Risk management concerns the question of how proactive investment generation? Can regional deals for growth pole projects can be made commercially viable. infrastructure investments and development be made, Risk sharing questions concern how infrastructure and are local investment banks involved? How can projects and their construction and maintenance risks funding be scaled up to engage a more diverse group can be distributed and leveraged for shared gain. of actors? To what extent can the regulatory capacity of Risk management and risk sharing are ongoing infrastructure investments be harmonized regionally, to and continuous parts of growth pole investments. attract and sustain investment and political will? World Once the main economic drivers of growth poles Bank–supported PPPs, especially on the west coast of are identified—whether these are agglomerations of Africa, have had success in balancing the coordination economic activity, such as cities, or the discovery of a of public-private participation and risk sharing in the new natural resource, for example—the types of risks projects (see Box 5). An example of such a successful involved must be identified. The types of risks that PPP from the telecommunication sector accounts for usually need managing in growth pole projects have to approximately 90 percent of the value of PPPs set up in do with payment and demand risks, market risks, and sub-Saharan Africa.9 construction risks. The recent guarantee and credit In PPPs such as those on the west coast of support in Nigeria for the gas sector provides a good Africa, public investment through the PPP mechanism example of innovative solutions to these problems undoubtedly helped to unlock the projects that were (Box 6). held in fragile states or those that were too large or Risk-sharing and risk management challenges of risky to have the private sector involved on its own. To growth poles ensure private-sector involvement, governments created Whether the economic driver of a growth pole is a enabling legal and regulatory frameworks and built natural resource or a particularly buoyant agglomeration pro-competition policies. Overall, to ensure the success of industrial activity, this economic driver could of the PPPs, deeper reforms are needed to eradicate translate, first and foremost, into a commercial risk to monopolies, and regulations have to be adjusted to meet be managed. Such a commercial risk will include both rapid technological changes. the payment and the demand risks involved in setting Growth pole PPPs up the project. Such risks determine a project’s ability to The risk profile of growth poles will be different from produce enough cash to be able to cover the project’s that of other types of PPP projects. Indeed, certain daily expenses (incurred in providing the services), pay areas would be better suited for public funding and back its debt, and achieve a reasonable profit. The 102 | The Africa Competitiveness Report 2013 2.3: Growth Poles Box 5: Success in PPP coordination Since 2007, the World Bank has provided technical Each recent submarine cable project supported by the assistance and financial support to more than 30 developing World Bank has resulted in a unique model according to the countries to connect them to international networks through level of involvement of private partners and the objectives of optic fiber. Many of these projects were public-private policy makers (Table A). partnerships (PPPs) on the west coast of Africa that linked The models for PPP developed in the telecommunication national networks to Europe through submarine cables. sector provide important lessons for emerging services The PPP structure has been tailored to each project’s level sectors such as infrastructure and construction in Africa. of public ownership, risk, and scope of service offered, ranging from business processing outsourcing to privatization (Figure A). Figure A: Matrix of selected PPP approaches and models Wide scope Management contract Privatization Scope of enterprise functionality Concession contract and service offering BOO BOT Network leasing PPP landing station Limited scope BPO Public Private Ownership and risk Source: Gallegos, 2012. Note: BOO = build-own-operate; BOT = build-operate-transfer; BPO = business processing outsourcing; IPO = initial public offering; PPP = public-private partnership. (Cont’d on next page) investments in the growth pole, for example, might be an important point because life cycle costs, including technically and economically sound, but not necessarily regular maintenance and replacements of the assets, are financially viable. Additionally, managing construction risk at stake. These life cycle costs can be higher than the is particularly important because the risk precludes many initial capital costs of the investments. sources of patient long-term capital, such as pension One way to address overall costing issues is to funds and sovereign wealth funds, from investing in set up high-quality PPPs that are designed to provide PPPs. services to the users over a longer-term period rather Another set of risk management questions concerns than using the traditional procurement method of a cost recovery from the growth poles. If the investment construction contract. Therefore, planning and allocating generates revenues, are these enough to cover the resources appropriately is vital to ensure that access is costs? If the revenues are not sufficient, is there potential inclusive and that growth is shared over 20–30 years. for increasing these revenues, or can the public entity To achieve shared growth, risk-sharing instruments involved complement the revenues generated directly must be thought through. Cost recovery concerns how by either driving down the capital costs or providing well the public partner is able estimate its investment supplementary revenues during implementation? This costs and price them into a periodic payment plan, either is a big decision for the governments involved because via users or another source. In this process, risk will be it becomes an affordability issue both for the users and shared. On the other hand, the private sector would not for the public budget. How much of the costs would (or enter into a transaction unless there is a certainty for should) the government pass on to the users? cost recovery during the operation period. Finally, governments often do not pay enough In the current markets, the potentially shared risk attention to the overall costing and the cost-benefit concerning cost recovery is translated into construction analysis of the whole project cycle at the outset. This is risk, which would mean cost overruns and time delays The Africa Competitiveness Report 2013 | 103 2.3: Growth Poles Box 5: Success in PPP coordination (cont’d) Table A: Recent World Bank–supported PPPs, approaches, and models Model Description Examples Cooperative All sector operators (MNOs, ISPs) unite to form a private company (special-purpose Burundi national vehicle) for the purpose of building, owning, and operating the national backbone as a backbone project, 2007 wholesale operator. The government contributes a subsidy with no related ownership to ensure national coverage, including rural access points, open access, nondiscrimination, and low-cost pricing. Equity The equity model is similar to the cooperative model except that the government obtains The Gambia, Guinea, equity and shareholding ownership rights in exchange for its contribution. Generally, Liberia, São Tomé and government divestiture mechanisms are built in. Príncipe, Sierra Leone Concession This is a traditional build-operate-transfer approach, whereby the government issues Republic of Congo, in a public tender to select a private-sector operator to build and operate the national process backbone or specific national and cross-border links. The agreement is in the form of a long-term concession (15–25 years) that requires the transfer of the networks back to the government at the end of the concession. Bulk capacity The government, acting as an “anchor client,� issues a public tender for the long-term Rwanda, 2011; Malawi, purchase (10–15 years) supply of bulk capacity (+ 1 gigabit) bandwidth. This model stimulates in process investment by the private sector through the aggregation of demand. In this case, the partnership is governed by a PPP agreement or supplier contract that establishes the rights and obligation of each party. Management This is a standard management contract agreement whereby the government issues a Gabon, in process* contract public tender to select a private operator to build, operate, and commercialize the national backbone (or specific national or cross-border links) for a fee during a short-term period (3–5 years). Core assets remain the property of the government. Source: World Bank, ICT Unit analysis. Notes: ISP = Internet service provider; MNO = mobile network operator. * The initial PPP structure allows for conversion to an equity approach at a later stage. Source: Gallegos, 2012. in the construction aspects of a project. The longer the is focused on Africa as an investment destination, with construction period, the longer it takes the project to a specific emphasis on the continent’s infrastructure. begin operation and therefore the longer it takes to begin Unfortunately, this growth is uneven and highly reliant generating revenues. Traditionally, this risk was covered on natural resources, with a number of resource-rich by monoliners,10 but after their demise in the aftermath of countries enjoying very strong growth—in some cases the 2008 financial markets problems, very few financiers over 10 percent—and other countries not doing very are able to accept this risk. The other big risk comes well. These competitiveness figures bring to the fore from the government itself as a co-financier of the the important question of how, while enjoying a high project. In the case where the government is providing rate of growth, African countries can make the types of financing either with a capital grant toward investment investments and policies that can put their economies costs or an availability payment during the operational on sustainable growth paths and create jobs for the long phase, the availability of public budget funds over the term. life of the concession remains risky. This risk, in turn, This chapter has argued that, for Africa to maintain is one of the reasons why there are such vast benefits and accelerate its growth performance, it needs to find to be gained from policymakers addressing the above- ways to develop its areas of key comparative advantages outlined coordination, accountability, and risk challenges in its competitive industries (for example, agriculture, associated with growth poles. mining, and tourism). This means improving productivity and connections to and among markets and reaping CONCLUSIONS the benefits of recent trends toward regional integration. The present time is fortuitous for Africa. The continent is The key ingredients to this success are governance enjoying solid growth, and much international attention and infrastructure, and the deployment of a combined 104 | The Africa Competitiveness Report 2013 2.3: Growth Poles challenges. Decision makers will want to ask Box 6: The Nigeria electricity and gas themselves a selection of important questions when improvement project seeking to resolve the economically and technically complex challenges of infrastructure and growth pole Poor infrastructure in the energy sector has been a key investments. Among these questions are those regarding constraint to economic growth in Nigeria. Shortfalls in the availability of energy have meant that around 60 million coordination: how can infrastructure services best be people continue to live in the dark, and average annual provided competitively? And what instruments—financial, per capita energy consumption is among the lowest in the regulatory, and participatory—can governments deploy world. Poor access to energy has forced companies to to involve the private sector and the broader society invest in self-generation, diverting substantial resources away from other, more productive uses. most effectively and efficiently in the construction and Furthermore, power generation has been constrained maintenance of this backbone of growth? Accountability by inadequate gas supplies to power plants. So far, low issues must simultaneously be addressed from this gas prices have inhibited domestic and international oil angle. An ecosystem of checks and balances—including companies from investing in gas-gathering and gas- processing equipment to supply the domestic market. competition commissions, infrastructure sector To address this problem, Nigeria has announced a regulators, and concession regulators—is required to phased price increase to domestic gas suppliers. At the deliver on accountabilities to the key stakeholders. As same time, it has introduced a domestic supply obligation growth poles in Madagascar and elsewhere have shown, and bilateral contracting between gas suppliers and consumers. These steps are expected to bring commercial supporting the growth of competitive industries and jobs discipline to the gas sector. Additionally, through extensive to make most of the infrastructure built requires both a multi-stakeholder consultations and communication large and a long-term investment for a government. activities, the Nigerian government established the Nigeria Governments must continuously probe best-practice Electricity and Gas Improvement Project, with World Bank guarantee assistance, to mobilize gas supplies for power financial and regulatory mechanisms to attract private generation. The Power Holding Company of Nigeria’s gas financing and servicing for growth pole projects that supply payment obligations to international and domestic will advance a country’s export industries to Africa’s oil companies (Shell, Chevron, Exxon-Mobil, Total, Addax, regional and global markets. Taking a strategic approach Agip, and Pan-Ocean) will help mobilize gas supplies for to handling the coordination, accountability, and risk power generation and, moreover, will support the private sector–led development of the gas sector. challenges involved in growth poles presents a promising These risk-sharing actions are expected to boost way forward. domestic gas supply for power generation, thus helping to create an enabling environment for private investment NOTES in the energy, gas, and industrial sectors. Moreover, this 1 World Bank 2009. innovative risk-sharing credit aims to strengthen the value chain for power generation by eliminating the bottlenecks 2 SEZs are usually designed as supply-side competitiveness in the supply chain for power generation—previously a measures, and are meant to establish an agglomeration of firms fundamental constraint to economic growth in the country. through the provision of superior infrastructure and operating conditions. Another often-used concept is development corridors. These are usually feeder infrastructures, achieving outcomes by Source: World Bank, 2009. deepening project linkages and by encouraging densification. 3 For comparable experiences and successes in Asia, see World Bank 2005. 4 World Bank 2005. 5 Perroux 1955. strategy of spatial and economic development called 6 SEZs can be high-tech parks, science parks, industrial zones, and growth poles. export processing zones. Morocco’s SEZ has been an African success case—see http://specialeconomiczone.org/category/ Because huge infrastructure needs remain and africa-sez/morocco/. because capacity in both financial and implementation 7 Hallward-Driemeier et al. 2010. terms is limited, the question of how to use these scarce 8 See the World Bank’s Senegal Sustainable and Inclusive resources best is a crucial one. The development of a Agribusiness Project, available at http://www.worldbank. more sustainable policy process around infrastructure org/projects/P124018/senegal-agribusiness-development- project?lang=en. investments will enable African countries to enhance the 9 See the World Bank’s Private Participation in Infrastructure competitiveness of their private sectors. This chapter Database, available at http://ppi.worldbank.org/. has highlighted this message in the context of growth 10 A monoliner is an insurance company that provides guarantees to pole projects on the continent, focusing on paths issuers, often in the form of credit wraps, that enhance the credit forward regarding coordination, accountability, and risk of the issuer. challenges. 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Geneva: International Labour Organization. 106 | The Africa Competitiveness Report 2013 Part 3 Competitiveness Profiles 3: Competitiveness Profiles How to Read the Competitiveness Profiles The Competitiveness Profiles section of The Africa Competitiveness Report 2013 presents a two-page Part 3: Competitiveness Profiles Algeria profile of the performance in the Global Competitiveness Key indicators, 2011 Population (millions) ..............................................36.2 GDP (PPP) per capita (int’l $), 1990–2011 Index (GCI) discussed in Chapter 1.1 of each of GDP (US$ billions)* .............................................197.9 10,000 Algeria MIddle East and North Africa GDP per capita (US$) ......................................5,503.2 GDP (PPP) as share (%) of world total ..................0.33 8,000 Sectoral value-added (% GDP), 2010 the 38 African economies covered in The Global Agriculture ..............................................................6.9 6,000 Industry ................................................................62.1 Services ...............................................................31.0 4,000 Competitiveness Report 2012–2013. Human Development Index, 2011 2,000 Score, (0–1) best ..................................................0.70 1991 1993 1995 1997 1999 2001 2003 2005 2007 2009 2011 Rank (out of 187 economies)...................................96 Sources: IMF; UNFPA; UNDP; World Bank The Global Competitiveness Index Rank Score Stage of development PAGE 1 (out of 144) (1–7) GCI 2012–2013 ................................................ 110 ..... 3.7 Transition Transition GCI 2011–2012 (out of 142) ........................................... 87 ...... 4.0 1 1–2 2 2–3 3 GCI 2010–2011 (out of 139) ........................................... 86 ...... 4.0 Factor Efficiency Innovation driven driven driven Basic requirements (59.1%) ......................................... 89 ...... 4.2 Institutions .................................................................... 141 ...... 2.7 Key indicators Institutions 7 Infrastructure ................................................................ 100 ...... 3.2 Innovation Infrastructure 6 Macroeconomic environment ......................................... 23 ...... 5.7 5 Health and primary education ......................................... 93 ...... 5.4 Business Macroeconomic 4 environment sophistication The first section presents a selection of key indicators for 3 Efficiency enhancers (35.7%) .................................... 136 ...... 3.1 2 Health and Higher education and training ....................................... 108 ...... 3.4 Market size 1 primary Goods market efficiency .............................................. 143 ...... 3.0 education Labor market efficiency ................................................ 144 ...... 2.8 the economy under review: Financial market development ...................................... 142 ...... 2.4 Technological Higher education readiness and training Technological readiness ................................................ 133 ...... 2.6 Market size ..................................................................... 49 ...... 4.3 Financial market Goods market development ef�ciency Innovation and sophistication factors (5.2%) ........... 144 ...... 2.3 Labor market ef�ciency Business sophistication ............................................... 144 ...... 2.5 Algeria Economies in transition from 1 to 2 Innovation ..................................................................... 141 ...... 2.1 • Population figures are from the World Population The most problematic factors for doing business Prospects: The 2010 Revision, (CD-ROM edition) Inefficient government bureaucracy ......................................... 20.5 Access to financing ................................................................. 15.7 Corruption ............................................................................... 14.0 published by the United Nations’ Department of Inadequate supply of infrastructure ............................................ 8.1 Inadequately educated workforce .............................................. 8.1 Tax regulations .......................................................................... 6.3 Policy instability ......................................................................... 4.9 Economic and Social Affairs, Population Division. Inflation ...................................................................................... 4.5 Restrictive labor regulations ....................................................... 4.3 Poor work ethic in national labor force....................................... 3.5 Foreign currency regulations ...................................................... 3.0 Crime and theft ......................................................................... 2.4 Tax rates.................................................................................... 2.4 • Gross domestic product (GDP) data come from the Insufficient capacity to innovate ................................................. 1.4 Poor public health ..................................................................... 0.8 Government instability/coups .................................................... 0.0 0 5 10 15 20 25 30 Percent of responses October 2012 edition of the International Monetary Note: From the list of factors above, respondents were asked to select the five most problematic for doing business in their country and to rank them between 1 (most problematic) and 5. The bars in the figure show the responses weighted according to their rankings. Fund (IMF)’s World Economic Outlook (WEO) 124 | The Africa Competitiveness Report 2013 Database. Reported GDP and GDP per capita are valued at current prices. • The sectoral value-added (% of GDP) data are from the World Bank’s World Development Indicators Online Database (retrieved on November 20, 2012). • The Human Development Index (HDI) ranking is figures come from the WEO database. For more computed by the United Nations Development information regarding the classification and the data, Programme (UNDP), available from the Human see www.imf.org/weo. Development Indices: Statistical Update 2011. The Global Competitiveness Index • The graph on the upper right-hand side displays the This section of the profile details the economy’s evolution of GDP per capita at purchasing power performance on the various components of the GCI. parity (PPP) from 1990 through 2011 (or the period The first column shows the country’s rank among the for which data are available) for the economy under 144 economies covered by the GCI, while the second review (blue line). The black line plots the GDP- column presents the score. The percentage contribution weighted average of GDP per capita of the group to the overall GCI score of each subindex is reported of economies to which the economy under review next to the subindex name. These weights vary belongs. We draw on the IMF country classification, depending on the country’s stage of development. For which divides the world into six regions: Central and more information on the methodology of the GCI, refer Eastern Europe; Commonwealth of Independent to Chapter 1.1. On the right-hand side, a spider chart States (CIS), which includes Georgia and Mongolia shows the country’s performance on the 12 pillars of although they are not members; Developing Asia; the GCI (blue line) measured against the average scores the Middle East and North Africa; sub-Saharan across all the economies in the GCI sample at the same Africa; and Latin America and the Caribbean. The stage of development (black line). last group comprises advanced economies. GDP The Africa Competitiveness Report 2013 | 109 3: Competitiveness Profiles The most problematic factors for doing business Part 3: Competitiveness Profiles The bar chart at the bottom of the page summarizes Algeria those factors seen by business executives as the most The Global Competitiveness Index in detail INDICATOR VALUE RANK/144 INDICATOR VALUE RANK/144 1st pillar: Institutions 6th pillar: Goods market efficiency problematic for doing business in their economy. The 1.01 1.02 1.03 1.04 Property rights ....................................................... 2.5 ..........140 Intellectual property protection ............................... 1.8 ..........142 Diversion of public funds ........................................ 2.2 ..........131 Public trust in politicians ......................................... 1.8 ..........129 6.01 6.02 6.03 6.04 Intensity of local competition .................................. 3.1 ..........144 Extent of market dominance .................................. 2.8 ..........137 Effectiveness of anti-monopoly policy ..................... 2.9 ..........140 Extent and effect of taxation................................... 3.2 ..........101 information is drawn from the 2012 edition of the World 1.05 Irregular payments and bribes ................................ 2.6 ..........135 6.05 Total tax rate, % profits* ....................................... 72.0 ..........135 1.06 Judicial independence............................................ 2.5 ..........123 6.06 No. procedures to start a business* ........................ 14 ..........134 1.07 Favoritism in decisions of government officials ....... 2.2 ..........134 6.07 No. days to start a business* .................................. 25 ............92 1.08 Wastefulness of government spending ................... 2.4 ..........116 6.08 Agricultural policy costs.......................................... 3.2 ..........124 1.09 Burden of government regulation ........................... 2.3 ..........140 6.09 Prevalence of trade barriers ................................... 3.0 ..........141 Economic Forum’s Executive Opinion Survey (the 1.10 Efficiency of legal framework in settling disputes .... 2.6 ..........132 6.10 Trade tariffs, % duty* ............................................ 14.0 ..........132 1.11 Efficiency of legal framework in challenging regs. ... 2.5 ..........137 6.11 Prevalence of foreign ownership............................. 3.3 ..........136 1.12 Transparency of government policymaking............. 2.6 ..........144 6.12 Business impact of rules on FDI ............................. 3.2 ..........138 1.13 Gov’t services for improved business performance... 2.8 ..........124 6.13 Burden of customs procedures .............................. 2.5 ..........141 1.14 Business costs of terrorism .................................... 3.5 ..........140 6.14 Imports as a percentage of GDP* ........................ 32.4 ..........111 Survey). From a list of 16 factors, respondents were 1.15 Business costs of crime and violence..................... 3.6 ..........119 6.15 Degree of customer orientation .............................. 3.0 ..........144 1.16 Organized crime ..................................................... 3.3 ..........137 6.16 Buyer sophistication ............................................... 2.4 ..........131 1.17 Reliability of police services .................................... 3.0 ..........121 1.18 Ethical behavior of firms ......................................... 2.6 ..........143 7th pillar: Labor market efficiency 1.19 Strength of auditing and reporting standards ......... 2.8 ..........143 7.01 Cooperation in labor-employer relations ................. 2.9 ..........143 asked to select the five most problematic and rank 1.20 Efficacy of corporate boards .................................. 3.1 ..........143 7.02 Flexibility of wage determination ............................. 4.0 ..........125 1.21 Protection of minority shareholders’ interests ......... 3.1 ..........136 7.03 Hiring and firing practices ....................................... 3.3 ..........112 1.22 Strength of investor protection, 0–10 (best)* .......... 5.3 ............65 7.04 Redundancy costs, weeks of salary* ....................... 17 ............81 7.05 Pay and productivity............................................... 2.4 ..........144 2nd pillar: Infrastructure 7.06 Reliance on professional management ................... 2.3 ..........144 them from 1 (most problematic) to 5. The results were 2.01 2.02 2.03 2.04 Quality of overall infrastructure ............................... 3.5 ..........102 Quality of roads ...................................................... 3.4 ............88 Quality of railroad infrastructure .............................. 2.0 ............90 Quality of port infrastructure ................................... 2.7 ..........131 7.07 7.08 Brain drain ............................................................. 1.5 ..........144 Women in labor force, ratio to men* ..................... 0.21 ..........144 8th pillar: Financial market development then tabulated and weighted according to the ranking 2.05 Quality of air transport infrastructure....................... 3.3 ..........125 8.01 Availability of financial services ............................... 2.6 ..........143 2.06 Available airline seat kms/week, millions* ........... 146.0 ............72 8.02 Affordability of financial services ............................. 2.0 ..........144 2.07 Quality of electricity supply ..................................... 4.5 ............80 8.03 Financing through local equity market .................... 2.2 ..........131 2.08 Mobile telephone subscriptions/100 pop.* ........... 99.0 ............87 8.04 Ease of access to loans ......................................... 2.0 ..........128 2.09 Fixed telephone lines/100 pop.* ............................. 8.5 ............98 8.05 Venture capital availability ....................................... 1.8 ..........138 assigned by respondents. For Rwanda, we use data 8.06 Soundness of banks .............................................. 2.9 ..........143 3rd pillar: Macroeconomic environment 8.07 Regulation of securities exchanges ........................ 2.3 ..........140 3.01 Government budget balance, % GDP* ..................-3.6 ............82 8.08 Legal rights index, 0–10 (best)* ................................. 3 ..........118 3.02 Gross national savings, % GDP* .......................... 50.1 ..............6 3.03 Inflation, annual % change* .................................... 4.5 ............68 9th pillar: Technological readiness from the 2011 edition of the Survey, so for that country 3.04 General government debt, % GDP* ....................... 9.9 ............11 9.01 Availability of latest technologies ............................ 3.4 ..........142 3.05 Country credit rating, 0–100 (best)* ...................... 53.7 ............59 9.02 Firm-level technology absorption ............................ 3.2 ..........144 9.03 FDI and technology transfer ................................... 3.4 ..........140 4th pillar: Health and primary education 9.04 Individuals using Internet, %* ............................... 14.0 ..........110 4.01 Business impact of malaria .................................... 5.5 ............91 9.05 Broadband Internet subscriptions/100 pop.* .......... 2.8 ............87 the list comprises only 15 factors—one less than in the 4.02 Malaria cases/100,000 pop.* ................................. 0.0 ............72 9.06 Int’l Internet bandwidth, kb/s per user* .................. 8.9 ............89 4.03 Business impact of tuberculosis ............................. 5.2 ............80 9.07 Mobile broadband subscriptions/100 pop.*............ 0.0 ..........128 4.04 Tuberculosis cases/100,000 pop.* ....................... 90.0 ............88 4.05 Business impact of HIV/AIDS ................................. 5.3 ............69 10th pillar: Market size 4.06 HIV prevalence, % adult pop.* ............................... 0.1 ............12 10.01 Domestic market size index, 1–7 (best)*................. 4.2 ............47 2012 edition.1 4.07 4.08 4.09 4.10 Infant mortality, deaths/1,000 live births* .............. 30.5 ..........102 Life expectancy, years*......................................... 72.9 ............83 Quality of primary education ................................... 2.4 ..........129 Primary education enrollment, net %* .................. 95.6 ............49 10.02 Foreign market size index, 1–7 (best)* .................... 4.9 ............49 11.01 11th pillar: Business sophistication Local supplier quantity ........................................... 4.0 ..........124 11.02 Local supplier quality.............................................. 3.4 ..........137 5th pillar: Higher education and training 11.03 State of cluster development.................................. 2.4 ..........139 5.01 Secondary education enrollment, gross %* .......... 94.9 ............52 11.04 Nature of competitive advantage ............................ 2.0 ..........144 5.02 Tertiary education enrollment, gross %*................ 30.8 ............74 11.05 Value chain breadth................................................ 2.2 ..........143 5.03 Quality of the educational system ........................... 2.5 ..........131 11.06 Control of international distribution ......................... 2.5 ..........144 PAGE 2 5.04 Quality of math and science education .................. 2.7 ..........129 11.07 Production process sophistication.......................... 2.3 ..........141 5.05 Quality of management schools ............................. 3.0 ..........131 11.08 Extent of marketing ................................................ 2.3 ..........143 5.06 Internet access in schools ...................................... 2.4 ..........132 11.09 Willingness to delegate authority ............................ 1.9 ..........144 5.07 Availability of research and training services ........... 2.8 ..........138 5.08 Extent of staff training ............................................ 2.6 ..........142 12th pillar: Innovation 12.01 Capacity for innovation........................................... 1.9 ..........143 12.02 Quality of scientific research institutions ................. 2.1 ..........141 12.03 Company spending on R&D................................... 1.8 ..........143 The Global Competitiveness Index in detail 12.04 12.05 12.06 12.07 University-industry collaboration in R&D ................. 1.9 ..........144 Gov’t procurement of advanced tech products ...... 2.2 ..........142 Availability of scientists and engineers .................... 4.0 ............72 PCT patents, applications/million pop.* .................. 0.2 ............91 This page details the country’s performance on each Notes: Values are on a 1-to-7 scale unless otherwise annotated with an asterisk (*). For further details and explanation, please refer to the section “How to Read the Competitiveness Profiles� on page 109. The Africa Competitiveness Report 2013 | 125 of the indicators entering the composition of the Global Competitiveness Index 2012–2013 (GCI). Indicators are organized by pillar. For indicators entering at the GCI in two different pillars, only the first instance is shown on this page. • INDICATOR, UNITS: This column contains the TECHNICAL NOTES AND SOURCES FOR THE title of each indicator and, where relevant, the units GLOBAL COMPETITIVENESS INDEX in which it is measured—for example, “days� or “% GDP.� Indicators that are not derived from the This section provides detailed definitions and sources for Survey are identified by an asterisk (*). Indicators all the indicators that enter the Global Competitiveness derived from the Survey are always expressed Index 2012–2013 (GCI); the next section provides as scores on a 1–7 scale, with 7 being the most details for the indicators of the sustainability-adjusted desirable outcome. GCI (the SCI). For further information, see The Global • VALUE: This column reports the country’s score on Competitiveness Report 2012–2013. each of the variables that compose the GCI. Two types of data are used in the GCI: Executive Opinion Survey data and data from sources other • RANK/144: This column reports the country’s than the World Economic Forum (national authorities, position among the 144 economies covered by the international agencies, and private sources). The latter GCI 2012–2013. were updated at the time The Global Competitiveness Report 2012–2013 was prepared. The following sections provide additional information For each indicator, the title appears on the first line, and definitions on each of these indicators. preceded by its number to allow for quick reference. The numbering refers to the data tables section in The Global Competitiveness Report 2012–2013. Underneath is a description of the indicator or, in the case of the Executive Opinion Survey data, the full question and the associated response. The data used represent the best available estimates at the time The Global Competitiveness Report 2012–2013 was prepared. It is possible that some data will have been updated or revised after publication. 1 For more information regarding the Executive Opinion Survey, see World Economic Forum, The Global Competitiveness Report 2012– 2013. Geneva: World Economic Forum. 110 | The Africa Competitiveness Report 2013 3: Competitiveness Profiles 1st Pillar: Institutions 1.09 Burden of government regulation How burdensome is it for businesses in your country to comply 1.01 Property rights with governmental administrative requirements (e.g., permits, How would you rate the protection of property rights, including regulations, reporting)? [1 = extremely burdensome; 7 = not financial assets, in your country? [1 = very weak; 7 = very burdensome at all] | 2011–12 weighted average strong] | 2011–12 weighted average Source: World Economic Forum, Executive Opinion Survey Source: World Economic Forum, Executive Opinion Survey 2011, 2012 2011, 2012 1.10 Efficiency of legal framework in settling disputes 1.02 Intellectual property protection How efficient is the legal framework in your country for private How would you rate intellectual property protection, including businesses in settling disputes? [1 = extremely inefficient; 7 = anti-counterfeiting measures, in your country? [1 = very weak; 7 highly efficient] | 2011–12 weighted average = very strong] | 2011–12 weighted average Source: World Economic Forum, Executive Opinion Survey Source: World Economic Forum, Executive Opinion Survey 2011, 2012 2011, 2012 1.11 Efficiency of legal framework in challenging regulations 1.03 Diversion of public funds How efficient is the legal framework in your country for private In your country, how common is diversion of public funds to businesses in challenging the legality of government actions companies, individuals, or groups due to corruption? [1 = very and/or regulations? [1 = extremely inefficient; 7 = highly common; 7 = never occurs] | 2011–12 weighted average efficient] | 2011–12 weighted average Source: World Economic Forum, Executive Opinion Survey Source: World Economic Forum, Executive Opinion Survey 2011, 2012 2011, 2012 1.04 Public trust in politicians 1.12 Transparency of government policymaking How would you rate the level of public trust in the ethical How easy is it for businesses in your country to obtain standards of politicians in your country? [1 = very low; 7 = very information about changes in government policies and high] | 2011–12 weighted average regulations affecting their activities? [1 = impossible; 7 = extremely easy] | 2011–12 weighted average Source: World Economic Forum, Executive Opinion Survey 2011, 2012 Source: World Economic Forum, Executive Opinion Survey 2011, 2012 1.05 Irregular payments and bribes Average score across the five components of the following 1.13 Government provision of services for improved business Executive Opinion Survey question: In your country, how performance common is it for firms to make undocumented extra To what extent does the government in your country payments or bribes connected with (a) imports and exports; continuously improve its provision of services to help (b) public utilities; (c) annual tax payments; (d) awarding of businesses in your country boost their economic performance? public contracts and licenses; (e) obtaining favorable judicial [1 = not at all; 7 = extensively] | 2011–12 weighted average decisions. In each case, the answer ranges from 1 (very Source: World Economic Forum, Executive Opinion Survey common) to 7 (never occurs). | 2011–12 weighted average 2011, 2012 Source: World Economic Forum, Executive Opinion Survey 2011, 2012 1.14 Business costs of terrorism To what extent does the threat of terrorism impose costs on 1.06 Judicial independence businesses in your country? [1 = to a great extent; 7 = not at To what extent is the judiciary in your country independent all] | 2011–12 weighted average from influences of members of government, citizens, or firms? Source: World Economic Forum, Executive Opinion Survey [1 = heavily influenced; 7 = entirely independent] | 2011–12 2011, 2012 weighted average Source: World Economic Forum, Executive Opinion Survey 1.15 Business costs of crime and violence 2011, 2012 To what extent does the incidence of crime and violence impose costs on businesses in your country? [1 = to a great 1.07 Favoritism in decisions of government officials extent; 7 = not at all] | 2011–12 weighted average To what extent do government officials in your country show Source: World Economic Forum, Executive Opinion Survey favoritism to well-connected firms and individuals when 2011, 2012 deciding upon policies and contracts? [1 = always show favoritism; 7 = never show favoritism] | 2011–12 weighted average 1.16 Organized crime To what extent does organized crime (mafia-oriented Source: World Economic Forum, Executive Opinion Survey racketeering, extortion) impose costs on businesses in your 2011, 2012 country? [1 = to a great extent; 7 = not at all] | 2011–12 weighted average 1.08 Wastefulness of government spending Source: World Economic Forum, Executive Opinion Survey How would you rate the composition of public spending in 2011, 2012 your country? [1 = extremely wasteful; 7 = highly efficient in providing necessary goods and services] | 2011–12 weighted average Source: World Economic Forum, Executive Opinion Survey 2011, 2012 The Africa Competitiveness Report 2013 | 111 3: Competitiveness Profiles 1.17 Reliability of police services 2.03 Quality of railroad infrastructure To what extent can police services be relied upon to enforce How would you assess the railroad system in your country? law and order in your country? [1 = cannot be relied upon at all; [1 = extremely underdeveloped; 7 = extensive and efficient by 7 = can be completely relied upon] | 2011–12 weighted average international standards] | 2011–12 weighted average Source: World Economic Forum, Executive Opinion Survey Source: World Economic Forum, Executive Opinion Survey 2011, 2012 2011, 2012 Note: N/Appl. is used for economies where the railroad network 1.18 Ethical behavior of firms totals less than 50 km. How would you compare the corporate ethics (ethical behavior in interactions with public officials, politicians, and 2.04 Quality of port infrastructure other enterprises) of firms in your country with those of other How would you assess the port facilities in your country? [1 = countries in the world? [1 = among the worst in the world; 7 = extremely underdeveloped; 7 = well developed and efficient by among the best in the world] | 2011–12 weighted average international standards] For landlocked countries, the question Source: World Economic Forum, Executive Opinion Survey is as follows: How accessible are port facilities? [1 = extremely 2011, 2012 inaccessible; 7 = extremely accessible] | 2011–12 weighted average 1.19 Strength of auditing and reporting standards Source: World Economic Forum, Executive Opinion Survey In your country, how would you assess financial auditing and 2011, 2012 reporting standards regarding company financial performance? [1 = extremely weak; 7 = extremely strong] | 2011–12 weighted 2.05 Quality of air transport infrastructure average How would you assess passenger air transport infrastructure Source: World Economic Forum, Executive Opinion Survey in your country? [1 = extremely underdeveloped; 7 = extensive 2011, 2012 and efficient by international standards] | 2011–12 weighted average 1.20 Efficacy of corporate boards Source: World Economic Forum, Executive Opinion Survey How would you characterize corporate governance by investors 2011, 2012 and boards of directors in your country? [1 = management has little accountability to investors and boards; 7 = investors and 2.06 Available airline seat kilometers boards exert strong supervision of management decisions] | Scheduled available airline seat kilometers per week originating 2011–12 weighted average in country (in millions) | Jan2012-Jul2012 Source: World Economic Forum, Executive Opinion Survey This variable measures the total passenger-carrying capacity of 2011, 2012 all scheduled flights, including domestic flights, originating in a country. It is computed by taking the number of seats available on 1.21 Protection of minority shareholders’ interests each flight multiplied by the flight distance in kilometers, summing In your country, to what extent are the interests of minority the result across all scheduled flights in a week during January shareholders protected by the legal system? [1 = not protected (winter schedule) and July (summer schedule) 2012, and taking at all; 7 = fully protected] | 2011–12 weighted average the average capacity of the two weeks. Source: International Air Transport Association, SRS Analyser Source: World Economic Forum, Executive Opinion Survey 2011, 2012 2.07 Quality of electricity supply 1.22 Strength of investor protection How would you assess the quality of the electricity supply in your country (lack of interruptions and lack of voltage Strength of Investor Protection Index on a 0–10 (best) scale | fluctuations)? [1 = insufficient and suffers frequent interruptions; 2011 7 = sufficient and reliable] | 2011–12 weighted average This variable is a combination of the Extent of disclosure index (transparency of transactions), the Extent of director liability index Source: World Economic Forum, Executive Opinion Survey (liability for self-dealing), and the Ease of shareholder suit index 2011, 2012 (shareholders’ ability to sue officers and directors for misconduct). For more details about the methodology employed and the 2.08 Mobile telephone subscriptions assumptions made to compute this indicator, visit http://www. Number of mobile telephone subscriptions per 100 population doingbusiness.org/methodologysurveys/. | 2011 Source: World Bank/International Finance Corporation, Doing A mobile telephone subscription refers to a subscription to a Business 2012: Doing Business in a More Transparent World public mobile telephone service that provides access to the public switched telephone network (PSTN) using cellular technology, including the number of pre-paid SIM cards active during the 2nd Pillar: Infrastructure past three months. This includes both analog and digital cellular systems (IMT-2000, Third Generation, 3G) and 4G subscriptions, 2.01 Quality of overall infrastructure but excludes mobile broadband subscriptions via data cards How would you assess general infrastructure (e.g., transport, or USB modems. Subscriptions to public mobile data services, telephony, and energy) in your country? [1 = extremely private trunked mobile radio, telepoint or radio paging, and underdeveloped; 7 = extensive and efficient by international telemetry services are also excluded. It includes all mobile cellular standards] | 2011–12 weighted average subscriptions that offer voice communications. Source: World Economic Forum, Executive Opinion Survey Source: International Telecommunication Union, ITU World 2011, 2012 Telecommunication/ICT Indicators Database 2012 (June 2012 edition) 2.02 Quality of roads How would you assess the roads in your country? [1 = extremely underdeveloped; 7 = extensive and efficient by international standards] | 2011–12 weighted average Source: World Economic Forum, Executive Opinion Survey 2011, 2012 112 | The Africa Competitiveness Report 2013 3: Competitiveness Profiles 2.09 Fixed telephone lines 3.05 Country credit rating Number of active fixed telephone lines per 100 population | Expert assessment of the probability of sovereign debt default 2011 on a 0–100 (lowest probability) scale | March 2012 A fixed telephone line is an active line connecting the subscriber’s Institutional Investor’s Country Credit ratings developed by terminal equipment to the public switched telephone network Institutional Investor are based on information provided by senior (PSTN) and that has a dedicated port in the telephone exchange economists and sovereign-debt analysts at leading global banks equipment. Active lines are those that have registered an activity and money management and security firms. Twice a year, the in the past three months. respondents grade each country on a scale of 0 to 100, with 100 representing the least chance of default. For more information, Source: International Telecommunication Union, ITU World visit http://www.institutionalinvestor.com/Research/3633/Global- Telecommunication/ICT Indicators Database 2012 (June 2012 Rankings.html. edition) Source: Institutional Investor 3rd Pillar: Macroeconomic environment 4th Pillar: Health and primary education 3.01 Government budget balance General government budget balance as a percentage of GDP 4.01 Business impact of malaria | 2011 How serious an impact do you consider malaria will have on Net lending (+)/ borrowing (–) is calculated as general government your company in the next five years (e.g., death, disability, revenue minus total expenditure. This is a core Government medical and funeral expenses, productivity and absenteeism, Finance Statistics (GFS) balance that measures the extent to recruitment and training expenses, revenues)? [1 = a serious which the general government is either putting financial resources impact; 7 = no impact at all] | 2011–12 weighted average at the disposal of other sectors in the economy and nonresidents Source: World Economic Forum, Executive Opinion Survey (net lending), or utilizing the financial resources generated by 2011, 2012 other sectors and nonresidents (net borrowing). This balance Note: This indicator does not apply to economies where malaria is may be viewed as an indicator of the financial impact of general not endemic (n/appl.). government activity on the rest of the economy and nonresidents. Revenue consists of taxes, social contributions, grants receivable, and other revenue. Revenue increases a government’s net worth, 4.02 Malaria incidence which is the difference between its assets and liabilities. General Number of malaria cases per 100,000 population | 2009 government total expenditure consists of total expenses and the Data are estimates and are provided only for economies in which net acquisition of nonfinancial assets. malaria is considered to be endemic. In the corresponding data table, “NE� denotes an economy where malaria is not endemic. Sources: International Monetary Fund, World Economic Outlook Database (April 2012 edition) and Public Information Notices Source: Cibulskis, R.E., M. Aregawi, R. Williams, M. Otten, and C. (various issues); national sources Dye. 2011. “Worldwide Incidence of Malaria in 2009: Estimates, Time Trends, and a Critique of Methods.� PLoS Med 8 (12): 3.02 Gross national savings e1001142. doi: 10.1271/journal/pmed.1001142. Gross national savings as a percentage of GDP | 2011 Aggregate national savings is defined as public- and private- 4.03 Business impact of tuberculosis sector savings as a percentage of nominal GDP. National savings How serious an impact do you consider tuberculosis will have equals gross domestic investment plus the current-account on your company in the next five years (e.g., death, disability, balance. medical and funeral expenses, productivity and absenteeism, recruitment and training expenses, revenues)? [1 = a serious Sources: International Monetary Fund, World Economic Outlook impact; 7 = no impact at all] | 2011–12 weighted average Database (April 2012 edition) and Public Information Notices (various issues); national sources Source: World Economic Forum, Executive Opinion Survey 2011, 2012 3.03 Inflation Annual percent change in consumer price index (year average) 4.04 Tuberculosis incidence | 2011 Number of tuberculosis cases per 100,000 population | 2010 Annual percent change in year average consumer price index. Incidence of tuberculosis is the estimated number of new pulmonary, smear positive, and extra-pulmonary tuberculosis Sources: International Monetary Fund, World Economic Outlook cases. Database (April 2012 edition); national sources Sources: The World Bank, World Development Indicators & Note: For inflation rates between 0.5 and 2.9 percent, a country Global Development Finance Catalog (April 2012 edition); national received the highest possible score of 7. Outside this range, sources scores decrease linearly as they move away from these values. 4.05 Business impact of HIV/AIDS 3.04 Government debt How serious an impact do you consider HIV/AIDS will have Gross general government debt as a percentage of GDP | 2011 on your company in the next five years (e.g., death, disability, Gross debt consists of all liabilities that require payment or medical and funeral expenses, productivity and absenteeism, payments of interest and/or principal by the debtor to the creditor recruitment and training expenses, revenues)? [1 = a serious at a date or dates in the future. This includes debt liabilities in impact; 7 = no impact at all] | 2011–12 weighted average the form of special drawing rights, currency and deposits, debt securities, loans, insurance, pensions and standardized guarantee Source: World Economic Forum, Executive Opinion Survey schemes, and other accounts payable. Thus, all liabilities in the 2011, 2012 Government Finance Statistics Manual 2001 system are debt, except for equity and investment fund shares and financial derivatives and employee stock options. Sources: International Monetary Fund, World Economic Outlook Database (April 2012 edition) and Public Information Notices (various issues); national sources The Africa Competitiveness Report 2013 | 113 3: Competitiveness Profiles 4.06 HIV prevalence 5.02 Tertiary education enrollment rate HIV prevalence as a percentage of adults aged 15–49 years | Gross tertiary education enrollment rate | 2010 2009 The reported value corresponds to the ratio of total tertiary HIV prevalence refers to the number of infections at a particular enrollment, regardless of age, to the population of the age group point in time, no matter when infection occurred. that officially corresponds to the tertiary education level. Tertiary education (ISCED levels 5 and 6), whether or not leading to an Sources: The World Bank, World Development Indicators & Global advanced research qualification, normally requires, as a minimum Development Finance Catalog (April 2012 edition); UNAIDS, condition of admission, the successful completion of education at Global Report on the Global AIDS Epidemic (2008 edition); the secondary level. national sources Sources: UNESCO Institute for Statistics (accessed May 10, 4.07 Infant mortality 2012); national sources Infant (children aged 0–12 months) mortality per 1,000 live births | 2010 5.03 Quality of the educational system Infant mortality rate is the number of infants dying before reaching How well does the educational system in your country meet the one year of age per 1,000 live births in a given year. needs of a competitive economy? [1 = not well at all; 7 = very well] | 2011–12 weighted average Sources: The World Bank, World Development Indicators & Global Development Finance Catalog (April 2012 edition); national Source: World Economic Forum, Executive Opinion Survey sources 2011, 2012 4.08 Life expectancy 5.04 Quality of math and science education Life expectancy at birth (years) | 2010 How would you assess the quality of math and science Life expectancy at birth indicates the number of years a newborn education in your country’s schools? [1 = poor; 7 = excellent – infant would live if prevailing patterns of mortality at the time of its among the best in the world] | 2011–12 weighted average birth were to stay the same throughout its life. Source: World Economic Forum, Executive Opinion Survey Sources: The World Bank, World Development Indicators & 2011, 2012 Global Development Finance Catalog (April 2012 edition); national sources 5.05 Quality of management schools How would you assess the quality of management or business 4.09 Quality of primary education schools in your country? [1 = poor; 7 = excellent – among the How would you assess the quality of primary schools in your best in the world] | 2011–12 weighted average country? [1 = poor; 7 = excellent – among the best in the world] | 2011–12 weighted average Source: World Economic Forum, Executive Opinion Survey 2011, 2012 Source: World Economic Forum, Executive Opinion Survey 2011, 2012 5.06 Internet access in schools How would you rate the level of access to the Internet in 4.10 Primary education enrollment rate schools in your country? [1 = very limited; 7 = extensive] | Net primary education enrollment rate | 2010 2011–12 weighted average The reported value corresponds to the ratio of children of official Source: World Economic Forum, Executive Opinion Survey school age (as defined by the national education system) who are 2011, 2012 enrolled in school to the population of the corresponding official school age. Primary education (ISCED level 1) provides children with basic reading, writing, and mathematics skills along with an 5.07 Local availability of specialized research and training elementary understanding of such subjects as history, geography, services natural science, social science, art, and music. In your country, to what extent are high-quality, specialized training services available? [1 = not available; 7 = widely Sources: UNESCO Institute for Statistics (accessed May 10, available] | 2011–12 weighted average 2012); The World Bank, EdStats Database (accessed June 27, 2012); Organisation for Economic Co-operation and Development Source: World Economic Forum, Executive Opinion Survey (OECD), Education at a Glance 2011; national sources 2011, 2012 5.08 Extent of staff training 5th Pillar: Higher education and training To what extent do companies in your country invest in training and employee development? [1 = hardly at all; 7 = to a great 5.01 Secondary education enrollment rate extent] | 2011–12 weighted average Gross secondary education enrollment rate | 2010 The reported value corresponds to the ratio of total secondary Source: World Economic Forum, Executive Opinion Survey enrollment, regardless of age, to the population of the age 2011, 2012 group that officially corresponds to the secondary education level. Secondary education (ISCED levels 2 and 3) completes the provision of basic education that began at the primary 6th Pillar: Goods market efficiency level, and aims to lay the foundations for lifelong learning and human development by offering more subject- or skills-oriented 6.01 Intensity of local competition instruction using more specialized teachers. How would you assess the intensity of competition in the local markets in your country? [1 = limited in most industries; 7 = Sources: UNESCO Institute for Statistics (accessed May 10, intense in most industries] | 2011–12 weighted average 2012); UNICEF ChildInfo.org Country Profiles; The World Bank, EdStats Database (accessed June 25, 2012); national sources Source: World Economic Forum, Executive Opinion Survey 2011, 2012 114 | The Africa Competitiveness Report 2013 3: Competitiveness Profiles 6.02 Extent of market dominance 6.09 Prevalence of trade barriers How would you characterize corporate activity in your country? In your country, to what extent do tariff and non-tariff barriers [1 = dominated by a few business groups; 7 = spread among limit the ability of imported goods to compete in the domestic many firms] | 2011–12 weighted average market? [1 = strongly limit; 7 = do not limit] | 2011–12 weighted average Source: World Economic Forum, Executive Opinion Survey 2011, 2012 Source: World Economic Forum, Executive Opinion Survey 2011, 2012 6.03 Effectiveness of anti-monopoly policy To what extent does anti-monopoly policy promote competition 6.10 Trade tariffs in your country? [1 = does not promote competition; 7 = Trade-weighted average tariff rate | 2011 effectively promotes competition] | 2011–12 weighted average This indicator is calculated as a weighted average of all the applied tariff rates, including preferential rates that a country Source: World Economic Forum, Executive Opinion Survey applies to the rest of the world. The weights are the trade 2011, 2012 patterns of the importing country’s reference group (2010 data). An applied tariff is a customs duty that is levied on imports of 6.04 Extent and effect of taxation merchandise goods. What impact does the level of taxes in your country have on incentives to work or invest? [1 = significantly limits incentives Source: International Trade Centre to work or invest; 7 = has no impact on incentives to work or invest] | 2011–12 weighted average 6.11 Prevalence of foreign ownership How prevalent is foreign ownership of companies in your Source: World Economic Forum, Executive Opinion Survey country? [1 = very rare; 7 = highly prevalent] | 2011–12 2011, 2012 weighted average 6.05 Total tax rate Source: World Economic Forum, Executive Opinion Survey This variable is a combination of profit tax (% of profits), labor 2011, 2012 tax and contribution (% of profits), and other taxes (% of profits) | 2011 6.12 Business impact of rules on FDI The total tax rate measures the amount of taxes and mandatory To what extent do rules governing foreign direct investment contributions payable by a business in the second year of (FDI) encourage or discourage it? [1 = strongly discourage FDI; operation, expressed as a share of commercial profits. The 7 = strongly encourage FDI] | 2011–12 weighted average total amount of taxes is the sum of five different types of taxes Source: World Economic Forum, Executive Opinion Survey and contributions payable after accounting for deductions and 2011, 2012 exemptions: profit or corporate income tax, social contributions and labor taxes paid by the employer, property taxes, turnover taxes, and other small taxes. For more details about the 6.13 Burden of customs procedures methodology employed and the assumptions made to compute How would you rate the level of efficiency of customs this indicator, please visit http://www.doingbusiness.org/ procedures (related to the entry and exit of merchandise) in methodologysurveys/. your country? [1 = extremely inefficient; 7 = extremely efficient] | 2011–12 weighted average Source: World Bank/International Finance Corporation, Doing Business 2012: Doing Business in a More Transparent World Source: World Economic Forum, Executive Opinion Survey 2011, 2012 6.06 Number of procedures required to start a business Number of procedures required to start a business | 2011 6.14 Imports as a percentage of GDP For details about the methodology employed and the Imports of goods and services as a percentage of gross assumptions made to compute this indicator, visit http://www. domestic product | 2011 doingbusiness.org/methodologysurveys/. Total imports is the sum of total imports of merchandise and commercial services. Source: World Bank/International Finance Corporation, Doing Business 2012: Doing Business in a More Transparent World Sources: World Trade Organization, Statistical Database: Time Series on merchandise and commercial services (accessed June 6.07 Time required to start a business 4, 2012); International Monetary Fund, World Economic Outlook Number of days required to start a business | 2011 Database (April 2012 edition); national sources For details about the methodology employed and the assumptions made to compute this indicator, visit http://www. 6.15 Degree of customer orientation doingbusiness.org/methodologysurveys/. How do companies in your country treat customers? [1 = generally treat their customers badly; 7 = are highly responsive Source: World Bank/International Finance Corporation, Doing to customers and customer retention] | 2011–12 weighted Business 2012: Doing Business in a More Transparent World average 6.08 Agricultural policy costs Source: World Economic Forum, Executive Opinion Survey How would you assess the agricultural policy in your country? 2011, 2012 [1 = excessively burdensome for the economy; 7 = balances the interests of taxpayers, consumers, and producers] | 2011– 6.16 Buyer sophistication 12 weighted average In your country, how do buyers make purchasing decisions? [1 = based solely on the lowest price; 7 = based on a Source: World Economic Forum, Executive Opinion Survey sophisticated analysis of performance attributes] | 2011–12 2011, 2012 weighted average Source: World Economic Forum, Executive Opinion Survey 2011, 2012 The Africa Competitiveness Report 2013 | 115 3: Competitiveness Profiles 7th Pillar: Labor market efficiency 8th Pillar: Financial market development 7.01 Cooperation in labor-employer relations 8.01 Availability of financial services How would you characterize labor-employer relations in Does the financial sector in your country provide a wide variety your country? [1 = generally confrontational; 7 = generally of financial products and services to businesses? [1 = not at cooperative] | 2011–12 weighted average all; 7 = provides a wide variety] | 2011–12 weighted average Source: World Economic Forum, Executive Opinion Survey Source: World Economic Forum, Executive Opinion Survey 2011, 2012 2011, 2012 7.02 Flexibility of wage determination 8.02 Affordability of financial services How are wages generally set in your country? [1 = by a To what extent does competition among providers of financial centralized bargaining process; 7 = up to each individual services in your country ensure the provision of financial company] | 2011–12 weighted average services at affordable prices? [1 = not at all; 7 = extremely well] | 2011–12 weighted average Source: World Economic Forum, Executive Opinion Survey 2011, 2012 Source: World Economic Forum, Executive Opinion Survey 2011, 2012 7.03 Hiring and firing practices How would you characterize the hiring and firing of workers 8.03 Financing through local equity market in your country? [1 = impeded by regulations; 7 = flexibly How easy is it to raise money by issuing shares on the stock determined by employers] | 2011–12 weighted average market in your country? [1 = very difficult; 7 = very easy] | 2011–12 weighted average Source: World Economic Forum, Executive Opinion Survey 2011, 2012 Source: World Economic Forum, Executive Opinion Survey 2011, 2012 7.04 Redundancy costs Redundancy costs in weeks of salary | 2011 8.04 Ease of access to loans This variable estimates the cost of advance notice requirements, How easy is it to obtain a bank loan in your country with only severance payments, and penalties due when terminating a a good business plan and no collateral? [1 = very difficult; 7 = redundant worker, expressed in weekly wages. For more details very easy] | 2011–12 weighted average about the methodology employed and the assumptions made Source: World Economic Forum, Executive Opinion Survey to compute this indicator, visit http://www.doingbusiness.org/ 2011, 2012 methodologysurveys/. Sources: World Bank/International Finance Corporation, Doing 8.05 Venture capital availability Business 2012: Doing Business in a More Transparent World; In your country, how easy is it for entrepreneurs with innovative authors’ calculations but risky projects to find venture capital? [1 = very difficult; 7 = very easy] | 2011–12 weighted average 7.05 Pay and productivity To what extent is pay in your country related to productivity? Source: World Economic Forum, Executive Opinion Survey [1 = not related to worker productivity; 7 = strongly related to 2011, 2012 worker productivity] | 2011–12 weighted average 8.06 Soundness of banks Source: World Economic Forum, Executive Opinion Survey How would you assess the soundness of banks in your 2011, 2012 country? [1 = insolvent and may require a government bailout; 7 = generally healthy with sound balance sheets] | 2011–12 7.06 Reliance on professional management weighted average In your country, who holds senior management positions? [1 = usually relatives or friends without regard to merit; 7 = mostly Source: World Economic Forum, Executive Opinion Survey professional managers chosen for merit and qualifications] | 2011, 2012 2011–12 weighted average 8.07 Regulation of securities exchanges Source: World Economic Forum, Executive Opinion Survey How would you assess the regulation and supervision of 2011, 2012 securities exchanges in your country? [1 = ineffective; 7 = effective] | 2011–12 weighted average 7.07 Brain drain Does your country retain and attract talented people? [1 = no, Source: World Economic Forum, Executive Opinion Survey the best and brightest normally leave to pursue opportunities 2011, 2012 in other countries; 7 = yes, there are many opportunities for talented people within the country] | 2011–12 weighted average 8.08 Legal rights index Degree of legal protection of borrowers and lenders’ rights on a Source: World Economic Forum, Executive Opinion Survey 0–10 (best) scale | 2011 2011, 2012 This index measures the degree to which collateral and bankruptcy laws protect borrowers’ and lenders’ rights and 7.08 Female participation in labor force thus facilitate lending. For more details about the methodology Ratio of women to men in the labor force | 2010 employed and the assumptions made to compute this indicator, This measure is the percentage of women aged 15–64 visit http://www.doingbusiness.org/methodologysurveys/. participating in the labor force divided by the percentage of men Source: World Bank/International Finance Corporation, Doing aged 15–64 participating in the labor force. Business 2012: Doing Business in a More Transparent World Sources: International Labour Organization, Key Indicators of the Labor Markets Net (accessed June 5, 2012); national sources 116 | The Africa Competitiveness Report 2013 3: Competitiveness Profiles 9th Pillar: Technological readiness 10th Pillar: Market size 9.01 Availability of latest technologies 10.01 Domestic market size index To what extent are the latest technologies available in your Sum of gross domestic product plus value of imports of goods country? [1 = not available; 7 = widely available] | 2011–12 and services, minus value of exports of goods and services, weighted average normalized on a 1–7 (best) scale | 2011 The size of the domestic market is calculated as the natural log Source: World Economic Forum, Executive Opinion Survey of the sum of the gross domestic product valued at PPP plus 2011, 2012 the total value (PPP estimates) of imports of goods and services, minus the total value (PPP estimates) of exports of goods and 9.02 Firm-level technology absorption services. Data are then normalized on a 1–7 scale. PPP estimates To what extent do businesses in your country absorb new of imports and exports are obtained by taking the product of technology? [1 = not at all; 7 = aggressively absorb] | 2011–12 exports as a percentage of GDP and GDP valued at PPP. weighted average Source: Authors’ calculations. For more details, refer to Appendix Source: World Economic Forum, Executive Opinion Survey A in Chapter 1.1 of this Report. 2011, 2012 10.02 Foreign market size index 9.03 FDI and technology transfer Value of exports of goods and services, normalized on a 1–7 To what extent does foreign direct investment (FDI) bring new (best) scale | 2011 technology into your country? [1 = not at all; 7 = FDI is a key The size of the foreign market is estimated as the natural log of source of new technology] | 2011–12 weighted average the total value (PPP estimates) of exports of goods and services, normalized on a 1–7 scale. PPP estimates of exports are obtained Source: World Economic Forum, Executive Opinion Survey by taking the product of exports as a percentage of GDP and 2011, 2012 GDP valued at PPP. 9.04 Internet users Source: Authors’ calculations. For more details refer to Appendix Percentage of individuals using the Internet | 2011 A in Chapter 1.1 of this Report. Internet users refers to people using the Internet from any device (including mobile phones) in the last 12 months. Data are based 10.03 GDP (PPP) on surveys generally carried out by national statistical offices or Gross domestic product valued at purchasing power parity in estimated based on the number of Internet subscriptions. billions of international dollars | 2011 Source: International Telecommunication Union, World Sources: International Monetary Fund, World Economic Outlook Telecommunication/ICT Indicators 2012 (June 2012 edition) Database (April 2012 edition); national sources 9.05 Fixed broadband Internet subscriptions 10.04 Exports as a percentage of GDP Fixed broadband Internet subscriptions per 100 population | Exports of goods and services as a percentage of gross 2011 domestic product | 2011 or most recent year available This refers to total fixed (wired) broadband Internet subscriptions Total exports is the sum of total exports of merchandise and (that is, subscriptions to high-speed access to the public commercial services. Internet—a TCP/IP connection—at downstream speeds equal to Sources: World Trade Organization, Online statistics database or greater than 256 kb/s). (accessed June 4, 2012); International Monetary Fund, World Source: International Telecommunication Union, World Economic Outlook Database (April 2012 edition); national sources Telecommunication/ICT Indicators 2012 (June 2012 edition) 9.06 Internet bandwidth 11th Pillar: Business sophistication International Internet bandwidth (kb/s) per Internet user | 2011 11.01 Local supplier quantity International Internet bandwidth is the sum of capacity of all How numerous are local suppliers in your country? [1 = largely Internet exchanges offering international bandwidth measured in nonexistent; 7 = very numerous] | 2011–12 weighted average kilobits per second (kb/s). Source: International Telecommunication Union, World Source: World Economic Forum, Executive Opinion Survey Telecommunication/ICT Indicators 2012 (June 2012 edition) 2011, 2012 9.07 Mobile broadband subscriptions 11.02 Local supplier quality Mobile broadband subscriptions per 100 population | 2011 How would you assess the quality of local suppliers in your country? [1 = very poor; 7 = very good] | 2011–12 weighted Mobile broadband subscriptions refers to active SIM cards average or, on CDMA networks, connections accessing the Internet at consistent broadband speeds of over 512 kb/s, including Source: World Economic Forum, Executive Opinion Survey cellular technologies such as HSPA, EV-DO, and above. This 2011, 2012 includes connections being used in any type of device able to access mobile broadband networks, including smartphones, 11.03 State of cluster development USB modems, mobile hotspots, and other mobile-broadband In your country’s economy, how prevalent are well-developed connected devices. and deep clusters? [1 = nonexistent; 7 = widespread in many Sources: International Telecommunication Union, ITU World fields] | 2011–12 weighted average Telecommunication/ICT Indicators Database 2012 (June 2012 edition); Informa Telecoms & Media; national sources Source: World Economic Forum, Executive Opinion Survey 2011, 2012 The Africa Competitiveness Report 2013 | 117 3: Competitiveness Profiles 11.04 Nature of competitive advantage 12th Pillar: Innovation What is the nature of competitive advantage of your country’s companies in international markets based upon? [1 = low-cost 12.01 Capacity for innovation or natural resources; 7 = unique products and processes] | In your country, how do companies obtain technology? [1 = 2011–12 weighted average exclusively from licensing or imitating foreign companies; 7 = by conducting formal research and pioneering their own new Source: World Economic Forum, Executive Opinion Survey products and processes] | 2011–12 weighted average 2011, 2012 Source: World Economic Forum, Executive Opinion Survey 11.05 Value chain breadth 2011, 2012 In your country, do exporting companies have a narrow or broad presence in the value chain? [1 = narrow, primarily 12.02 Quality of scientific research institutions involved in individual steps of the value chain (e.g., resource How would you assess the quality of scientific research extraction or production); 7 = broad, present across the entire institutions in your country? [1 = very poor; 7 = the best in their value chain (i.e., do not only produce but also perform product field internationally] | 2011–12 weighted average design, marketing sales, logistics, and after-sales services)] | 2011–12 weighted average Source: World Economic Forum, Executive Opinion Survey 2011, 2012 Source: World Economic Forum, Executive Opinion Survey 2011, 2012 12.03 Company spending on R&D To what extent do companies in your country spend on R&D? 11.06 Control of international distribution [1 = do not spend on R&D; 7 = spend heavily on R&D] | 2011– To what extent are international distribution and marketing from 12 weighted average your country owned and controlled by domestic companies? [1 = not at all, they take place through foreign companies; Source: World Economic Forum, Executive Opinion Survey 7 = extensively, they are primarily owned and controlled by 2011, 2012 domestic companies] | 2011–12 weighted average 12.04 University-industry collaboration in R&D Source: World Economic Forum, Executive Opinion Survey To what extent do business and universities collaborate on 2011, 2012 research and development (R&D) in your country? [1 = do not collaborate at all; 7 = collaborate extensively] | 2011–12 11.07 Production process sophistication weighted average In your country, how sophisticated are production processes? [1 = not at all – labor-intensive methods or previous Source: World Economic Forum, Executive Opinion Survey generations of process technology prevail; 7 = highly – the 2011, 2012 world’s best and most efficient process technology prevails] | 2011–12 weighted average 12.05 Government procurement of advanced technology products Source: World Economic Forum, Executive Opinion Survey Do government procurement decisions foster technological 2011, 2012 innovation in your country? [1 = no, not at all; 7 = yes, extremely effectively] | 2011–12 weighted average 11.08 Extent of marketing In your country, to what extent do companies use sophisticated Source: World Economic Forum, Executive Opinion Survey marketing tools and techniques? [1 = very little; 7 = extensively] 2011, 2012 | 2011–12 weighted average 12.06 Availability of scientists and engineers Source: World Economic Forum, Executive Opinion Survey To what extent are scientists and engineers available in 2011, 2012 your country? [1 = not at all; 7 = widely available] | 2011–12 weighted average 11.09 Willingness to delegate authority In your country, how do you assess the willingness to delegate Source: World Economic Forum, Executive Opinion Survey authority to subordinates? [1 = low – top management controls 2011, 2012 all important decisions; 7 = high – authority is mostly delegated to business unit heads and other lower-level managers] | 2011– 12.07 PCT patent applications 12 weighted average Number of applications filed under the Patent Cooperation Treaty (PCT) per million population | 2008-2009 Source: World Economic Forum, Executive Opinion Survey This measures the total count of applications filed under the 2011, 2012 Patent Cooperation Treaty (PCT), by priority date and inventor nationality, using fractional count if an application is filed by multiple inventors. The average count of applications filed in 2008 and 2009 is divided by population figures for 2009. Sources: Organisation for Economic Co-operation and Development (OECD), Patent Database, June 2012; United Nations, Department of Economic and Social Affairs, Population Division, 2011; World Population Prospects: The 2010 Revision, CD-ROM Edition; authors’ calculations 118 | The Africa Competitiveness Report 2013 3: Competitiveness Profiles S03.02 Access to improved drinking water TECHNICAL NOTES AND SOURCES FOR THE Percent of total population with access to improved drinking SUSTAINABILITY-ADJUSTED GCI water | 2010 or most recent year available Percent of the population with reasonable access to an adequate amount of water from an improved source, such as a household The data used in Chapter 1.1 of this Report represent the connection, public standpipe, borehole, protected well or spring, best available estimates from various national authorities, or rainwater collection. Unimproved sources include vendors, tanker trucks, and unprotected wells and springs. Reasonable international agencies, and private sources at the time access is defined as the availability of at least 20 liters per person the Report was prepared. It is possible that some data per day from a source within 1 kilometer of the dwelling. will have been revised or updated by the sources after Source: World Health Organization, World Health Statistics 2012 publication. Throughout the Report, “n/a� denotes that online database (retrieved June 5, 2012) the value is not available or that the available data are S03.03 Accessibility of healthcare services unreasonably outdated or do not come from a reliable How accessible is healthcare in your country? [1 = limited— source. For each indicator, the title appears on the first only the privileged have access; 7 = universal—all citizens have line, preceded by its number to allow for quick reference. access to healthcare] | 2011–12 weighted average The numbering is the same as the numbering used Source: World Economic Forum, Executive Opinion Survey in Appendix B of Chapter 1.1. Below is a description 2011, 2012 of each indicator or, in the case of Executive Opinion Survey data, the full question and associated answers. If S04 Social safety net protection necessary, additional information is provided underneath. In your country, does a formal social safety net provide protection from economic insecurity due to job loss or S01 Income Gini index disability? [1 = not at all; 7 = fully] | 2011–12 weighted average Measure of income inequality [0 = perfect equality; 100 = Source: World Economic Forum, Executive Opinion Survey perfect inequality] | 2010 or most recent year available 2011, 2012 This indicator measures the extent to which the distribution of income among individuals or households within an economy S05 Extent of informal economy deviates from a perfectly equal distribution. A Lorenz curve plots the cumulative percentages of total income received against How much economic activity in your country would you the cumulative number of recipients, starting with the poorest estimate to be undeclared or unregistered? [1 = most economic individual. The Gini index measures the area between the Lorenz activity is undeclared or unregistered; 7 = most economic curve and a hypothetical line of absolute equality, expressed as activity is declared or registered] | 2011–12 weighted average a percentage of the maximum area under the line. Thus a Gini Source: World Economic Forum, Executive Opinion Survey index of 0 represents perfect equality, while a value of 100 implies 2011, 2012 perfect inequality. Sources: The World Bank, World Development Indicators Online S06 Social mobility (retrieved June 1, 2012); CIA World Factbook (retrieved June 6, To what extent do individuals in your country have the 2012); national sources opportunity to improve their economic situation through their personal efforts regardless of the socioeconomic status of S02 Youth unemployment their parents? [1 = little opportunity exists to improve one’s Youth unemployment measured as the ratio of total economic situation; 7 = significant opportunity exists to unemployed youth to total labor force aged 15–24 | 2010 or improve one’s economic situation] | 2011–12 weighted average most recent year available Source: World Economic Forum, Executive Opinion Survey Youth unemployment refers to the share of the labor force ages 2011, 2012 15–24 without work but available for and seeking employment. Source: International Labour Organization, Key Indicators of the S07 Vulnerable employment Labour Markets Net (retrieved June 5, 2012) Proportion of own-account and contributing family workers in total employment | 2010 or most recent year available S03.01 Access to sanitation Vulnerable employment refers to the proportion of unpaid Percent of total population with access to improved sanitation contributing family workers and own-account workers in total facilities | 2010 or most recent year available employment. Own-account workers are those workers who, Percent of the population with at least adequate access to working on their own account or with one or more partners, excreta disposal facilities that can effectively prevent human, hold the type of job defined as a self-employed job and have animal, and insect contact with excreta. Improved facilities not engaged on a continuous basis any employees to work for range from simple but protected pit latrines to flush toilets with a them during the reference period. A contributing family worker sewerage connection. To be effective, facilities must be correctly is a person who holds a job in a market-oriented establishment constructed and properly maintained. operated by a related person living in the same household and who cannot be regarded as a partner because the degree of his Source: World Health Organization, World Health Statistics 2012 or her commitment to the operation of the establishment, in terms online database (retrieved June 5, 2012) of the working time or other factors to be determined by national circumstances, is not at a level comparable with that of the head of the establishment. Source: The World Bank, World Development Indicators Online (retrieved June 1, 2012) The Africa Competitiveness Report 2013 | 119 3: Competitiveness Profiles S08.01 Stringency of environmental regulation S10 No. of ratified international environmental treaties How would you assess the stringency of your country’s Total number of ratified environmental treaties | 2010 environmental regulations? [1 = very lax; 7 = among the world’s This indicator provides the total number of environmental treaties most stringent] | 2011–12 weighted average ratified by a country. It measures the total number of international treaties from a set of 25 for which a state is a participant. A state Source: World Economic Forum, Executive Opinion Survey becomes a “participant� by Ratification, Formal confirmation, 2011, 2012 Accession, Acceptance, Definitive signature, Approval, Simplified procedure, Consent to be bound, Succession, and Provisional S08.02 Enforcement of environmental regulation application (which are here grouped under the term ratification, How would you assess the enforcement of environmental for reasons of convenience). The treaties included are: the regulations in your country? [1 = very lax; 7 = among the International Convention for the Regulation of Whaling, 1948 world’s most rigorous] | 2011–12 weighted average Washington; the International Convention for the Prevention of Pollution of the Sea by Oil, 1954 London, as amended in Source: World Economic Forum, Executive Opinion Survey 1962 and 1969; the Convention on Wetlands of International 2011, 2012 Importance especially as Waterfowl Habitat, 1971 Ramsar; the Convention Concerning the Protection of the World Cultural and S09 Terrestrial biome protection Natural Heritage, 1972 Paris; the Convention on the Prevention Degree to which a country achieves the target of protecting 17 of Marine Pollution by Dumping of Wastes and Other Matter, percent of each terrestrial biome within its borders | 2010 or 1972 London, Mexico City, Moscow, Washington; the Convention most recent year available on International Trade in Endangered Species of Wild Fauna This indicator is calculated by Columbia University’s Center for and Flora, 1973 Washington; the International Convention for International Earth Science Information Network (CIESIN) by the Prevention of Pollution from Ships (MARPOL) as modified overlaying the protected area mask on terrestrial biome data by the Protocol of 1978, 1978 London; the Convention on developed by the World Wildlife Fund (WWF)’s Terrestrial Eco- the Conservation of Migratory Species of Wild Animals, 1979 regions of the World for each country. Scores are capped at 17 Bonn; the United Nations Convention on the Law of the Sea, percent per biome such that higher levels of protection of some 1982 Montego Bay; the Convention on the Protection of the biomes cannot be used to offset lower levels of protection of Ozone Layer, 1985 Vienna; the Protocol on Substances that other biomes, hence the maximum level of protection a country Deplete the Ozone Layer, 1987 Montreal; the Convention on can achieve is 17 percent. CIESIN uses time series of the World the Control of Transboundary Movements of Hazardous Wastes Database on Protected Areas (WDPA) developed by the United and their Disposal, 1989 Basel; the International Convention Nations Environment Programme (UNEP) World Conservation on Oil Pollution Preparedness, Response and Co-operation, Monitoring Centre (WCMC) in 2011, which provides a spatial time 1990 London; the United Nations Framework Convention on series of protected area coverage from 1990 to 2010. The WCMC Climate Change, 1992 New York; the Convention on Biological considers all nationally designated protected areas whose location Diversity, 1992 Rio de Janeiro; the International Convention to and extent is known. Boundaries were defined by polygons Combat Desertification in Those Countries Experiencing Serious where available; where they were not available, protected-area Drought and/or Desertification, particularly Africa, 1994 Paris; the centroids were buffered to create a circle in accordance with the Agreement relating to the Implementation of Part XI of the United protected area size. The WCMC removed all overlaps between Nations Convention on the Law of the Sea of 10 December different protected areas by dissolving the boundaries to create a 1982, 1994 New York; the Agreement relating to the Provisions protected areas mask. of the United Nations Convention on the Law of the Sea relating to the Conservation and Management of Straddling Fish Stocks Source: Yale University and Columbia University, Environmental and Highly Migratory Fish Stocks, 1995 New York; the Kyoto Performance Index (EPI) 2012 edition, based on WWF World Protocol to the United Nations Framework Convention on the Wildlife Fund USA and UNEP WCMC data. Climate Change, Kyoto 1997; the Rotterdam Convention on the Prior Informed Consent Procedure for Certain Hazardous Chemicals and Pesticides in International Trade, 1998 Rotterdam; the Cartagena Protocol of Biosafety to the Convention on Biological Diversity, 2000 Montreal; the Protocol on Preparedness, Response and Cooperation to Pollution Incidents by Hazardous and Noxious Substances, 2000 London; the Stockholm Convention on Persistent Organic Pollutants, 2001 Stockholm; the International Treaty on Plant Genetic Resources for Food and Agriculture, 2001 Rome; and the International Tropical Timber Agreement 206, 1994 Geneva. Source: The International Union for Conservation of Nature (IUCN) Environmental Law Centre ELIS Treaty Database S11 Agricultural water intensity Agricultural water withdrawal as a percent of total renewable water resources | 2006 or most recent year available Agricultural water withdrawal as a percent of total renewable water resources is calculated as: 100 × agricultural water withdrawal/total renewable water resources. In turn, total renewable water resources = surface renewable water + renewable groundwater – overlap between surface and groundwater. Where available, this indicator includes water resources coming from desalination used for agriculture (as in Kuwait, Saudi Arabia, the United Arab Emirates, Qatar, Bahrain, and Spain). Source: FAO AQUASTAT database, available at http://www.fao. org/nr/water/aquastat/main/index.stm (retrieved May 31, 2012) 120 | The Africa Competitiveness Report 2013 3: Competitiveness Profiles S12 CO2 intensity S14.02 Forest loss CO2 intensity (kilograms of CO2 per kilogram of oil equivalent Forest cover lost over the period 2000–10 based on satellite energy use) | 2008 data | 2010 Carbon dioxide (CO2) emissions are those stemming from the This indicator represents the loss of forest area owing to burning of fossil fuels and the manufacture of cement. They deforestation from either human or natural causes, such as forest include carbon dioxide produced during consumption of solid, fires. The University of Maryland researchers used Moderate liquid, and gas fuels and gas flaring. Energy use refers to use Resolution Imaging Spectroradiometer (MODIS) 500-meter of primary energy before transformation to other end-use fuels, resolution satellite data to identify areas of forest disturbance, which is equal to indigenous production plus imports and stock then used Landsat data to quantify the area of forest loss. This changes, minus exports and fuels supplied to ships and aircraft indicator uses a baseline forest cover layer (forest cover fraction engaged in international transport. A logarithm transformation is with a 30 percent forest cover threshold) to measure the area applied to the ratio of these statistics in order to spread the data under forest cover in the year 2000. It then combines forest loss distribution. estimates from Landsat for the periods 2000–05 and 2005–10 to arrive at a total forest cover change amount for the decade. This Source: The World Bank, World Development Indicators Online total is then divided by the forest area estimate for 2000 to come (retrieved June 1, 2012) up with a percent change in forest cover over the decade. Further details on the methods used are found in Hansen, M., S. V. S13 Fish stocks overexploited Stehman, and P. V. Potapov. 2010. “Quantification of Global Gross Fraction of country’s exclusive economic zone with Forest Cover Loss.� Proceedings of the National Academies overexploited and collapsed stocks | 2006 of Science, available at www.pnas.org/cgi/doi/10.1073/ The Sea Around Us (SAU) project‘s Stock Status Plots (SSPs) pnas.0912668107. A logarithm transformation is applied to these are created in four steps (Kleisner and Pauly, 2011). The first step statistics in order to spread the data distribution. is to define a stock. SAU defines a stock to be a taxon (either at Source: Yale University and Columbia University, Environmental the species, genus, or family level of taxonomic assignment) that Performance Index (EPI) 2012 edition, based on University of occurs in the catch records for at least 5 consecutive years, over Maryland data a minimum of 10 years, and which has a total catch in an area of at least 1,000 tonnes over the time span. In the second step, SAU assesses the status of the stock for every year relative to the S15 Particulate matter (2.5) concentration peak catch. SAU defines five states of stock status for a catch Population-weighted exposure to PM2.5 in micrograms per time series. This definition is assigned to every taxon meeting cubic meter, based on satellite data | 2009 the definition of a stock for a particular spatial area considered This indicator was developed by the Battelle Memorial Institute in (e.g., exclusive economic zones, or EEZs). Stock status states collaboration with Columbia University’s Center for International are: (1) Developing—before the year of peak catch and less Earth Science Information Network (CIESIN) and funding from the than 50 percent of the peak catch; (2) Exploited—before or after NASA Applied Sciences Program. Using relationships between the year of peak catch and more than 50 percent of the peak the Moderate Resolution Imaging Spectroradiometer (MODIS) catch; (3) Overexploited—after the year of peak catch and less Aerosol Optical Depth (AOD) and surface PM2.5 concentrations than 50 percent but more than 10 percent of the peak catch; that were modeled by van Donkelaar et al. (2010), annual average (4) Collapsed—after the year of peak catch and less than 10 MODIS AOD retrievals were used to estimate surface PM2.5 percent of the peak catch; (5) Rebuilding—occurs after the year concentrations from 2001 to 2010. These were averaged into of peak catch and after the stock has collapsed, when catch three-year moving averages from 2002 to 2009 to generate global has recovered to between 10 and 50 percent of the peak. In grids of PM2.5 concentrations. The grids were resampled to the third step, SAU graphs the number of stocks by status by match CIESIN’s Global Rural-Urban Mapping Project (GRUMP) 1 tallying the number of stocks in a particular state in a given year kilometer population grid. The population-weighted average of the and presenting these as percentages. In the fourth step, the PM2.5 values was used to calculate the country’s annual average cumulative catch of stock by status in a given year is summed exposure to PM2.5 in micrograms per cubic meter. A logarithm over all stocks and presented as a percentage in the catch transformation is applied to these statistics in order to spread the by stock status graph. The combination of these two figures data distribution. represents the complete Stock Status Plot. The numbers for this indicator are taken from the overexploited and collapsed numbers Source: Yale University and Columbia University, Environmental of stocks over total numbers of stocks per EEZ. A logarithm Performance Index (EPI) 2012 edition based on NASA MODIS transformation is applied to these statistics in order to spread the and MISR data (van Donkelaar et al. [2010]), Battelle, and CIESIN data distribution. S16 Quality of the natural environment Source: Yale University and Columbia University, Environmental How would you assess the quality of the natural environment in Performance Index (EPI) 2012 edition based on Sea Around Us your country? [1 = extremely poor; 7 = among the world’s most data pristine] | 2011–12 weighted average S14.01 Forest cover change Source: World Economic Forum, Executive Opinion Survey Percent change in forest area over the period 1990–10 | 2010 2011, 2012 This measure represents the percent change in forest area, applying a 10 percent crown cover as the definition of forested areas, between time periods. We used total forest extent rather than the extent of primary forest only. The change measure is calculated from forest area data in 1995, 2000, 2005, and 2010. The data are reported by national governments, and therefore methods and data sources may vary from country to country. Positive values indicate afforestation or reforestation, and negative values represent deforestation. Source: Yale University and Columbia University, Environmental Performance Index (EPI) 2012 edition based on Sea Around Us data The Africa Competitiveness Report 2013 | 121 3: Competitiveness Profiles List of Countries Country Page Country Page Country Page Algeria 124 Ghana 150 Namibia 176 Benin 126 Guinea 152 Nigeria 178 Botswana 128 Kenya 154 Rwanda 180 Burkina Faso 130 Lesotho 156 Senegal 182 Burundi 132 Liberia 158 Seychelles 184 Cameroon 134 Libya 160 Sierra Leone 186 Cape Verde 136 Madagascar 162 South Africa 188 Chad 138 Malawi 164 Swaziland 190 Côte d’Ivoire 140 Mali 166 Tanzania 192 Egypt 142 Mauritania 168 Uganda 194 Ethiopia 144 Mauritius 170 Zambia 196 Gabon 146 Morocco 172 Zimbabwe 198 Gambia, The 148 Mozambique 174 The Africa Competitiveness Report 2013 | 123 Part 3: Competitiveness Profiles Algeria Key indicators, 2011 Population (millions) ..............................................36.2 GDP (PPP) per capita (int’l $), 1990–2011 GDP (US$ billions)* .............................................197.9 10,000 Algeria MIddle East and North Africa GDP per capita (US$) ......................................5,503.2 GDP (PPP) as share (%) of world total ..................0.33 8,000 Sectoral value-added (% GDP), 2010 Agriculture ..............................................................6.9 6,000 Industry ................................................................62.1 Services ...............................................................31.0 4,000 Human Development Index, 2011 2,000 Score, (0–1) best ..................................................0.70 1991 1993 1995 1997 1999 2001 2003 2005 2007 2009 2011 Rank (out of 187 economies)...................................96 Sources: IMF; UNFPA; UNDP; World Bank The Global Competitiveness Index Rank Score Stage of development (out of 144) (1–7) GCI 2012–2013 ................................................ 110 ..... 3.7 Transition Transition GCI 2011–2012 (out of 142) ........................................... 87 ...... 4.0 1 1–2 2 2–3 3 GCI 2010–2011 (out of 139) ........................................... 86 ...... 4.0 Factor Efficiency Innovation driven driven driven Basic requirements (59.1%) ......................................... 89 ...... 4.2 Institutions .................................................................... 141 ...... 2.7 Institutions 7 Infrastructure ................................................................ 100 ...... 3.2 Innovation Infrastructure 6 Macroeconomic environment ......................................... 23 ...... 5.7 5 Health and primary education ......................................... 93 ...... 5.4 Business Macroeconomic 4 environment sophistication 3 Efficiency enhancers (35.7%) .................................... 136 ...... 3.1 2 Health and Higher education and training ....................................... 108 ...... 3.4 Market size 1 primary Goods market efficiency .............................................. 143 ...... 3.0 education Labor market efficiency ................................................ 144 ...... 2.8 Financial market development ...................................... 142 ...... 2.4 Technological Higher education readiness and training Technological readiness ................................................ 133 ...... 2.6 Market size ..................................................................... 49 ...... 4.3 Financial market Goods market development ef�ciency Innovation and sophistication factors (5.2%) ........... 144 ...... 2.3 Labor market ef�ciency Business sophistication ............................................... 144 ...... 2.5 Algeria Economies in transition from 1 to 2 Innovation ..................................................................... 141 ...... 2.1 The most problematic factors for doing business Inefficient government bureaucracy ......................................... 20.5 Access to financing ................................................................. 15.7 Corruption ............................................................................... 14.0 Inadequate supply of infrastructure ............................................ 8.1 Inadequately educated workforce .............................................. 8.1 Tax regulations .......................................................................... 6.3 Policy instability ......................................................................... 4.9 Inflation ...................................................................................... 4.5 Restrictive labor regulations ....................................................... 4.3 Poor work ethic in national labor force....................................... 3.5 Foreign currency regulations ...................................................... 3.0 Crime and theft ......................................................................... 2.4 Tax rates.................................................................................... 2.4 Insufficient capacity to innovate ................................................. 1.4 Poor public health ..................................................................... 0.8 Government instability/coups .................................................... 0.0 0 5 10 15 20 25 30 Percent of responses Note: From the list of factors above, respondents were asked to select the five most problematic for doing business in their country and to rank them between 1 (most problematic) and 5. The bars in the figure show the responses weighted according to their rankings. 124 | The Africa Competitiveness Report 2013 Part 3: Competitiveness Profiles Algeria The Global Competitiveness Index in detail INDICATOR VALUE RANK/144 INDICATOR VALUE RANK/144 1st pillar: Institutions 6th pillar: Goods market efficiency 1.01 Property rights ....................................................... 2.5 ..........140 6.01 Intensity of local competition .................................. 3.1 ..........144 1.02 Intellectual property protection ............................... 1.8 ..........142 6.02 Extent of market dominance .................................. 2.8 ..........137 1.03 Diversion of public funds ........................................ 2.2 ..........131 6.03 Effectiveness of anti-monopoly policy ..................... 2.9 ..........140 1.04 Public trust in politicians ......................................... 1.8 ..........129 6.04 Extent and effect of taxation................................... 3.2 ..........101 1.05 Irregular payments and bribes ................................ 2.6 ..........135 6.05 Total tax rate, % profits* ....................................... 72.0 ..........135 1.06 Judicial independence............................................ 2.5 ..........123 6.06 No. procedures to start a business* ........................ 14 ..........134 1.07 Favoritism in decisions of government officials ....... 2.2 ..........134 6.07 No. days to start a business* .................................. 25 ............92 1.08 Wastefulness of government spending ................... 2.4 ..........116 6.08 Agricultural policy costs.......................................... 3.2 ..........124 1.09 Burden of government regulation ........................... 2.3 ..........140 6.09 Prevalence of trade barriers ................................... 3.0 ..........141 1.10 Efficiency of legal framework in settling disputes .... 2.6 ..........132 6.10 Trade tariffs, % duty* ............................................ 14.0 ..........132 1.11 Efficiency of legal framework in challenging regs. ... 2.5 ..........137 6.11 Prevalence of foreign ownership............................. 3.3 ..........136 1.12 Transparency of government policymaking............. 2.6 ..........144 6.12 Business impact of rules on FDI ............................. 3.2 ..........138 1.13 Gov’t services for improved business performance... 2.8 ..........124 6.13 Burden of customs procedures .............................. 2.5 ..........141 1.14 Business costs of terrorism .................................... 3.5 ..........140 6.14 Imports as a percentage of GDP* ........................ 32.4 ..........111 1.15 Business costs of crime and violence..................... 3.6 ..........119 6.15 Degree of customer orientation .............................. 3.0 ..........144 1.16 Organized crime ..................................................... 3.3 ..........137 6.16 Buyer sophistication ............................................... 2.4 ..........131 1.17 Reliability of police services .................................... 3.0 ..........121 1.18 Ethical behavior of firms ......................................... 2.6 ..........143 7th pillar: Labor market efficiency 1.19 Strength of auditing and reporting standards ......... 2.8 ..........143 7.01 Cooperation in labor-employer relations ................. 2.9 ..........143 1.20 Efficacy of corporate boards .................................. 3.1 ..........143 7.02 Flexibility of wage determination ............................. 4.0 ..........125 1.21 Protection of minority shareholders’ interests ......... 3.1 ..........136 7.03 Hiring and firing practices ....................................... 3.3 ..........112 1.22 Strength of investor protection, 0–10 (best)* .......... 5.3 ............65 7.04 Redundancy costs, weeks of salary* ....................... 17 ............81 7.05 Pay and productivity............................................... 2.4 ..........144 2nd pillar: Infrastructure 7.06 Reliance on professional management ................... 2.3 ..........144 2.01 Quality of overall infrastructure ............................... 3.5 ..........102 7.07 Brain drain ............................................................. 1.5 ..........144 2.02 Quality of roads ...................................................... 3.4 ............88 7.08 Women in labor force, ratio to men* ..................... 0.21 ..........144 2.03 Quality of railroad infrastructure .............................. 2.0 ............90 2.04 Quality of port infrastructure ................................... 2.7 ..........131 8th pillar: Financial market development 2.05 Quality of air transport infrastructure....................... 3.3 ..........125 8.01 Availability of financial services ............................... 2.6 ..........143 2.06 Available airline seat kms/week, millions* ........... 146.0 ............72 8.02 Affordability of financial services ............................. 2.0 ..........144 2.07 Quality of electricity supply ..................................... 4.5 ............80 8.03 Financing through local equity market .................... 2.2 ..........131 2.08 Mobile telephone subscriptions/100 pop.* ........... 99.0 ............87 8.04 Ease of access to loans ......................................... 2.0 ..........128 2.09 Fixed telephone lines/100 pop.* ............................. 8.5 ............98 8.05 Venture capital availability ....................................... 1.8 ..........138 8.06 Soundness of banks .............................................. 2.9 ..........143 3rd pillar: Macroeconomic environment 8.07 Regulation of securities exchanges ........................ 2.3 ..........140 3.01 Government budget balance, % GDP* ..................-3.6 ............82 8.08 Legal rights index, 0–10 (best)* ................................. 3 ..........118 3.02 Gross national savings, % GDP* .......................... 50.1 ..............6 3.03 Inflation, annual % change* .................................... 4.5 ............68 9th pillar: Technological readiness 3.04 General government debt, % GDP* ....................... 9.9 ............11 9.01 Availability of latest technologies ............................ 3.4 ..........142 3.05 Country credit rating, 0–100 (best)* ...................... 53.7 ............59 9.02 Firm-level technology absorption ............................ 3.2 ..........144 9.03 FDI and technology transfer ................................... 3.4 ..........140 4th pillar: Health and primary education 9.04 Individuals using Internet, %* ............................... 14.0 ..........110 4.01 Business impact of malaria .................................... 5.5 ............91 9.05 Broadband Internet subscriptions/100 pop.* .......... 2.8 ............87 4.02 Malaria cases/100,000 pop.* ................................. 0.0 ............72 9.06 Int’l Internet bandwidth, kb/s per user* .................. 8.9 ............89 4.03 Business impact of tuberculosis ............................. 5.2 ............80 9.07 Mobile broadband subscriptions/100 pop.*............ 0.0 ..........128 4.04 Tuberculosis cases/100,000 pop.* ....................... 90.0 ............88 4.05 Business impact of HIV/AIDS ................................. 5.3 ............69 10th pillar: Market size 4.06 HIV prevalence, % adult pop.* ............................... 0.1 ............12 10.01 Domestic market size index, 1–7 (best)*................. 4.2 ............47 4.07 Infant mortality, deaths/1,000 live births* .............. 30.5 ..........102 10.02 Foreign market size index, 1–7 (best)* .................... 4.9 ............49 4.08 Life expectancy, years*......................................... 72.9 ............83 4.09 Quality of primary education ................................... 2.4 ..........129 11th pillar: Business sophistication 4.10 Primary education enrollment, net %* .................. 95.6 ............49 11.01 Local supplier quantity ........................................... 4.0 ..........124 11.02 Local supplier quality.............................................. 3.4 ..........137 5th pillar: Higher education and training 11.03 State of cluster development.................................. 2.4 ..........139 5.01 Secondary education enrollment, gross %* .......... 94.9 ............52 11.04 Nature of competitive advantage ............................ 2.0 ..........144 5.02 Tertiary education enrollment, gross %*................ 30.8 ............74 11.05 Value chain breadth................................................ 2.2 ..........143 5.03 Quality of the educational system ........................... 2.5 ..........131 11.06 Control of international distribution ......................... 2.5 ..........144 5.04 Quality of math and science education .................. 2.7 ..........129 11.07 Production process sophistication.......................... 2.3 ..........141 5.05 Quality of management schools ............................. 3.0 ..........131 11.08 Extent of marketing ................................................ 2.3 ..........143 5.06 Internet access in schools ...................................... 2.4 ..........132 11.09 Willingness to delegate authority ............................ 1.9 ..........144 5.07 Availability of research and training services ........... 2.8 ..........138 5.08 Extent of staff training ............................................ 2.6 ..........142 12th pillar: Innovation 12.01 Capacity for innovation........................................... 1.9 ..........143 12.02 Quality of scientific research institutions ................. 2.1 ..........141 12.03 Company spending on R&D................................... 1.8 ..........143 12.04 University-industry collaboration in R&D ................. 1.9 ..........144 12.05 Gov’t procurement of advanced tech products ...... 2.2 ..........142 12.06 Availability of scientists and engineers .................... 4.0 ............72 12.07 PCT patents, applications/million pop.* .................. 0.2 ............91 Notes: Values are on a 1-to-7 scale unless otherwise annotated with an asterisk (*). For further details and explanation, please refer to the section “How to Read the Competitiveness Profiles� on page 109. The Africa Competitiveness Report 2013 | 125 Part 3: Competitiveness Profiles Benin Key indicators, 2011 Population (millions) ................................................9.1 GDP (PPP) per capita (int’l $), 1990–2011 GDP (US$ billions)* .................................................7.3 2,500 Benin Sub-Saharan Africa GDP per capita (US$) .........................................802.2 GDP (PPP) as share (%) of world total ..................0.02 2,000 Sectoral value-added (% GDP), 2005 Agriculture ............................................................32.2 1,500 Industry ................................................................13.4 Services ...............................................................54.4 1,000 Human Development Index, 2011 500 Score, (0–1) best ..................................................0.43 1991 1993 1995 1997 1999 2001 2003 2005 2007 2009 2011 Rank (out of 187 economies).................................167 Sources: IMF; UNFPA; UNDP; World Bank The Global Competitiveness Index Rank Score Stage of development (out of 144) (1–7) GCI 2012–2013 ................................................ 119 ..... 3.6 Transition Transition GCI 2011–2012 (out of 142) ......................................... 104 ...... 3.8 1 1–2 2 2–3 3 GCI 2010–2011 (out of 139) ......................................... 103 ...... 3.7 Factor Efficiency Innovation driven driven driven Basic requirements (60.0%) ....................................... 113 ...... 3.8 Institutions ...................................................................... 99 ...... 3.5 Institutions 7 Infrastructure ................................................................ 122 ...... 2.6 Innovation Infrastructure 6 Macroeconomic environment ......................................... 76 ...... 4.6 5 Health and primary education ....................................... 111 ...... 4.7 Business Macroeconomic 4 environment sophistication 3 Efficiency enhancers (35.0%) .................................... 125 ...... 3.3 2 Health and Higher education and training ....................................... 120 ...... 3.1 Market size 1 primary Goods market efficiency .............................................. 132 ...... 3.7 education Labor market efficiency .................................................. 67 ...... 4.4 Financial market development ...................................... 112 ...... 3.6 Technological Higher education readiness and training Technological readiness ................................................ 124 ...... 2.7 Market size ................................................................... 122 ...... 2.5 Financial market Goods market development ef�ciency Innovation and sophistication factors (5.0%) ........... 111 ...... 3.1 Labor market ef�ciency Business sophistication ............................................... 125 ...... 3.2 Benin Factor-driven economies Innovation ....................................................................... 84 ...... 3.0 The most problematic factors for doing business Corruption ............................................................................... 23.8 Access to financing ................................................................. 17.2 Tax rates.................................................................................. 14.0 Inadequate supply of infrastructure .......................................... 11.1 Tax regulations .......................................................................... 6.6 Inefficient government bureaucracy ........................................... 6.4 Inflation ...................................................................................... 5.2 Inadequately educated workforce .............................................. 3.7 Poor work ethic in national labor force....................................... 3.0 Policy instability ......................................................................... 2.7 Insufficient capacity to innovate ................................................. 2.4 Foreign currency regulations ...................................................... 1.8 Crime and theft ......................................................................... 0.9 Restrictive labor regulations ....................................................... 0.8 Government instability/coups .................................................... 0.3 Poor public health ..................................................................... 0.0 0 5 10 15 20 25 30 Percent of responses Note: From the list of factors above, respondents were asked to select the five most problematic for doing business in their country and to rank them between 1 (most problematic) and 5. The bars in the figure show the responses weighted according to their rankings. 126 | The Africa Competitiveness Report 2013 Part 3: Competitiveness Profiles Benin The Global Competitiveness Index in detail INDICATOR VALUE RANK/144 INDICATOR VALUE RANK/144 1st pillar: Institutions 6th pillar: Goods market efficiency 1.01 Property rights ....................................................... 3.9 ............90 6.01 Intensity of local competition .................................. 4.5 ............93 1.02 Intellectual property protection ............................... 3.2 ............91 6.02 Extent of market dominance .................................. 3.8 ............66 1.03 Diversion of public funds ........................................ 2.6 ..........112 6.03 Effectiveness of anti-monopoly policy ..................... 3.8 ............92 1.04 Public trust in politicians ......................................... 2.3 ............98 6.04 Extent and effect of taxation................................... 2.8 ..........124 1.05 Irregular payments and bribes ................................ 2.5 ..........136 6.05 Total tax rate, % profits* ....................................... 66.0 ..........129 1.06 Judicial independence............................................ 2.9 ..........101 6.06 No. procedures to start a business* .......................... 6 ............47 1.07 Favoritism in decisions of government officials ....... 3.1 ............65 6.07 No. days to start a business* .................................. 29 ............99 1.08 Wastefulness of government spending ................... 3.7 ............40 6.08 Agricultural policy costs.......................................... 3.0 ..........137 1.09 Burden of government regulation ........................... 3.0 ..........106 6.09 Prevalence of trade barriers ................................... 3.3 ..........138 1.10 Efficiency of legal framework in settling disputes .... 3.3 ............91 6.10 Trade tariffs, % duty* ............................................ 11.4 ..........116 1.11 Efficiency of legal framework in challenging regs. ... 3.7 ............66 6.11 Prevalence of foreign ownership............................. 3.5 ..........128 1.12 Transparency of government policymaking............. 3.8 ..........108 6.12 Business impact of rules on FDI ............................. 3.6 ..........125 1.13 Gov’t services for improved business performance... 3.9 ............52 6.13 Burden of customs procedures .............................. 3.1 ..........128 1.14 Business costs of terrorism .................................... 5.1 ..........101 6.14 Imports as a percentage of GDP* ........................ 41.4 ............81 1.15 Business costs of crime and violence..................... 4.5 ............89 6.15 Degree of customer orientation .............................. 4.5 ............89 1.16 Organized crime ..................................................... 4.6 ..........103 6.16 Buyer sophistication ............................................... 2.4 ..........130 1.17 Reliability of police services .................................... 4.4 ............61 1.18 Ethical behavior of firms ......................................... 3.6 ............97 7th pillar: Labor market efficiency 1.19 Strength of auditing and reporting standards ......... 3.3 ..........137 7.01 Cooperation in labor-employer relations ................. 3.9 ..........106 1.20 Efficacy of corporate boards .................................. 4.6 ............60 7.02 Flexibility of wage determination ............................. 5.5 ............24 1.21 Protection of minority shareholders’ interests ......... 3.8 ..........100 7.03 Hiring and firing practices ....................................... 4.0 ............64 1.22 Strength of investor protection, 0–10 (best)* .......... 3.3 ..........125 7.04 Redundancy costs, weeks of salary* ....................... 12 ............49 7.05 Pay and productivity............................................... 3.1 ..........125 2nd pillar: Infrastructure 7.06 Reliance on professional management ................... 3.5 ..........127 2.01 Quality of overall infrastructure ............................... 3.2 ..........121 7.07 Brain drain ............................................................. 3.4 ............73 2.02 Quality of roads ...................................................... 3.1 ..........104 7.08 Women in labor force, ratio to men* ..................... 0.87 ............39 2.03 Quality of railroad infrastructure .............................. 1.6 ..........107 2.04 Quality of port infrastructure ................................... 3.7 ............95 8th pillar: Financial market development 2.05 Quality of air transport infrastructure....................... 3.4 ..........123 8.01 Availability of financial services ............................... 3.5 ..........128 2.06 Available airline seat kms/week, millions* ............. 20.9 ..........120 8.02 Affordability of financial services ............................. 3.3 ..........124 2.07 Quality of electricity supply ..................................... 2.5 ..........122 8.03 Financing through local equity market .................... 3.0 ..........102 2.08 Mobile telephone subscriptions/100 pop.* ........... 85.3 ..........102 8.04 Ease of access to loans ......................................... 2.3 ..........113 2.09 Fixed telephone lines/100 pop.* ............................. 1.7 ..........121 8.05 Venture capital availability ....................................... 2.2 ..........102 8.06 Soundness of banks .............................................. 4.9 ............81 3rd pillar: Macroeconomic environment 8.07 Regulation of securities exchanges ........................ 3.1 ..........125 3.01 Government budget balance, % GDP* ..................-1.4 ............43 8.08 Legal rights index, 0–10 (best)* ................................. 6 ............65 3.02 Gross national savings, % GDP* ............................ 9.8 ..........126 3.03 Inflation, annual % change* .................................... 2.7 ..............1 9th pillar: Technological readiness 3.04 General government debt, % GDP* ..................... 31.3 ............45 9.01 Availability of latest technologies ............................ 4.2 ..........113 3.05 Country credit rating, 0–100 (best)* ...................... 24.2 ..........118 9.02 Firm-level technology absorption ............................ 4.2 ..........114 9.03 FDI and technology transfer ................................... 3.8 ..........125 4th pillar: Health and primary education 9.04 Individuals using Internet, %* ................................. 3.5 ..........131 4.01 Business impact of malaria .................................... 3.8 ..........123 9.05 Broadband Internet subscriptions/100 pop.* .......... 0.0 ..........129 4.02 Malaria cases/100,000 pop.* ........................ 27,461.1 ..........131 9.06 Int’l Internet bandwidth, kb/s per user* .................. 3.4 ..........116 4.03 Business impact of tuberculosis ............................. 4.3 ..........115 9.07 Mobile broadband subscriptions/100 pop.*............ 0.0 ..........128 4.04 Tuberculosis cases/100,000 pop.* ....................... 94.0 ............90 4.05 Business impact of HIV/AIDS ................................. 4.2 ..........118 10th pillar: Market size 4.06 HIV prevalence, % adult pop.* ............................... 1.2 ..........110 10.01 Domestic market size index, 1–7 (best)*................. 2.3 ..........123 4.07 Infant mortality, deaths/1,000 live births* .............. 73.2 ..........132 10.02 Foreign market size index, 1–7 (best)* .................... 2.8 ..........124 4.08 Life expectancy, years*......................................... 55.6 ..........125 4.09 Quality of primary education ................................... 3.4 ............90 11th pillar: Business sophistication 4.10 Primary education enrollment, net %* .................. 93.8 ............66 11.01 Local supplier quantity ........................................... 3.7 ..........139 11.02 Local supplier quality.............................................. 3.7 ..........126 5th pillar: Higher education and training 11.03 State of cluster development.................................. 2.6 ..........136 5.01 Secondary education enrollment, gross %* .......... 37.1 ..........127 11.04 Nature of competitive advantage ............................ 3.1 ..........102 5.02 Tertiary education enrollment, gross %*................ 10.6 ..........108 11.05 Value chain breadth................................................ 3.2 ..........100 5.03 Quality of the educational system ........................... 3.6 ............71 11.06 Control of international distribution ......................... 3.3 ..........129 5.04 Quality of math and science education .................. 4.3 ............51 11.07 Production process sophistication.......................... 3.5 ............81 5.05 Quality of management schools ............................. 4.4 ............53 11.08 Extent of marketing ................................................ 3.0 ..........125 5.06 Internet access in schools ...................................... 2.5 ..........127 11.09 Willingness to delegate authority ............................ 3.0 ..........124 5.07 Availability of research and training services ........... 4.1 ............76 5.08 Extent of staff training ............................................ 3.1 ..........133 12th pillar: Innovation 12.01 Capacity for innovation........................................... 2.5 ..........121 12.02 Quality of scientific research institutions ................. 3.2 ..........101 12.03 Company spending on R&D................................... 3.0 ............77 12.04 University-industry collaboration in R&D ................. 3.0 ..........114 12.05 Gov’t procurement of advanced tech products ...... 3.7 ............62 12.06 Availability of scientists and engineers .................... 4.5 ............39 12.07 PCT patents, applications/million pop.* .................. 0.0 ..........111 Notes: Values are on a 1-to-7 scale unless otherwise annotated with an asterisk (*). For further details and explanation, please refer to the section “How to Read the Competitiveness Profiles� on page 109. The Africa Competitiveness Report 2013 | 127 Part 3: Competitiveness Profiles Botswana Key indicators, 2011 Population (millions) ................................................2.0 GDP (PPP) per capita (int’l $), 1990–2011 GDP (US$ billions)* ...............................................17.7 20,000 Botswana Sub-Saharan Africa GDP per capita (US$) ......................................9,537.4 GDP (PPP) as share (%) of world total ..................0.04 15,000 Sectoral value-added (% GDP), 2011 Agriculture ..............................................................2.5 10,000 Industry ................................................................46.8 Services ...............................................................50.8 5,000 Human Development Index, 2011 0 Score, (0–1) best ..................................................0.63 1991 1993 1995 1997 1999 2001 2003 2005 2007 2009 2011 Rank (out of 187 economies).................................118 Sources: IMF; UNFPA; UNDP; World Bank The Global Competitiveness Index Rank Score Stage of development (out of 144) (1–7) GCI 2012–2013 .................................................. 79 ..... 4.1 Transition Transition GCI 2011–2012 (out of 142) ........................................... 80 ...... 4.0 1 1–2 2 2–3 3 GCI 2010–2011 (out of 139) ........................................... 76 ...... 4.1 Factor Efficiency Innovation driven driven driven Basic requirements (48.5%) ......................................... 78 ...... 4.4 Institutions ...................................................................... 33 ...... 4.8 Institutions 7 Infrastructure .................................................................. 87 ...... 3.6 Innovation Infrastructure 6 Macroeconomic environment ......................................... 81 ...... 4.5 5 Health and primary education ....................................... 114 ...... 4.6 Business Macroeconomic 4 environment sophistication 3 Efficiency enhancers (43.6%) ...................................... 89 ...... 3.8 2 Health and Higher education and training ......................................... 95 ...... 3.7 Market size 1 primary Goods market efficiency ................................................ 78 ...... 4.2 education Labor market efficiency .................................................. 60 ...... 4.5 Financial market development ........................................ 53 ...... 4.4 Technological Higher education readiness and training Technological readiness ................................................ 106 ...... 3.2 Market size ..................................................................... 97 ...... 2.9 Financial market Goods market development ef�ciency Innovation and sophistication factors (7.9%) ............. 82 ...... 3.4 Labor market ef�ciency Business sophistication ................................................. 95 ...... 3.7 Botswana Economies in transition from 1 to 2 Innovation ....................................................................... 73 ...... 3.1 The most problematic factors for doing business Poor work ethic in national labor force..................................... 19.8 Access to financing ................................................................. 15.9 Inadequately educated workforce ............................................ 12.2 Inefficient government bureaucracy ......................................... 10.7 Restrictive labor regulations ....................................................... 9.2 Inadequate supply of infrastructure ............................................ 7.9 Insufficient capacity to innovate ................................................. 6.7 Corruption ................................................................................. 6.3 Inflation ...................................................................................... 4.3 Crime and theft ......................................................................... 2.0 Tax rates.................................................................................... 1.5 Policy instability ......................................................................... 1.4 Tax regulations .......................................................................... 1.0 Foreign currency regulations ...................................................... 0.6 Government instability/coups .................................................... 0.2 Poor public health ..................................................................... 0.1 0 5 10 15 20 25 30 Percent of responses Note: From the list of factors above, respondents were asked to select the five most problematic for doing business in their country and to rank them between 1 (most problematic) and 5. The bars in the figure show the responses weighted according to their rankings. 128 | The Africa Competitiveness Report 2013 Part 3: Competitiveness Profiles Botswana The Global Competitiveness Index in detail INDICATOR VALUE RANK/144 INDICATOR VALUE RANK/144 1st pillar: Institutions 6th pillar: Goods market efficiency 1.01 Property rights ....................................................... 4.9 ............46 6.01 Intensity of local competition .................................. 4.8 ............74 1.02 Intellectual property protection ............................... 4.1 ............45 6.02 Extent of market dominance .................................. 3.7 ............70 1.03 Diversion of public funds ........................................ 4.7 ............31 6.03 Effectiveness of anti-monopoly policy ..................... 4.0 ............72 1.04 Public trust in politicians ......................................... 4.3 ............22 6.04 Extent and effect of taxation................................... 4.7 ............13 1.05 Irregular payments and bribes ................................ 5.0 ............36 6.05 Total tax rate, % profits* ....................................... 19.4 ............13 1.06 Judicial independence............................................ 5.5 ............22 6.06 No. procedures to start a business* ........................ 10 ..........110 1.07 Favoritism in decisions of government officials ....... 4.1 ............29 6.07 No. days to start a business* .................................. 61 ..........131 1.08 Wastefulness of government spending ................... 4.4 ............21 6.08 Agricultural policy costs.......................................... 4.6 ............20 1.09 Burden of government regulation ........................... 3.8 ............43 6.09 Prevalence of trade barriers ................................... 4.6 ............42 1.10 Efficiency of legal framework in settling disputes .... 5.0 ............16 6.10 Trade tariffs, % duty* .............................................. 6.7 ............81 1.11 Efficiency of legal framework in challenging regs. ... 4.9 ............15 6.11 Prevalence of foreign ownership............................. 5.3 ............35 1.12 Transparency of government policymaking............. 4.7 ............43 6.12 Business impact of rules on FDI ............................. 4.8 ............49 1.13 Gov’t services for improved business performance... 4.0 ............50 6.13 Burden of customs procedures .............................. 4.4 ............54 1.14 Business costs of terrorism .................................... 6.5 ..............7 6.14 Imports as a percentage of GDP* ........................ 43.9 ............74 1.15 Business costs of crime and violence..................... 5.1 ............59 6.15 Degree of customer orientation .............................. 4.2 ..........105 1.16 Organized crime ..................................................... 6.3 ............20 6.16 Buyer sophistication ............................................... 2.8 ..........119 1.17 Reliability of police services .................................... 5.0 ............43 1.18 Ethical behavior of firms ......................................... 4.8 ............37 7th pillar: Labor market efficiency 1.19 Strength of auditing and reporting standards ......... 4.9 ............50 7.01 Cooperation in labor-employer relations ................. 3.9 ..........113 1.20 Efficacy of corporate boards .................................. 4.8 ............42 7.02 Flexibility of wage determination ............................. 4.8 ............94 1.21 Protection of minority shareholders’ interests ......... 4.5 ............44 7.03 Hiring and firing practices ....................................... 3.1 ..........123 1.22 Strength of investor protection, 0–10 (best)* .......... 6.0 ............39 7.04 Redundancy costs, weeks of salary* ....................... 22 ............99 7.05 Pay and productivity............................................... 3.9 ............68 2nd pillar: Infrastructure 7.06 Reliance on professional management ................... 5.2 ............30 2.01 Quality of overall infrastructure ............................... 4.4 ............64 7.07 Brain drain ............................................................. 3.8 ............44 2.02 Quality of roads ...................................................... 4.4 ............55 7.08 Women in labor force, ratio to men* ..................... 0.90 ............27 2.03 Quality of railroad infrastructure .............................. 3.1 ............55 2.04 Quality of port infrastructure ................................... 3.7 ............97 8th pillar: Financial market development 2.05 Quality of air transport infrastructure....................... 4.1 ............96 8.01 Availability of financial services ............................... 4.6 ............72 2.06 Available airline seat kms/week, millions* ............... 5.6 ..........141 8.02 Affordability of financial services ............................. 4.1 ............75 2.07 Quality of electricity supply ..................................... 3.6 ..........104 8.03 Financing through local equity market .................... 3.9 ............49 2.08 Mobile telephone subscriptions/100 pop.* ......... 142.8 ............19 8.04 Ease of access to loans ......................................... 3.4 ............35 2.09 Fixed telephone lines/100 pop.* ............................. 7.4 ..........101 8.05 Venture capital availability ....................................... 2.9 ............47 8.06 Soundness of banks .............................................. 5.5 ............50 3rd pillar: Macroeconomic environment 8.07 Regulation of securities exchanges ........................ 4.3 ............56 3.01 Government budget balance, % GDP* ..................-4.2 ............95 8.08 Legal rights index, 0–10 (best)* ................................. 7 ............43 3.02 Gross national savings, % GDP* .......................... 14.7 ..........100 3.03 Inflation, annual % change* .................................... 8.5 ..........113 9th pillar: Technological readiness 3.04 General government debt, % GDP* ..................... 17.3 ............21 9.01 Availability of latest technologies ............................ 4.6 ............93 3.05 Country credit rating, 0–100 (best)* ...................... 60.0 ............49 9.02 Firm-level technology absorption ............................ 4.4 ............98 9.03 FDI and technology transfer ................................... 4.1 ..........102 4th pillar: Health and primary education 9.04 Individuals using Internet, %* ................................. 7.0 ..........124 4.01 Business impact of malaria .................................... 5.1 ..........104 9.05 Broadband Internet subscriptions/100 pop.* .......... 0.8 ..........105 4.02 Malaria cases/100,000 pop.* ............................. 232.9 ..........102 9.06 Int’l Internet bandwidth, kb/s per user* .................. 8.4 ............91 4.03 Business impact of tuberculosis ............................. 3.7 ..........130 9.07 Mobile broadband subscriptions/100 pop.*............ 1.5 ..........106 4.04 Tuberculosis cases/100,000 pop.* ..................... 503.0 ..........136 4.05 Business impact of HIV/AIDS ................................. 3.0 ..........136 10th pillar: Market size 4.06 HIV prevalence, % adult pop.* ............................. 24.8 ..........143 10.01 Domestic market size index, 1–7 (best)*................. 2.8 ............95 4.07 Infant mortality, deaths/1,000 live births* .............. 36.1 ..........104 10.02 Foreign market size index, 1–7 (best)* .................... 3.5 ..........104 4.08 Life expectancy, years*......................................... 53.1 ..........132 4.09 Quality of primary education ................................... 4.2 ............56 11th pillar: Business sophistication 4.10 Primary education enrollment, net %* .................. 89.7 ............96 11.01 Local supplier quantity ........................................... 4.0 ..........122 11.02 Local supplier quality.............................................. 3.9 ..........114 5th pillar: Higher education and training 11.03 State of cluster development.................................. 3.6 ............74 5.01 Secondary education enrollment, gross %* .......... 81.7 ............88 11.04 Nature of competitive advantage ............................ 3.4 ............73 5.02 Tertiary education enrollment, gross %*.................. 7.4 ..........119 11.05 Value chain breadth................................................ 3.2 ..........104 5.03 Quality of the educational system ........................... 4.0 ............55 11.06 Control of international distribution ......................... 3.7 ..........104 5.04 Quality of math and science education .................. 4.1 ............66 11.07 Production process sophistication.......................... 3.2 ..........106 5.05 Quality of management schools ............................. 3.9 ............92 11.08 Extent of marketing ................................................ 3.3 ..........118 5.06 Internet access in schools ...................................... 3.5 ............96 11.09 Willingness to delegate authority ............................ 4.0 ............46 5.07 Availability of research and training services ........... 3.7 ............95 5.08 Extent of staff training ............................................ 3.9 ............68 12th pillar: Innovation 12.01 Capacity for innovation........................................... 2.8 ............96 12.02 Quality of scientific research institutions ................. 3.6 ............73 12.03 Company spending on R&D................................... 3.2 ............62 12.04 University-industry collaboration in R&D ................. 3.7 ............63 12.05 Gov’t procurement of advanced tech products ...... 3.6 ............65 12.06 Availability of scientists and engineers .................... 3.5 ..........112 12.07 PCT patents, applications/million pop.* .................. 0.0 ..........119 Notes: Values are on a 1-to-7 scale unless otherwise annotated with an asterisk (*). For further details and explanation, please refer to the section “How to Read the Competitiveness Profiles� on page 109. The Africa Competitiveness Report 2013 | 129 Part 3: Competitiveness Profiles Burkina Faso Key indicators, 2011 Population (millions) ..............................................17.0 GDP (PPP) per capita (int’l $), 1990–2011 GDP (US$ billions)* ...............................................10.2 2,500 Burkina Faso Sub-Saharan Africa GDP per capita (US$) .........................................601.0 GDP (PPP) as share (%) of world total ..................0.03 2,000 Sectoral value-added (% GDP), 2006 Agriculture ............................................................33.3 1,500 Industry ................................................................22.4 Services ...............................................................44.4 1,000 Human Development Index, 2011 500 Score, (0–1) best ..................................................0.33 1991 1993 1995 1997 1999 2001 2003 2005 2007 2009 2011 Rank (out of 187 economies).................................181 Sources: IMF; UNFPA; UNDP; World Bank The Global Competitiveness Index Rank Score Stage of development (out of 144) (1–7) GCI 2012–2013 ................................................ 133 ..... 3.3 Transition Transition GCI 2011–2012 (out of 142) ......................................... 136 ...... 3.3 1 1–2 2 2–3 3 GCI 2010–2011 (out of 139) ......................................... 134 ...... 3.2 Factor Efficiency Innovation driven driven driven Basic requirements (60.0%) ....................................... 133 ...... 3.4 Institutions ...................................................................... 83 ...... 3.7 Institutions 7 Infrastructure ................................................................ 136 ...... 2.2 Innovation Infrastructure 6 Macroeconomic environment ......................................... 85 ...... 4.5 5 Health and primary education ....................................... 139 ...... 3.5 Business Macroeconomic 4 environment sophistication 3 Efficiency enhancers (35.0%) .................................... 129 ...... 3.2 2 Health and Higher education and training ....................................... 137 ...... 2.5 Market size 1 primary Goods market efficiency .............................................. 118 ...... 3.8 education Labor market efficiency .................................................. 64 ...... 4.4 Financial market development ...................................... 117 ...... 3.4 Technological Higher education readiness and training Technological readiness ................................................ 137 ...... 2.5 Market size ................................................................... 114 ...... 2.6 Financial market Goods market development ef�ciency Innovation and sophistication factors (5.0%) ........... 126 ...... 2.9 Labor market ef�ciency Business sophistication ............................................... 140 ...... 3.0 Burkina Faso Factor-driven economies Innovation ..................................................................... 107 ...... 2.9 The most problematic factors for doing business Access to financing ................................................................. 28.6 Corruption ............................................................................... 17.5 Tax rates.................................................................................. 11.2 Inadequate supply of infrastructure ............................................ 9.5 Tax regulations .......................................................................... 8.2 Inefficient government bureaucracy ........................................... 7.4 Inadequately educated workforce .............................................. 4.4 Insufficient capacity to innovate ................................................. 3.0 Poor work ethic in national labor force....................................... 2.3 Restrictive labor regulations ....................................................... 2.1 Inflation ...................................................................................... 1.7 Crime and theft ......................................................................... 1.3 Policy instability ......................................................................... 1.3 Poor public health ..................................................................... 0.8 Government instability/coups .................................................... 0.6 Foreign currency regulations ...................................................... 0.0 0 5 10 15 20 25 30 Percent of responses Note: From the list of factors above, respondents were asked to select the five most problematic for doing business in their country and to rank them between 1 (most problematic) and 5. The bars in the figure show the responses weighted according to their rankings. 130 | The Africa Competitiveness Report 2013 Part 3: Competitiveness Profiles Burkina Faso The Global Competitiveness Index in detail INDICATOR VALUE RANK/144 INDICATOR VALUE RANK/144 1st pillar: Institutions 6th pillar: Goods market efficiency 1.01 Property rights ....................................................... 4.3 ............66 6.01 Intensity of local competition .................................. 4.3 ..........105 1.02 Intellectual property protection ............................... 3.6 ............71 6.02 Extent of market dominance .................................. 3.2 ..........111 1.03 Diversion of public funds ........................................ 2.5 ..........118 6.03 Effectiveness of anti-monopoly policy ..................... 4.1 ............65 1.04 Public trust in politicians ......................................... 2.2 ..........103 6.04 Extent and effect of taxation................................... 3.3 ............91 1.05 Irregular payments and bribes ................................ 3.2 ..........112 6.05 Total tax rate, % profits* ....................................... 43.6 ............87 1.06 Judicial independence............................................ 2.5 ..........126 6.06 No. procedures to start a business* .......................... 3 ..............8 1.07 Favoritism in decisions of government officials ....... 2.8 ............90 6.07 No. days to start a business* .................................. 13 ............59 1.08 Wastefulness of government spending ................... 2.9 ............92 6.08 Agricultural policy costs.......................................... 3.6 ............96 1.09 Burden of government regulation ........................... 3.7 ............49 6.09 Prevalence of trade barriers ................................... 4.1 ............90 1.10 Efficiency of legal framework in settling disputes .... 3.6 ............78 6.10 Trade tariffs, % duty* ............................................ 11.4 ..........118 1.11 Efficiency of legal framework in challenging regs. ... 3.5 ............81 6.11 Prevalence of foreign ownership............................. 4.1 ..........105 1.12 Transparency of government policymaking............. 4.4 ............60 6.12 Business impact of rules on FDI ............................. 4.8 ............48 1.13 Gov’t services for improved business performance... 3.8 ............64 6.13 Burden of customs procedures .............................. 3.8 ............83 1.14 Business costs of terrorism .................................... 5.4 ............85 6.14 Imports as a percentage of GDP* ........................ 30.1 ..........120 1.15 Business costs of crime and violence..................... 4.3 ............96 6.15 Degree of customer orientation .............................. 4.0 ..........115 1.16 Organized crime ..................................................... 5.2 ............73 6.16 Buyer sophistication ............................................... 1.9 ..........143 1.17 Reliability of police services .................................... 3.8 ............95 1.18 Ethical behavior of firms ......................................... 4.1 ............54 7th pillar: Labor market efficiency 1.19 Strength of auditing and reporting standards ......... 4.0 ..........109 7.01 Cooperation in labor-employer relations ................. 4.1 ............95 1.20 Efficacy of corporate boards .................................. 4.8 ............47 7.02 Flexibility of wage determination ............................. 5.4 ............33 1.21 Protection of minority shareholders’ interests ......... 3.9 ............95 7.03 Hiring and firing practices ....................................... 4.5 ............32 1.22 Strength of investor protection, 0–10 (best)* .......... 3.7 ..........120 7.04 Redundancy costs, weeks of salary* ....................... 10 ............43 7.05 Pay and productivity............................................... 3.0 ..........127 2nd pillar: Infrastructure 7.06 Reliance on professional management ................... 3.5 ..........125 2.01 Quality of overall infrastructure ............................... 2.7 ..........136 7.07 Brain drain ............................................................. 2.8 ..........114 2.02 Quality of roads ...................................................... 2.6 ..........125 7.08 Women in labor force, ratio to men* ..................... 0.88 ............36 2.03 Quality of railroad infrastructure .............................. 2.0 ............92 2.04 Quality of port infrastructure ................................... 3.6 ..........103 8th pillar: Financial market development 2.05 Quality of air transport infrastructure....................... 3.3 ..........127 8.01 Availability of financial services ............................... 3.5 ..........127 2.06 Available airline seat kms/week, millions* ............. 14.0 ..........127 8.02 Affordability of financial services ............................. 3.2 ..........133 2.07 Quality of electricity supply ..................................... 2.3 ..........125 8.03 Financing through local equity market .................... 3.3 ............79 2.08 Mobile telephone subscriptions/100 pop.* ........... 45.3 ..........133 8.04 Ease of access to loans ......................................... 1.7 ..........140 2.09 Fixed telephone lines/100 pop.* ............................. 0.8 ..........129 8.05 Venture capital availability ....................................... 1.8 ..........136 8.06 Soundness of banks .............................................. 4.6 ..........102 3rd pillar: Macroeconomic environment 8.07 Regulation of securities exchanges ........................ 3.3 ..........117 3.01 Government budget balance, % GDP* ..................-2.5 ............60 8.08 Legal rights index, 0–10 (best)* ................................. 6 ............65 3.02 Gross national savings, % GDP* .......................... 11.2 ..........120 3.03 Inflation, annual % change* .................................... 2.8 ..............1 9th pillar: Technological readiness 3.04 General government debt, % GDP* ..................... 29.4 ............42 9.01 Availability of latest technologies ............................ 3.6 ..........138 3.05 Country credit rating, 0–100 (best)* ...................... 22.2 ..........122 9.02 Firm-level technology absorption ............................ 4.1 ..........118 9.03 FDI and technology transfer ................................... 4.0 ..........110 4th pillar: Health and primary education 9.04 Individuals using Internet, %* ................................. 3.0 ..........134 4.01 Business impact of malaria .................................... 3.2 ..........131 9.05 Broadband Internet subscriptions/100 pop.* .......... 0.1 ..........121 4.02 Malaria cases/100,000 pop.* ........................ 31,822.2 ..........138 9.06 Int’l Internet bandwidth, kb/s per user* .................. 2.2 ..........124 4.03 Business impact of tuberculosis ............................. 4.5 ..........107 9.07 Mobile broadband subscriptions/100 pop.*............ 0.0 ..........128 4.04 Tuberculosis cases/100,000 pop.* ....................... 55.0 ............74 4.05 Business impact of HIV/AIDS ................................. 4.5 ..........109 10th pillar: Market size 4.06 HIV prevalence, % adult pop.* ............................... 1.2 ..........110 10.01 Domestic market size index, 1–7 (best)*................. 2.6 ..........105 4.07 Infant mortality, deaths/1,000 live births* .............. 92.6 ..........141 10.02 Foreign market size index, 1–7 (best)* .................... 2.8 ..........126 4.08 Life expectancy, years*......................................... 54.9 ..........127 4.09 Quality of primary education ................................... 3.1 ..........110 11th pillar: Business sophistication 4.10 Primary education enrollment, net %* .................. 63.2 ..........136 11.01 Local supplier quantity ........................................... 4.4 ............95 11.02 Local supplier quality.............................................. 4.0 ..........105 5th pillar: Higher education and training 11.03 State of cluster development.................................. 2.5 ..........137 5.01 Secondary education enrollment, gross %* .......... 22.6 ..........143 11.04 Nature of competitive advantage ............................ 2.8 ..........116 5.02 Tertiary education enrollment, gross %*.................. 3.9 ..........131 11.05 Value chain breadth................................................ 2.4 ..........140 5.03 Quality of the educational system ........................... 2.8 ..........124 11.06 Control of international distribution ......................... 3.1 ..........135 5.04 Quality of math and science education .................. 3.8 ............80 11.07 Production process sophistication.......................... 2.4 ..........139 5.05 Quality of management schools ............................. 3.7 ..........105 11.08 Extent of marketing ................................................ 2.9 ..........127 5.06 Internet access in schools ...................................... 1.7 ..........141 11.09 Willingness to delegate authority ............................ 2.3 ..........143 5.07 Availability of research and training services ........... 3.7 ............93 5.08 Extent of staff training ............................................ 2.9 ..........137 12th pillar: Innovation 12.01 Capacity for innovation........................................... 2.3 ..........135 12.02 Quality of scientific research institutions ................. 3.7 ............59 12.03 Company spending on R&D................................... 2.7 ..........109 12.04 University-industry collaboration in R&D ................. 3.2 ..........104 12.05 Gov’t procurement of advanced tech products ...... 3.4 ............88 12.06 Availability of scientists and engineers .................... 3.5 ..........107 12.07 PCT patents, applications/million pop.* .................. 0.0 ..........110 Notes: Values are on a 1-to-7 scale unless otherwise annotated with an asterisk (*). For further details and explanation, please refer to the section “How to Read the Competitiveness Profiles� on page 109. The Africa Competitiveness Report 2013 | 131 Part 3: Competitiveness Profiles Burundi Key indicators, 2011 Population (millions) ................................................8.6 GDP (PPP) per capita (int’l $), 1990–2011 GDP (US$ billions)* .................................................2.4 2,500 Burundi Sub-Saharan Africa GDP per capita (US$) .........................................274.9 GDP (PPP) as share (%) of world total ..................0.01 2,000 Sectoral value-added (% GDP), 2011 1,500 Agriculture ............................................................35.2 1,000 Industry ................................................................18.6 Services ...............................................................46.3 500 Human Development Index, 2011 0 Score, (0–1) best ..................................................0.32 1991 1993 1995 1997 1999 2001 2003 2005 2007 2009 2011 Rank (out of 187 economies).................................185 Sources: IMF; UNFPA; UNDP; World Bank The Global Competitiveness Index Rank Score Stage of development (out of 144) (1–7) GCI 2012–2013 ................................................ 144 ..... 2.8 Transition Transition GCI 2011–2012 (out of 142) ......................................... 140 ...... 2.9 1 1–2 2 2–3 3 GCI 2010–2011 (out of 139) ......................................... 137 ...... 3.0 Factor Efficiency Innovation driven driven driven Basic requirements (60.0%) ....................................... 142 ...... 2.9 Institutions .................................................................... 142 ...... 2.6 Institutions 7 Infrastructure ................................................................ 141 ...... 1.9 Innovation Infrastructure 6 Macroeconomic environment ....................................... 137 ...... 3.1 5 Health and primary education ....................................... 127 ...... 4.2 Business Macroeconomic 4 environment sophistication 3 Efficiency enhancers (35.0%) .................................... 144 ...... 2.6 2 Health and Higher education and training ....................................... 143 ...... 2.0 Market size 1 primary Goods market efficiency .............................................. 139 ...... 3.3 education Labor market efficiency ................................................ 112 ...... 4.0 Financial market development ...................................... 144 ...... 2.3 Technological Higher education readiness and training Technological readiness ................................................ 144 ...... 2.2 Market size ................................................................... 140 ...... 1.6 Financial market Goods market development ef�ciency Innovation and sophistication factors (5.0%) ........... 142 ...... 2.4 Labor market ef�ciency Business sophistication ............................................... 143 ...... 2.7 Burundi Factor-driven economies Innovation ..................................................................... 140 ...... 2.2 The most problematic factors for doing business Access to financing ................................................................. 19.8 Corruption ............................................................................... 18.5 Policy instability ......................................................................... 9.8 Tax rates.................................................................................... 9.3 Inflation ...................................................................................... 9.2 Inefficient government bureaucracy ........................................... 6.9 Inadequate supply of infrastructure ............................................ 5.4 Tax regulations .......................................................................... 5.0 Inadequately educated workforce .............................................. 3.7 Foreign currency regulations ...................................................... 3.6 Insufficient capacity to innovate ................................................. 2.3 Crime and theft ......................................................................... 1.9 Restrictive labor regulations ....................................................... 1.8 Poor work ethic in national labor force....................................... 1.8 Government instability/coups .................................................... 1.0 Poor public health ..................................................................... 0.0 0 5 10 15 20 25 30 Percent of responses Note: From the list of factors above, respondents were asked to select the five most problematic for doing business in their country and to rank them between 1 (most problematic) and 5. The bars in the figure show the responses weighted according to their rankings. 132 | The Africa Competitiveness Report 2013 Part 3: Competitiveness Profiles Burundi The Global Competitiveness Index in detail INDICATOR VALUE RANK/144 INDICATOR VALUE RANK/144 1st pillar: Institutions 6th pillar: Goods market efficiency 1.01 Property rights ....................................................... 2.4 ..........141 6.01 Intensity of local competition .................................. 3.5 ..........140 1.02 Intellectual property protection ............................... 1.9 ..........141 6.02 Extent of market dominance .................................. 3.3 ..........105 1.03 Diversion of public funds ........................................ 1.8 ..........141 6.03 Effectiveness of anti-monopoly policy ..................... 2.9 ..........137 1.04 Public trust in politicians ......................................... 1.7 ..........134 6.04 Extent and effect of taxation................................... 2.2 ..........143 1.05 Irregular payments and bribes ................................ 2.3 ..........140 6.05 Total tax rate, % profits* ....................................... 46.2 ..........100 1.06 Judicial independence............................................ 1.7 ..........143 6.06 No. procedures to start a business* .......................... 9 ............97 1.07 Favoritism in decisions of government officials ....... 2.4 ..........126 6.07 No. days to start a business* .................................. 14 ............66 1.08 Wastefulness of government spending ................... 2.0 ..........141 6.08 Agricultural policy costs.......................................... 3.3 ..........117 1.09 Burden of government regulation ........................... 2.8 ..........121 6.09 Prevalence of trade barriers ................................... 3.3 ..........137 1.10 Efficiency of legal framework in settling disputes .... 2.6 ..........134 6.10 Trade tariffs, % duty* .............................................. 8.9 ............99 1.11 Efficiency of legal framework in challenging regs. ... 2.4 ..........141 6.11 Prevalence of foreign ownership............................. 2.8 ..........141 1.12 Transparency of government policymaking............. 3.3 ..........134 6.12 Business impact of rules on FDI ............................. 3.3 ..........133 1.13 Gov’t services for improved business performance... 2.1 ..........136 6.13 Burden of customs procedures .............................. 2.6 ..........140 1.14 Business costs of terrorism .................................... 4.0 ..........134 6.14 Imports as a percentage of GDP* ........................ 32.8 ..........109 1.15 Business costs of crime and violence..................... 3.6 ..........116 6.15 Degree of customer orientation .............................. 3.6 ..........137 1.16 Organized crime ..................................................... 3.9 ..........125 6.16 Buyer sophistication ............................................... 1.8 ..........144 1.17 Reliability of police services .................................... 2.0 ..........144 1.18 Ethical behavior of firms ......................................... 2.6 ..........144 7th pillar: Labor market efficiency 1.19 Strength of auditing and reporting standards ......... 2.6 ..........144 7.01 Cooperation in labor-employer relations ................. 3.5 ..........131 1.20 Efficacy of corporate boards .................................. 3.9 ..........126 7.02 Flexibility of wage determination ............................. 5.7 ............16 1.21 Protection of minority shareholders’ interests ......... 3.1 ..........134 7.03 Hiring and firing practices ....................................... 3.7 ............87 1.22 Strength of investor protection, 0–10 (best)* .......... 6.0 ............39 7.04 Redundancy costs, weeks of salary* ....................... 16 ............75 7.05 Pay and productivity............................................... 2.5 ..........141 2nd pillar: Infrastructure 7.06 Reliance on professional management ................... 2.5 ..........141 2.01 Quality of overall infrastructure ............................... 2.3 ..........142 7.07 Brain drain ............................................................. 1.7 ..........142 2.02 Quality of roads ...................................................... 2.7 ..........121 7.08 Women in labor force, ratio to men* ..................... 1.03 ..............3 2.03 Quality of railroad infrastructure ........................ n/appl. ...........n/a 2.04 Quality of port infrastructure ................................... 2.6 ..........136 8th pillar: Financial market development 2.05 Quality of air transport infrastructure....................... 2.8 ..........139 8.01 Availability of financial services ............................... 2.5 ..........144 2.06 Available airline seat kms/week, millions* ............... 2.3 ..........142 8.02 Affordability of financial services ............................. 2.5 ..........142 2.07 Quality of electricity supply ..................................... 1.9 ..........133 8.03 Financing through local equity market .................... 1.8 ..........141 2.08 Mobile telephone subscriptions/100 pop.* ........... 14.5 ..........144 8.04 Ease of access to loans ......................................... 1.5 ..........144 2.09 Fixed telephone lines/100 pop.* ............................. 0.4 ..........136 8.05 Venture capital availability ....................................... 1.6 ..........143 8.06 Soundness of banks .............................................. 3.2 ..........140 3rd pillar: Macroeconomic environment 8.07 Regulation of securities exchanges ........................ 2.0 ..........142 3.01 Government budget balance, % GDP* ..................-4.0 ............87 8.08 Legal rights index, 0–10 (best)* ................................. 3 ..........118 3.02 Gross national savings, % GDP* ............................ 7.7 ..........134 3.03 Inflation, annual % change* .................................. 14.9 ..........135 9th pillar: Technological readiness 3.04 General government debt, % GDP* ..................... 35.3 ............58 9.01 Availability of latest technologies ............................ 3.2 ..........144 3.05 Country credit rating, 0–100 (best)* ...................... 12.6 ..........139 9.02 Firm-level technology absorption ............................ 3.5 ..........143 9.03 FDI and technology transfer ................................... 3.5 ..........137 4th pillar: Health and primary education 9.04 Individuals using Internet, %* ................................. 1.1 ..........141 4.01 Business impact of malaria .................................... 2.7 ..........138 9.05 Broadband Internet subscriptions/100 pop.* .......... 0.0 ..........140 4.02 Malaria cases/100,000 pop.* .......................... 8,931.5 ..........122 9.06 Int’l Internet bandwidth, kb/s per user* .................. 0.7 ..........134 4.03 Business impact of tuberculosis ............................. 3.0 ..........142 9.07 Mobile broadband subscriptions/100 pop.*............ 0.0 ..........128 4.04 Tuberculosis cases/100,000 pop.* ..................... 129.0 ..........100 4.05 Business impact of HIV/AIDS ................................. 2.7 ..........141 10th pillar: Market size 4.06 HIV prevalence, % adult pop.* ............................... 3.3 ..........127 10.01 Domestic market size index, 1–7 (best)*................. 1.7 ..........138 4.07 Infant mortality, deaths/1,000 live births* .............. 87.8 ..........138 10.02 Foreign market size index, 1–7 (best)* .................... 1.2 ..........143 4.08 Life expectancy, years*......................................... 49.9 ..........137 4.09 Quality of primary education ................................... 2.0 ..........142 11th pillar: Business sophistication 4.10 Primary education enrollment, net %* .................. 89.7 ............95 11.01 Local supplier quantity ........................................... 3.5 ..........140 11.02 Local supplier quality.............................................. 3.0 ..........142 5th pillar: Higher education and training 11.03 State of cluster development.................................. 2.4 ..........141 5.01 Secondary education enrollment, gross %* .......... 24.8 ..........140 11.04 Nature of competitive advantage ............................ 2.8 ..........119 5.02 Tertiary education enrollment, gross %*.................. 3.2 ..........134 11.05 Value chain breadth................................................ 2.9 ..........124 5.03 Quality of the educational system ........................... 2.0 ..........143 11.06 Control of international distribution ......................... 3.0 ..........139 5.04 Quality of math and science education .................. 3.2 ..........112 11.07 Production process sophistication.......................... 2.2 ..........143 5.05 Quality of management schools ............................. 2.8 ..........136 11.08 Extent of marketing ................................................ 2.0 ..........144 5.06 Internet access in schools ...................................... 1.5 ..........143 11.09 Willingness to delegate authority ............................ 2.4 ..........142 5.07 Availability of research and training services ........... 2.2 ..........144 5.08 Extent of staff training ............................................ 2.4 ..........143 12th pillar: Innovation 12.01 Capacity for innovation........................................... 1.8 ..........144 12.02 Quality of scientific research institutions ................. 2.3 ..........135 12.03 Company spending on R&D................................... 2.2 ..........135 12.04 University-industry collaboration in R&D ................. 2.2 ..........139 12.05 Gov’t procurement of advanced tech products ...... 2.4 ..........139 12.06 Availability of scientists and engineers .................... 3.6 ..........102 12.07 PCT patents, applications/million pop.* .................. 0.0 ..........119 Notes: Values are on a 1-to-7 scale unless otherwise annotated with an asterisk (*). For further details and explanation, please refer to the section “How to Read the Competitiveness Profiles� on page 109. The Africa Competitiveness Report 2013 | 133 Part 3: Competitiveness Profiles Cameroon Key indicators, 2011 Population (millions) ..............................................20.1 GDP (PPP) per capita (int’l $), 1990–2011 GDP (US$ billions)* ...............................................25.6 2,500 Cameroon Sub-Saharan Africa GDP per capita (US$) ......................................1,225.2 GDP (PPP) as share (%) of world total ..................0.06 2,000 Sectoral value-added (% GDP), 2007 Agriculture ............................................................19.5 Industry ................................................................30.6 1,500 Services ...............................................................49.9 Human Development Index, 2011 1,000 Score, (0–1) best ..................................................0.48 1991 1993 1995 1997 1999 2001 2003 2005 2007 2009 2011 Rank (out of 187 economies).................................150 Sources: IMF; UNFPA; UNDP; World Bank The Global Competitiveness Index Rank Score Stage of development (out of 144) (1–7) GCI 2012–2013 ................................................ 112 ..... 3.7 Transition Transition GCI 2011–2012 (out of 142) ......................................... 116 ...... 3.6 1 1–2 2 2–3 3 GCI 2010–2011 (out of 139) ......................................... 111 ...... 3.6 Factor Efficiency Innovation driven driven driven Basic requirements (60.0%) ....................................... 115 ...... 3.8 Institutions .................................................................... 107 ...... 3.4 Institutions 7 Infrastructure ................................................................ 125 ...... 2.5 Innovation Infrastructure 6 Macroeconomic environment ......................................... 59 ...... 4.8 5 Health and primary education ....................................... 118 ...... 4.5 Business Macroeconomic 4 environment sophistication 3 Efficiency enhancers (35.0%) .................................... 111 ...... 3.6 2 Health and Higher education and training ....................................... 115 ...... 3.3 Market size 1 primary Goods market efficiency ................................................ 89 ...... 4.1 education Labor market efficiency .................................................. 58 ...... 4.5 Financial market development ...................................... 105 ...... 3.6 Technological Higher education readiness and training Technological readiness ................................................ 126 ...... 2.7 Market size ..................................................................... 87 ...... 3.2 Financial market Goods market development ef�ciency Innovation and sophistication factors (5.0%) ............. 95 ...... 3.3 Labor market ef�ciency Business sophistication ............................................... 104 ...... 3.5 Cameroon Factor-driven economies Innovation ....................................................................... 79 ...... 3.1 The most problematic factors for doing business Corruption ............................................................................... 22.8 Access to financing ................................................................. 19.3 Inadequate supply of infrastructure .......................................... 16.2 Inefficient government bureaucracy ......................................... 11.2 Tax rates.................................................................................... 9.7 Tax regulations .......................................................................... 7.0 Poor work ethic in national labor force....................................... 3.2 Foreign currency regulations ...................................................... 2.0 Inflation ...................................................................................... 2.0 Inadequately educated workforce .............................................. 1.9 Crime and theft ......................................................................... 1.8 Restrictive labor regulations ....................................................... 1.4 Insufficient capacity to innovate ................................................. 1.2 Policy instability ......................................................................... 0.2 Poor public health ..................................................................... 0.1 Government instability/coups .................................................... 0.0 0 5 10 15 20 25 30 Percent of responses Note: From the list of factors above, respondents were asked to select the five most problematic for doing business in their country and to rank them between 1 (most problematic) and 5. The bars in the figure show the responses weighted according to their rankings. 134 | The Africa Competitiveness Report 2013 Part 3: Competitiveness Profiles Cameroon The Global Competitiveness Index in detail INDICATOR VALUE RANK/144 INDICATOR VALUE RANK/144 1st pillar: Institutions 6th pillar: Goods market efficiency 1.01 Property rights ....................................................... 3.8 ............97 6.01 Intensity of local competition .................................. 4.4 ............97 1.02 Intellectual property protection ............................... 3.1 ..........100 6.02 Extent of market dominance .................................. 4.1 ............43 1.03 Diversion of public funds ........................................ 2.2 ..........133 6.03 Effectiveness of anti-monopoly policy ..................... 4.6 ............33 1.04 Public trust in politicians ......................................... 2.1 ..........111 6.04 Extent and effect of taxation................................... 3.3 ............93 1.05 Irregular payments and bribes ................................ 2.9 ..........128 6.05 Total tax rate, % profits* ....................................... 49.1 ..........108 1.06 Judicial independence............................................ 2.5 ..........127 6.06 No. procedures to start a business* .......................... 5 ............29 1.07 Favoritism in decisions of government officials ....... 2.6 ..........108 6.07 No. days to start a business* .................................. 15 ............71 1.08 Wastefulness of government spending ................... 2.6 ..........108 6.08 Agricultural policy costs.......................................... 4.2 ............46 1.09 Burden of government regulation ........................... 3.4 ............73 6.09 Prevalence of trade barriers ................................... 4.5 ............54 1.10 Efficiency of legal framework in settling disputes .... 3.4 ............88 6.10 Trade tariffs, % duty* ............................................ 13.3 ..........130 1.11 Efficiency of legal framework in challenging regs. ... 3.3 ............91 6.11 Prevalence of foreign ownership............................. 5.4 ............29 1.12 Transparency of government policymaking............. 4.2 ............73 6.12 Business impact of rules on FDI ............................. 4.8 ............53 1.13 Gov’t services for improved business performance... 4.0 ............49 6.13 Burden of customs procedures .............................. 4.2 ............63 1.14 Business costs of terrorism .................................... 5.2 ............95 6.14 Imports as a percentage of GDP* ........................ 30.5 ..........117 1.15 Business costs of crime and violence..................... 4.3 ..........101 6.15 Degree of customer orientation .............................. 4.1 ..........111 1.16 Organized crime ..................................................... 4.7 ............96 6.16 Buyer sophistication ............................................... 3.1 ............99 1.17 Reliability of police services .................................... 3.9 ............88 1.18 Ethical behavior of firms ......................................... 3.4 ..........113 7th pillar: Labor market efficiency 1.19 Strength of auditing and reporting standards ......... 3.7 ..........124 7.01 Cooperation in labor-employer relations ................. 4.1 ............94 1.20 Efficacy of corporate boards .................................. 4.7 ............58 7.02 Flexibility of wage determination ............................. 4.8 ............88 1.21 Protection of minority shareholders’ interests ......... 4.1 ............76 7.03 Hiring and firing practices ....................................... 4.9 ............18 1.22 Strength of investor protection, 0–10 (best)* .......... 4.3 ..........101 7.04 Redundancy costs, weeks of salary* ....................... 14 ............65 7.05 Pay and productivity............................................... 3.6 ............95 2nd pillar: Infrastructure 7.06 Reliance on professional management ................... 4.3 ............64 2.01 Quality of overall infrastructure ............................... 3.2 ..........122 7.07 Brain drain ............................................................. 3.2 ............92 2.02 Quality of roads ...................................................... 2.9 ..........112 7.08 Women in labor force, ratio to men* ..................... 0.85 ............53 2.03 Quality of railroad infrastructure .............................. 2.5 ............75 2.04 Quality of port infrastructure ................................... 3.7 ............99 8th pillar: Financial market development 2.05 Quality of air transport infrastructure....................... 3.7 ..........109 8.01 Availability of financial services ............................... 3.9 ............99 2.06 Available airline seat kms/week, millions* ............. 45.2 ............99 8.02 Affordability of financial services ............................. 3.6 ..........107 2.07 Quality of electricity supply ..................................... 2.8 ..........120 8.03 Financing through local equity market .................... 3.2 ............81 2.08 Mobile telephone subscriptions/100 pop.* ........... 52.4 ..........128 8.04 Ease of access to loans ......................................... 2.4 ............97 2.09 Fixed telephone lines/100 pop.* ............................. 3.3 ..........112 8.05 Venture capital availability ....................................... 2.2 ..........108 8.06 Soundness of banks .............................................. 4.6 ............94 3rd pillar: Macroeconomic environment 8.07 Regulation of securities exchanges ........................ 3.4 ..........115 3.01 Government budget balance, % GDP* ..................-1.9 ............51 8.08 Legal rights index, 0–10 (best)* ................................. 6 ............65 3.02 Gross national savings, % GDP* .......................... 14.8 ............99 3.03 Inflation, annual % change* .................................... 2.9 ............26 9th pillar: Technological readiness 3.04 General government debt, % GDP* ..................... 12.9 ............16 9.01 Availability of latest technologies ............................ 4.0 ..........123 3.05 Country credit rating, 0–100 (best)* ...................... 24.6 ..........114 9.02 Firm-level technology absorption ............................ 4.2 ..........113 9.03 FDI and technology transfer ................................... 4.7 ............73 4th pillar: Health and primary education 9.04 Individuals using Internet, %* ................................. 5.0 ..........126 4.01 Business impact of malaria .................................... 3.4 ..........127 9.05 Broadband Internet subscriptions/100 pop.* .......... 0.0 ..........139 4.02 Malaria cases/100,000 pop.* ........................ 26,842.0 ..........130 9.06 Int’l Internet bandwidth, kb/s per user* .................. 0.3 ..........140 4.03 Business impact of tuberculosis ............................. 4.6 ..........105 9.07 Mobile broadband subscriptions/100 pop.*............ 0.0 ..........128 4.04 Tuberculosis cases/100,000 pop.* ..................... 177.0 ..........110 4.05 Business impact of HIV/AIDS ................................. 4.3 ..........115 10th pillar: Market size 4.06 HIV prevalence, % adult pop.* ............................... 5.3 ..........132 10.01 Domestic market size index, 1–7 (best)*................. 3.1 ............85 4.07 Infant mortality, deaths/1,000 live births* .............. 84.4 ..........136 10.02 Foreign market size index, 1–7 (best)* .................... 3.5 ..........101 4.08 Life expectancy, years*......................................... 51.1 ..........135 4.09 Quality of primary education ................................... 3.8 ............68 11th pillar: Business sophistication 4.10 Primary education enrollment, net %* .................. 92.4 ............80 11.01 Local supplier quantity ........................................... 4.2 ..........115 11.02 Local supplier quality.............................................. 4.1 ............97 5th pillar: Higher education and training 11.03 State of cluster development.................................. 3.2 ..........102 5.01 Secondary education enrollment, gross %* .......... 42.2 ..........122 11.04 Nature of competitive advantage ............................ 2.7 ..........126 5.02 Tertiary education enrollment, gross %*................ 11.5 ..........107 11.05 Value chain breadth................................................ 3.4 ............81 5.03 Quality of the educational system ........................... 3.7 ............66 11.06 Control of international distribution ......................... 3.3 ..........131 5.04 Quality of math and science education .................. 3.9 ............75 11.07 Production process sophistication.......................... 3.4 ............95 5.05 Quality of management schools ............................. 4.5 ............46 11.08 Extent of marketing ................................................ 3.6 ..........103 5.06 Internet access in schools ...................................... 2.4 ..........130 11.09 Willingness to delegate authority ............................ 3.5 ............90 5.07 Availability of research and training services ........... 4.1 ............70 5.08 Extent of staff training ............................................ 3.8 ............83 12th pillar: Innovation 12.01 Capacity for innovation........................................... 2.7 ..........110 12.02 Quality of scientific research institutions ................. 3.4 ............91 12.03 Company spending on R&D................................... 3.0 ............78 12.04 University-industry collaboration in R&D ................. 3.2 ............98 12.05 Gov’t procurement of advanced tech products ...... 3.9 ............43 12.06 Availability of scientists and engineers .................... 4.4 ............49 12.07 PCT patents, applications/million pop.* .................. 0.2 ............86 Notes: Values are on a 1-to-7 scale unless otherwise annotated with an asterisk (*). For further details and explanation, please refer to the section “How to Read the Competitiveness Profiles� on page 109. The Africa Competitiveness Report 2013 | 135 Part 3: Competitiveness Profiles Cape Verde Key indicators, 2011 Population (millions) ................................................0.5 GDP (PPP) per capita (int’l $), 1990–2011 GDP (US$ billions)* .................................................1.9 4,000 Cape Verde Sub-Saharan Africa GDP per capita (US$) ......................................3,660.9 GDP (PPP) as share (%) of world total ..................0.00 3,000 Sectoral value-added (% GDP), 2011 Agriculture ............................................................10.4 2,000 Industry ................................................................17.8 Services ...............................................................71.8 1,000 Human Development Index, 2011 0 Score, (0–1) best ..................................................0.57 1991 1993 1995 1997 1999 2001 2003 2005 2007 2009 2011 Rank (out of 187 economies).................................133 Sources: IMF; UNFPA; UNDP; World Bank The Global Competitiveness Index Rank Score Stage of development (out of 144) (1–7) GCI 2012–2013 ................................................ 122 ..... 3.5 Transition Transition GCI 2011–2012 (out of 142) ......................................... 119 ...... 3.6 1 1–2 2 2–3 3 GCI 2010–2011 (out of 139) ......................................... 117 ...... 3.5 Factor Efficiency Innovation driven driven driven Basic requirements (40.0%) ....................................... 100 ...... 4.1 Institutions ...................................................................... 57 ...... 4.1 Institutions 7 Infrastructure ................................................................ 114 ...... 2.8 Innovation Infrastructure 6 Macroeconomic environment ....................................... 121 ...... 3.8 5 Health and primary education ......................................... 71 ...... 5.7 Business Macroeconomic 4 environment sophistication 3 Efficiency enhancers (50.0%) .................................... 128 ...... 3.2 2 Health and Higher education and training ......................................... 99 ...... 3.6 Market size 1 primary Goods market efficiency .............................................. 105 ...... 3.9 education Labor market efficiency ................................................ 126 ...... 3.7 Financial market development ...................................... 121 ...... 3.4 Technological Higher education readiness and training Technological readiness .................................................. 90 ...... 3.4 Market size ................................................................... 143 ...... 1.2 Financial market Goods market development ef�ciency Innovation and sophistication factors (10.0%) ......... 119 ...... 3.0 Labor market ef�ciency Business sophistication ............................................... 118 ...... 3.3 Cape Verde Efficiency-driven economies Innovation ..................................................................... 120 ...... 2.7 The most problematic factors for doing business Access to financing ................................................................. 23.0 Inefficient government bureaucracy ......................................... 13.4 Tax rates.................................................................................. 11.6 Inadequate supply of infrastructure ............................................ 8.7 Inadequately educated workforce .............................................. 7.4 Restrictive labor regulations ....................................................... 7.2 Tax regulations .......................................................................... 6.2 Poor work ethic in national labor force....................................... 4.5 Crime and theft ......................................................................... 4.2 Insufficient capacity to innovate ................................................. 3.1 Corruption ................................................................................. 3.0 Inflation ...................................................................................... 2.7 Policy instability ......................................................................... 2.5 Poor public health ..................................................................... 1.2 Foreign currency regulations ...................................................... 1.0 Government instability/coups .................................................... 0.2 0 5 10 15 20 25 30 Percent of responses Note: From the list of factors above, respondents were asked to select the five most problematic for doing business in their country and to rank them between 1 (most problematic) and 5. The bars in the figure show the responses weighted according to their rankings. 136 | The Africa Competitiveness Report 2013 Part 3: Competitiveness Profiles Cape Verde The Global Competitiveness Index in detail INDICATOR VALUE RANK/144 INDICATOR VALUE RANK/144 1st pillar: Institutions 6th pillar: Goods market efficiency 1.01 Property rights ....................................................... 4.0 ............86 6.01 Intensity of local competition .................................. 4.0 ..........122 1.02 Intellectual property protection ............................... 2.9 ..........113 6.02 Extent of market dominance .................................. 3.7 ............75 1.03 Diversion of public funds ........................................ 4.4 ............40 6.03 Effectiveness of anti-monopoly policy ..................... 3.6 ..........101 1.04 Public trust in politicians ......................................... 4.0 ............28 6.04 Extent and effect of taxation................................... 3.3 ............85 1.05 Irregular payments and bribes ................................ 4.9 ............38 6.05 Total tax rate, % profits* ....................................... 37.8 ............69 1.06 Judicial independence............................................ 4.2 ............51 6.06 No. procedures to start a business* .......................... 8 ............87 1.07 Favoritism in decisions of government officials ....... 3.5 ............49 6.07 No. days to start a business* .................................. 11 ............52 1.08 Wastefulness of government spending ................... 3.5 ............54 6.08 Agricultural policy costs.......................................... 4.1 ............51 1.09 Burden of government regulation ........................... 3.8 ............38 6.09 Prevalence of trade barriers ................................... 3.7 ..........121 1.10 Efficiency of legal framework in settling disputes .... 3.7 ............70 6.10 Trade tariffs, % duty* ............................................ 11.1 ..........114 1.11 Efficiency of legal framework in challenging regs. ... 3.7 ............64 6.11 Prevalence of foreign ownership............................. 4.6 ............79 1.12 Transparency of government policymaking............. 4.4 ............58 6.12 Business impact of rules on FDI ............................. 4.5 ............83 1.13 Gov’t services for improved business performance... 3.9 ............53 6.13 Burden of customs procedures .............................. 3.4 ..........116 1.14 Business costs of terrorism .................................... 5.5 ............80 6.14 Imports as a percentage of GDP* ........................ 64.8 ............39 1.15 Business costs of crime and violence..................... 4.0 ..........106 6.15 Degree of customer orientation .............................. 3.6 ..........138 1.16 Organized crime ..................................................... 4.5 ..........104 6.16 Buyer sophistication ............................................... 2.9 ..........113 1.17 Reliability of police services .................................... 4.5 ............58 1.18 Ethical behavior of firms ......................................... 4.4 ............46 7th pillar: Labor market efficiency 1.19 Strength of auditing and reporting standards ......... 4.0 ..........112 7.01 Cooperation in labor-employer relations ................. 3.9 ..........110 1.20 Efficacy of corporate boards .................................. 4.0 ..........117 7.02 Flexibility of wage determination ............................. 5.3 ............46 1.21 Protection of minority shareholders’ interests ......... 3.9 ............92 7.03 Hiring and firing practices ....................................... 3.6 ............99 1.22 Strength of investor protection, 0–10 (best)* .......... 4.0 ..........110 7.04 Redundancy costs, weeks of salary* ....................... 30 ..........124 7.05 Pay and productivity............................................... 3.0 ..........131 2nd pillar: Infrastructure 7.06 Reliance on professional management ................... 3.7 ..........109 2.01 Quality of overall infrastructure ............................... 3.7 ............94 7.07 Brain drain ............................................................. 3.2 ............93 2.02 Quality of roads ...................................................... 4.1 ............65 7.08 Women in labor force, ratio to men* ..................... 0.64 ..........108 2.03 Quality of railroad infrastructure ........................ n/appl. ...........n/a 2.04 Quality of port infrastructure ................................... 3.9 ............85 8th pillar: Financial market development 2.05 Quality of air transport infrastructure....................... 4.3 ............81 8.01 Availability of financial services ............................... 3.7 ..........116 2.06 Available airline seat kms/week, millions* ............. 36.2 ..........103 8.02 Affordability of financial services ............................. 3.8 ............93 2.07 Quality of electricity supply ..................................... 1.8 ..........135 8.03 Financing through local equity market .................... 3.2 ............83 2.08 Mobile telephone subscriptions/100 pop.* ........... 79.2 ..........109 8.04 Ease of access to loans ......................................... 2.2 ..........116 2.09 Fixed telephone lines/100 pop.* ........................... 14.9 ............84 8.05 Venture capital availability ....................................... 2.3 ............99 8.06 Soundness of banks .............................................. 5.1 ............72 3rd pillar: Macroeconomic environment 8.07 Regulation of securities exchanges ........................ 3.8 ............95 3.01 Government budget balance, % GDP* ..................-8.9 ..........138 8.08 Legal rights index, 0–10 (best)* ................................. 2 ..........135 3.02 Gross national savings, % GDP* .......................... 24.1 ............51 3.03 Inflation, annual % change* .................................... 4.5 ............66 9th pillar: Technological readiness 3.04 General government debt, % GDP* ..................... 77.6 ..........123 9.01 Availability of latest technologies ............................ 5.0 ............68 3.05 Country credit rating, 0–100 (best)* ...................... 31.5 ..........102 9.02 Firm-level technology absorption ............................ 4.7 ............76 9.03 FDI and technology transfer ................................... 4.7 ............70 4th pillar: Health and primary education 9.04 Individuals using Internet, %* ............................... 32.0 ............83 4.01 Business impact of malaria .................................... 5.2 ............97 9.05 Broadband Internet subscriptions/100 pop.* .......... 4.3 ............78 4.02 Malaria cases/100,000 pop.* ............................... 68.8 ............96 9.06 Int’l Internet bandwidth, kb/s per user* .................. 5.8 ..........102 4.03 Business impact of tuberculosis ............................. 5.0 ............88 9.07 Mobile broadband subscriptions/100 pop.*............ 3.0 ............95 4.04 Tuberculosis cases/100,000 pop.* ..................... 147.0 ..........106 4.05 Business impact of HIV/AIDS ................................. 5.0 ............88 10th pillar: Market size 4.06 HIV prevalence, % adult pop.* ............................... 0.8 ............98 10.01 Domestic market size index, 1–7 (best)*................. 1.1 ..........143 4.07 Infant mortality, deaths/1,000 live births* .............. 29.2 ............99 10.02 Foreign market size index, 1–7 (best)* .................... 1.8 ..........140 4.08 Life expectancy, years*......................................... 73.8 ............65 4.09 Quality of primary education ................................... 3.9 ............65 11th pillar: Business sophistication 4.10 Primary education enrollment, net %* .................. 93.2 ............74 11.01 Local supplier quantity ........................................... 3.9 ..........131 11.02 Local supplier quality.............................................. 3.7 ..........128 5th pillar: Higher education and training 11.03 State of cluster development.................................. 3.0 ..........118 5.01 Secondary education enrollment, gross %* .......... 87.5 ............76 11.04 Nature of competitive advantage ............................ 3.7 ............53 5.02 Tertiary education enrollment, gross %*................ 17.8 ............96 11.05 Value chain breadth................................................ 2.8 ..........128 5.03 Quality of the educational system ........................... 3.8 ............64 11.06 Control of international distribution ......................... 3.3 ..........132 5.04 Quality of math and science education .................. 3.4 ..........108 11.07 Production process sophistication.......................... 3.1 ..........110 5.05 Quality of management schools ............................. 3.5 ..........114 11.08 Extent of marketing ................................................ 3.3 ..........120 5.06 Internet access in schools ...................................... 3.6 ............90 11.09 Willingness to delegate authority ............................ 3.2 ..........107 5.07 Availability of research and training services ........... 3.3 ..........120 5.08 Extent of staff training ............................................ 3.2 ..........120 12th pillar: Innovation 12.01 Capacity for innovation........................................... 2.3 ..........137 12.02 Quality of scientific research institutions ................. 2.8 ..........119 12.03 Company spending on R&D................................... 2.3 ..........133 12.04 University-industry collaboration in R&D ................. 3.1 ..........109 12.05 Gov’t procurement of advanced tech products ...... 3.9 ............42 12.06 Availability of scientists and engineers .................... 3.3 ..........127 12.07 PCT patents, applications/million pop.* .................. 0.0 ..........119 Notes: Values are on a 1-to-7 scale unless otherwise annotated with an asterisk (*). For further details and explanation, please refer to the section “How to Read the Competitiveness Profiles� on page 109. The Africa Competitiveness Report 2013 | 137 Part 3: Competitiveness Profiles Chad Key indicators, 2011 Population (millions) ..............................................11.6 GDP (PPP) per capita (int’l $), 1990–2011 GDP (US$ billions)* .................................................9.3 2,500 Chad Sub-Saharan Africa GDP per capita (US$) .........................................891.9 GDP (PPP) as share (%) of world total ..................0.03 2,000 Sectoral value-added (% GDP), 2008 Agriculture ............................................................13.6 1,500 Industry ................................................................48.8 Services ...............................................................37.5 1,000 Human Development Index, 2011 500 Score, (0–1) best ..................................................0.33 1991 1993 1995 1997 1999 2001 2003 2005 2007 2009 2011 Rank (out of 187 economies).................................183 Sources: IMF; UNFPA; UNDP; World Bank The Global Competitiveness Index Rank Score Stage of development (out of 144) (1–7) GCI 2012–2013 ................................................ 139 ..... 3.1 Transition Transition GCI 2011–2012 (out of 142) ......................................... 142 ...... 2.9 1 1–2 2 2–3 3 GCI 2010–2011 (out of 139) ......................................... 139 ...... 2.7 Factor Efficiency Innovation driven driven driven Basic requirements (60.0%) ....................................... 139 ...... 3.1 Institutions .................................................................... 140 ...... 2.7 Institutions 7 Infrastructure ................................................................ 140 ...... 1.9 Innovation Infrastructure 6 Macroeconomic environment ......................................... 45 ...... 5.1 5 Health and primary education ....................................... 144 ...... 2.9 Business Macroeconomic 4 environment sophistication 3 Efficiency enhancers (35.0%) .................................... 141 ...... 2.9 2 Health and Higher education and training ....................................... 140 ...... 2.3 Market size 1 primary Goods market efficiency .............................................. 141 ...... 3.1 education Labor market efficiency .................................................. 95 ...... 4.1 Financial market development ...................................... 137 ...... 3.0 Technological Higher education readiness and training Technological readiness ................................................ 143 ...... 2.2 Market size ................................................................... 112 ...... 2.7 Financial market Goods market development ef�ciency Innovation and sophistication factors (5.0%) ........... 129 ...... 2.9 Labor market ef�ciency Business sophistication ............................................... 138 ...... 3.0 Chad Factor-driven economies Innovation ..................................................................... 113 ...... 2.7 The most problematic factors for doing business Access to financing ................................................................. 24.3 Corruption ............................................................................... 17.2 Tax rates.................................................................................... 8.8 Inadequate supply of infrastructure ............................................ 8.3 Inadequately educated workforce .............................................. 6.3 Policy instability ......................................................................... 5.8 Crime and theft ......................................................................... 5.6 Inefficient government bureaucracy ........................................... 5.0 Tax regulations .......................................................................... 4.9 Insufficient capacity to innovate ................................................. 2.7 Government instability/coups .................................................... 2.5 Poor work ethic in national labor force....................................... 2.3 Restrictive labor regulations ....................................................... 2.0 Inflation ...................................................................................... 1.9 Poor public health ..................................................................... 1.4 Foreign currency regulations ...................................................... 1.1 0 5 10 15 20 25 30 Percent of responses Note: From the list of factors above, respondents were asked to select the five most problematic for doing business in their country and to rank them between 1 (most problematic) and 5. The bars in the figure show the responses weighted according to their rankings. 138 | The Africa Competitiveness Report 2013 Part 3: Competitiveness Profiles Chad The Global Competitiveness Index in detail INDICATOR VALUE RANK/144 INDICATOR VALUE RANK/144 1st pillar: Institutions 6th pillar: Goods market efficiency 1.01 Property rights ....................................................... 2.6 ..........139 6.01 Intensity of local competition .................................. 3.3 ..........142 1.02 Intellectual property protection ............................... 2.1 ..........138 6.02 Extent of market dominance .................................. 2.9 ..........134 1.03 Diversion of public funds ........................................ 2.2 ..........134 6.03 Effectiveness of anti-monopoly policy ..................... 3.1 ..........135 1.04 Public trust in politicians ......................................... 2.2 ..........108 6.04 Extent and effect of taxation................................... 2.6 ..........132 1.05 Irregular payments and bribes ................................ 2.3 ..........141 6.05 Total tax rate, % profits* ....................................... 65.4 ..........127 1.06 Judicial independence............................................ 2.2 ..........136 6.06 No. procedures to start a business* ........................ 11 ..........119 1.07 Favoritism in decisions of government officials ....... 2.4 ..........124 6.07 No. days to start a business* .................................. 66 ..........132 1.08 Wastefulness of government spending ................... 2.1 ..........134 6.08 Agricultural policy costs.......................................... 3.7 ............89 1.09 Burden of government regulation ........................... 3.1 ............95 6.09 Prevalence of trade barriers ................................... 3.4 ..........135 1.10 Efficiency of legal framework in settling disputes .... 2.7 ..........131 6.10 Trade tariffs, % duty* ............................................ 13.6 ..........131 1.11 Efficiency of legal framework in challenging regs. ... 2.8 ..........121 6.11 Prevalence of foreign ownership............................. 3.4 ..........131 1.12 Transparency of government policymaking............. 3.1 ..........138 6.12 Business impact of rules on FDI ............................. 3.5 ..........129 1.13 Gov’t services for improved business performance... 2.9 ..........119 6.13 Burden of customs procedures .............................. 2.8 ..........139 1.14 Business costs of terrorism .................................... 4.4 ..........125 6.14 Imports as a percentage of GDP* ........................ 54.2 ............54 1.15 Business costs of crime and violence..................... 3.6 ..........117 6.15 Degree of customer orientation .............................. 3.1 ..........143 1.16 Organized crime ..................................................... 3.5 ..........134 6.16 Buyer sophistication ............................................... 2.2 ..........137 1.17 Reliability of police services .................................... 2.4 ..........139 1.18 Ethical behavior of firms ......................................... 2.8 ..........140 7th pillar: Labor market efficiency 1.19 Strength of auditing and reporting standards ......... 3.3 ..........135 7.01 Cooperation in labor-employer relations ................. 3.4 ..........132 1.20 Efficacy of corporate boards .................................. 3.3 ..........142 7.02 Flexibility of wage determination ............................. 5.4 ............38 1.21 Protection of minority shareholders’ interests ......... 2.9 ..........142 7.03 Hiring and firing practices ....................................... 4.7 ............23 1.22 Strength of investor protection, 0–10 (best)* .......... 3.3 ..........125 7.04 Redundancy costs, weeks of salary* ....................... 13 ............55 7.05 Pay and productivity............................................... 3.0 ..........130 2nd pillar: Infrastructure 7.06 Reliance on professional management ................... 2.4 ..........143 2.01 Quality of overall infrastructure ............................... 2.8 ..........134 7.07 Brain drain ............................................................. 2.8 ..........112 2.02 Quality of roads ...................................................... 3.1 ..........103 7.08 Women in labor force, ratio to men* ..................... 0.81 ............66 2.03 Quality of railroad infrastructure ........................ n/appl. ...........n/a 2.04 Quality of port infrastructure ................................... 2.8 ..........130 8th pillar: Financial market development 2.05 Quality of air transport infrastructure....................... 2.9 ..........136 8.01 Availability of financial services ............................... 2.9 ..........139 2.06 Available airline seat kms/week, millions* ............... 9.1 ..........135 8.02 Affordability of financial services ............................. 2.7 ..........141 2.07 Quality of electricity supply ..................................... 1.5 ..........140 8.03 Financing through local equity market .................... 2.5 ..........120 2.08 Mobile telephone subscriptions/100 pop.* ........... 31.8 ..........141 8.04 Ease of access to loans ......................................... 2.2 ..........120 2.09 Fixed telephone lines/100 pop.* ............................. 0.3 ..........140 8.05 Venture capital availability ....................................... 2.0 ..........124 8.06 Soundness of banks .............................................. 3.8 ..........134 3rd pillar: Macroeconomic environment 8.07 Regulation of securities exchanges ........................ 2.4 ..........138 3.01 Government budget balance, % GDP* ................... 3.2 ............15 8.08 Legal rights index, 0–10 (best)* ................................. 6 ............65 3.02 Gross national savings, % GDP* .......................... 18.8 ............76 3.03 Inflation, annual % change* .................................... 1.9 ..............1 9th pillar: Technological readiness 3.04 General government debt, % GDP* ..................... 32.2 ............47 9.01 Availability of latest technologies ............................ 3.3 ..........143 3.05 Country credit rating, 0–100 (best)* ...................... 15.7 ..........138 9.02 Firm-level technology absorption ............................ 3.7 ..........137 9.03 FDI and technology transfer ................................... 3.3 ..........141 4th pillar: Health and primary education 9.04 Individuals using Internet, %* ................................. 1.9 ..........138 4.01 Business impact of malaria .................................... 2.4 ..........141 9.05 Broadband Internet subscriptions/100 pop.* .......... 0.0 ..........142 4.02 Malaria cases/100,000 pop.* ........................ 37,881.4 ..........142 9.06 Int’l Internet bandwidth, kb/s per user* .................. 0.2 ..........141 4.03 Business impact of tuberculosis ............................. 3.0 ..........141 9.07 Mobile broadband subscriptions/100 pop.*............ 0.0 ..........128 4.04 Tuberculosis cases/100,000 pop.* ..................... 276.0 ..........127 4.05 Business impact of HIV/AIDS ................................. 2.9 ..........138 10th pillar: Market size 4.06 HIV prevalence, % adult pop.* ............................... 3.4 ..........128 10.01 Domestic market size index, 1–7 (best)*................. 2.5 ..........112 4.07 Infant mortality, deaths/1,000 live births* .............. 98.9 ..........142 10.02 Foreign market size index, 1–7 (best)* .................... 3.3 ..........110 4.08 Life expectancy, years*......................................... 49.2 ..........140 4.09 Quality of primary education ................................... 2.4 ..........128 11th pillar: Business sophistication 4.10 Primary education enrollment, net %* .................. 62.3 ..........138 11.01 Local supplier quantity ........................................... 5.1 ............34 11.02 Local supplier quality.............................................. 3.6 ..........134 5th pillar: Higher education and training 11.03 State of cluster development.................................. 2.9 ..........124 5.01 Secondary education enrollment, gross %* .......... 24.6 ..........141 11.04 Nature of competitive advantage ............................ 2.7 ..........123 5.02 Tertiary education enrollment, gross %*.................. 2.2 ..........136 11.05 Value chain breadth................................................ 2.9 ..........118 5.03 Quality of the educational system ........................... 3.0 ..........113 11.06 Control of international distribution ......................... 2.9 ..........142 5.04 Quality of math and science education .................. 3.2 ..........111 11.07 Production process sophistication.......................... 2.6 ..........132 5.05 Quality of management schools ............................. 3.2 ..........128 11.08 Extent of marketing ................................................ 2.6 ..........136 5.06 Internet access in schools ...................................... 1.5 ..........144 11.09 Willingness to delegate authority ............................ 2.5 ..........140 5.07 Availability of research and training services ........... 3.3 ..........117 5.08 Extent of staff training ............................................ 2.9 ..........139 12th pillar: Innovation 12.01 Capacity for innovation........................................... 2.7 ..........105 12.02 Quality of scientific research institutions ................. 2.7 ..........120 12.03 Company spending on R&D................................... 3.3 ............53 12.04 University-industry collaboration in R&D ................. 3.0 ..........119 12.05 Gov’t procurement of advanced tech products ...... 3.1 ..........112 12.06 Availability of scientists and engineers .................... 3.7 ............92 12.07 PCT patents, applications/million pop.* .................. 0.0 ..........104 Notes: Values are on a 1-to-7 scale unless otherwise annotated with an asterisk (*). For further details and explanation, please refer to the section “How to Read the Competitiveness Profiles� on page 109. The Africa Competitiveness Report 2013 | 139 Part 3: Competitiveness Profiles Côte d’Ivoire Key indicators, 2011 Population (millions) ..............................................20.2 GDP (PPP) per capita (int’l $), 1990–2011 GDP (US$ billions)* ...............................................24.1 2,500 Côte d’Ivoire Sub-Saharan Africa GDP per capita (US$) ......................................1,062.1 GDP (PPP) as share (%) of world total ..................0.05 2,000 Sectoral value-added (% GDP), 2011 Agriculture ............................................................24.3 Industry ................................................................30.3 1,500 Services ...............................................................45.4 Human Development Index, 2011 1,000 Score, (0–1) best ..................................................0.40 1991 1993 1995 1997 1999 2001 2003 2005 2007 2009 2011 Rank (out of 187 economies).................................170 Sources: IMF; UNFPA; UNDP; World Bank The Global Competitiveness Index Rank Score Stage of development (out of 144) (1–7) GCI 2012–2013 ................................................ 131 ..... 3.4 Transition Transition GCI 2011–2012 (out of 142) ......................................... 129 ...... 3.4 1 1–2 2 2–3 3 GCI 2010–2011 (out of 139) ......................................... 129 ...... 3.3 Factor Efficiency Innovation driven driven driven Basic requirements (60.0%) ....................................... 137 ...... 3.3 Institutions .................................................................... 129 ...... 3.2 Institutions 7 Infrastructure ................................................................ 102 ...... 3.1 Innovation Infrastructure 6 Macroeconomic environment ....................................... 130 ...... 3.5 5 Health and primary education ....................................... 140 ...... 3.4 Business Macroeconomic 4 environment sophistication 3 Efficiency enhancers (35.0%) .................................... 115 ...... 3.5 2 Health and Higher education and training ....................................... 123 ...... 3.0 Market size 1 primary Goods market efficiency .............................................. 122 ...... 3.8 education Labor market efficiency .................................................. 71 ...... 4.4 Financial market development ...................................... 103 ...... 3.7 Technological Higher education readiness and training Technological readiness .................................................. 99 ...... 3.3 Market size ..................................................................... 94 ...... 3.1 Financial market Goods market development ef�ciency Innovation and sophistication factors (5.0%) ........... 121 ...... 3.0 Labor market ef�ciency Business sophistication ............................................... 123 ...... 3.3 Côte d’Ivoire Factor-driven economies Innovation ..................................................................... 115 ...... 2.7 The most problematic factors for doing business Access to financing ................................................................. 24.8 Corruption ............................................................................... 16.5 Government instability/coups .................................................. 13.8 Tax rates.................................................................................... 7.1 Policy instability ......................................................................... 5.9 Inadequate supply of infrastructure ............................................ 5.0 Tax regulations .......................................................................... 4.6 Inefficient government bureaucracy ........................................... 4.1 Crime and theft ......................................................................... 3.8 Inadequately educated workforce .............................................. 3.2 Poor work ethic in national labor force....................................... 3.2 Insufficient capacity to innovate ................................................. 2.5 Inflation ...................................................................................... 2.4 Restrictive labor regulations ....................................................... 1.7 Foreign currency regulations ...................................................... 1.1 Poor public health ..................................................................... 0.3 0 5 10 15 20 25 30 Percent of responses Note: From the list of factors above, respondents were asked to select the five most problematic for doing business in their country and to rank them between 1 (most problematic) and 5. The bars in the figure show the responses weighted according to their rankings. 140 | The Africa Competitiveness Report 2013 Part 3: Competitiveness Profiles Côte d’Ivoire The Global Competitiveness Index in detail INDICATOR VALUE RANK/144 INDICATOR VALUE RANK/144 1st pillar: Institutions 6th pillar: Goods market efficiency 1.01 Property rights ....................................................... 3.2 ..........126 6.01 Intensity of local competition .................................. 4.7 ............78 1.02 Intellectual property protection ............................... 2.6 ..........122 6.02 Extent of market dominance .................................. 3.1 ..........128 1.03 Diversion of public funds ........................................ 2.4 ..........125 6.03 Effectiveness of anti-monopoly policy ..................... 3.7 ............93 1.04 Public trust in politicians ......................................... 2.2 ..........105 6.04 Extent and effect of taxation................................... 3.4 ............81 1.05 Irregular payments and bribes ................................ 3.2 ..........113 6.05 Total tax rate, % profits* ....................................... 44.3 ............94 1.06 Judicial independence............................................ 2.1 ..........137 6.06 No. procedures to start a business* ........................ 10 ..........110 1.07 Favoritism in decisions of government officials ....... 2.8 ............95 6.07 No. days to start a business* .................................. 32 ..........105 1.08 Wastefulness of government spending ................... 2.9 ............97 6.08 Agricultural policy costs.......................................... 3.8 ............81 1.09 Burden of government regulation ........................... 3.5 ............55 6.09 Prevalence of trade barriers ................................... 3.5 ..........131 1.10 Efficiency of legal framework in settling disputes .... 2.9 ..........119 6.10 Trade tariffs, % duty* ............................................ 11.4 ..........120 1.11 Efficiency of legal framework in challenging regs. ... 2.8 ..........120 6.11 Prevalence of foreign ownership............................. 5.5 ............22 1.12 Transparency of government policymaking............. 3.8 ..........106 6.12 Business impact of rules on FDI ............................. 4.8 ............58 1.13 Gov’t services for improved business performance... 4.1 ............43 6.13 Burden of customs procedures .............................. 3.9 ............76 1.14 Business costs of terrorism .................................... 5.2 ............97 6.14 Imports as a percentage of GDP* ........................ 43.7 ............75 1.15 Business costs of crime and violence..................... 2.8 ..........137 6.15 Degree of customer orientation .............................. 4.3 ..........100 1.16 Organized crime ..................................................... 3.5 ..........132 6.16 Buyer sophistication ............................................... 2.1 ..........141 1.17 Reliability of police services .................................... 2.8 ..........135 1.18 Ethical behavior of firms ......................................... 3.5 ..........105 7th pillar: Labor market efficiency 1.19 Strength of auditing and reporting standards ......... 3.5 ..........133 7.01 Cooperation in labor-employer relations ................. 4.8 ............32 1.20 Efficacy of corporate boards .................................. 5.0 ............31 7.02 Flexibility of wage determination ............................. 5.3 ............51 1.21 Protection of minority shareholders’ interests ......... 3.8 ............98 7.03 Hiring and firing practices ....................................... 4.6 ............28 1.22 Strength of investor protection, 0–10 (best)* .......... 3.3 ..........125 7.04 Redundancy costs, weeks of salary* ....................... 13 ............58 7.05 Pay and productivity............................................... 3.4 ..........108 2nd pillar: Infrastructure 7.06 Reliance on professional management ................... 4.1 ............80 2.01 Quality of overall infrastructure ............................... 3.6 ............99 7.07 Brain drain ............................................................. 3.4 ............79 2.02 Quality of roads ...................................................... 3.0 ..........107 7.08 Women in labor force, ratio to men* ..................... 0.64 ..........107 2.03 Quality of railroad infrastructure .............................. 2.1 ............87 2.04 Quality of port infrastructure ................................... 4.6 ............53 8th pillar: Financial market development 2.05 Quality of air transport infrastructure....................... 4.3 ............83 8.01 Availability of financial services ............................... 3.4 ..........130 2.06 Available airline seat kms/week, millions* ............. 33.4 ..........106 8.02 Affordability of financial services ............................. 3.2 ..........132 2.07 Quality of electricity supply ..................................... 3.8 ............96 8.03 Financing through local equity market .................... 3.9 ............47 2.08 Mobile telephone subscriptions/100 pop.* ........... 86.4 ..........101 8.04 Ease of access to loans ......................................... 1.9 ..........132 2.09 Fixed telephone lines/100 pop.* ............................. 1.3 ..........124 8.05 Venture capital availability ....................................... 1.7 ..........140 8.06 Soundness of banks .............................................. 4.9 ............82 3rd pillar: Macroeconomic environment 8.07 Regulation of securities exchanges ........................ 3.9 ............85 3.01 Government budget balance, % GDP* ..................-5.7 ..........118 8.08 Legal rights index, 0–10 (best)* ................................. 6 ............65 3.02 Gross national savings, % GDP* .......................... 14.9 ............98 3.03 Inflation, annual % change* .................................... 4.9 ............73 9th pillar: Technological readiness 3.04 General government debt, % GDP* ..................... 90.5 ..........131 9.01 Availability of latest technologies ............................ 4.8 ............77 3.05 Country credit rating, 0–100 (best)* ...................... 18.2 ..........132 9.02 Firm-level technology absorption ............................ 4.8 ............66 9.03 FDI and technology transfer ................................... 4.7 ............64 4th pillar: Health and primary education 9.04 Individuals using Internet, %* ................................. 2.2 ..........136 4.01 Business impact of malaria .................................... 3.6 ..........126 9.05 Broadband Internet subscriptions/100 pop.* .......... 0.1 ..........122 4.02 Malaria cases/100,000 pop.* ........................ 38,557.2 ..........143 9.06 Int’l Internet bandwidth, kb/s per user* ................ 18.0 ............64 4.03 Business impact of tuberculosis ............................. 4.4 ..........113 9.07 Mobile broadband subscriptions/100 pop.*............ 0.0 ..........128 4.04 Tuberculosis cases/100,000 pop.* ..................... 139.0 ..........104 4.05 Business impact of HIV/AIDS ................................. 4.3 ..........117 10th pillar: Market size 4.06 HIV prevalence, % adult pop.* ............................... 3.4 ..........128 10.01 Domestic market size index, 1–7 (best)*................. 2.8 ............94 4.07 Infant mortality, deaths/1,000 live births* .............. 85.9 ..........137 10.02 Foreign market size index, 1–7 (best)* .................... 3.8 ............89 4.08 Life expectancy, years*......................................... 54.7 ..........128 4.09 Quality of primary education ................................... 3.3 ............93 11th pillar: Business sophistication 4.10 Primary education enrollment, net %* .................. 61.5 ..........139 11.01 Local supplier quantity ........................................... 4.7 ............69 11.02 Local supplier quality.............................................. 4.2 ............93 5th pillar: Higher education and training 11.03 State of cluster development.................................. 2.8 ..........131 5.01 Secondary education enrollment, gross %* .......... 27.1 ..........138 11.04 Nature of competitive advantage ............................ 2.4 ..........143 5.02 Tertiary education enrollment, gross %*.................. 8.9 ..........116 11.05 Value chain breadth................................................ 2.9 ..........121 5.03 Quality of the educational system ........................... 3.3 ............95 11.06 Control of international distribution ......................... 3.0 ..........137 5.04 Quality of math and science education .................. 4.0 ............73 11.07 Production process sophistication.......................... 2.6 ..........130 5.05 Quality of management schools ............................. 4.1 ............83 11.08 Extent of marketing ................................................ 3.5 ..........111 5.06 Internet access in schools ...................................... 1.8 ..........138 11.09 Willingness to delegate authority ............................ 2.9 ..........130 5.07 Availability of research and training services ........... 4.1 ............71 5.08 Extent of staff training ............................................ 4.2 ............44 12th pillar: Innovation 12.01 Capacity for innovation........................................... 2.2 ..........139 12.02 Quality of scientific research institutions ................. 2.9 ..........113 12.03 Company spending on R&D................................... 2.6 ..........120 12.04 University-industry collaboration in R&D ................. 2.4 ..........136 12.05 Gov’t procurement of advanced tech products ...... 3.4 ............86 12.06 Availability of scientists and engineers .................... 4.6 ............33 12.07 PCT patents, applications/million pop.* .................. 0.0 ..........119 Notes: Values are on a 1-to-7 scale unless otherwise annotated with an asterisk (*). For further details and explanation, please refer to the section “How to Read the Competitiveness Profiles� on page 109. The Africa Competitiveness Report 2013 | 141 Part 3: Competitiveness Profiles Egypt Key indicators, 2011 Population (millions) ..............................................83.1 GDP (PPP) per capita (int’l $), 1990–2011 GDP (US$ billions)* .............................................235.7 10,000 Egypt Middle East and North Africa GDP per capita (US$) ......................................2,931.8 GDP (PPP) as share (%) of world total ..................0.66 8,000 Sectoral value-added (% GDP), 2011 Agriculture ............................................................13.9 6,000 Industry ................................................................36.7 Services ...............................................................49.3 4,000 Human Development Index, 2011 2,000 Score, (0–1) best ..................................................0.64 1991 1993 1995 1997 1999 2001 2003 2005 2007 2009 2011 Rank (out of 187 economies).................................113 Sources: IMF; UNFPA; UNDP; World Bank The Global Competitiveness Index Rank Score Stage of development (out of 144) (1–7) GCI 2012–2013 ................................................ 107 ..... 3.7 Transition Transition GCI 2011–2012 (out of 142) ........................................... 94 ...... 3.9 1 1–2 2 2–3 3 GCI 2010–2011 (out of 139) ........................................... 81 ...... 4.0 Factor Efficiency Innovation driven driven driven Basic requirements (40.6%) ....................................... 110 ...... 3.9 Institutions ...................................................................... 96 ...... 3.6 Institutions 7 Infrastructure .................................................................. 83 ...... 3.6 Innovation Infrastructure 6 Macroeconomic environment ....................................... 138 ...... 3.1 5 Health and primary education ......................................... 94 ...... 5.3 Business Macroeconomic 4 environment sophistication 3 Efficiency enhancers (49.6%) .................................... 101 ...... 3.7 2 Health and Higher education and training ....................................... 109 ...... 3.3 Market size 1 primary Goods market efficiency .............................................. 125 ...... 3.8 education Labor market efficiency ................................................ 142 ...... 3.1 Financial market development ...................................... 102 ...... 3.7 Technological Higher education readiness and training Technological readiness .................................................. 91 ...... 3.4 Market size ..................................................................... 29 ...... 4.8 Financial market Goods market development ef�ciency Innovation and sophistication factors (9.9%) ............. 96 ...... 3.3 Labor market ef�ciency Business sophistication ................................................. 83 ...... 3.8 Egypt Economies in transition from 1 to 2 Innovation ..................................................................... 109 ...... 2.8 The most problematic factors for doing business Government instability/coups .................................................. 17.4 Policy instability ....................................................................... 17.0 Crime and theft ......................................................................... 9.7 Restrictive labor regulations ....................................................... 6.5 Corruption ................................................................................. 6.3 Access to financing ................................................................... 5.6 Tax regulations .......................................................................... 5.4 Inadequately educated workforce .............................................. 5.3 Inefficient government bureaucracy ........................................... 5.3 Tax rates.................................................................................... 4.6 Poor work ethic in national labor force....................................... 4.3 Foreign currency regulations ...................................................... 3.8 Inflation ...................................................................................... 3.0 Inadequate supply of infrastructure ............................................ 2.5 Insufficient capacity to innovate ................................................. 2.4 Poor public health ..................................................................... 0.9 0 5 10 15 20 25 30 Percent of responses Note: From the list of factors above, respondents were asked to select the five most problematic for doing business in their country and to rank them between 1 (most problematic) and 5. The bars in the figure show the responses weighted according to their rankings. 142 | The Africa Competitiveness Report 2013 Part 3: Competitiveness Profiles Egypt The Global Competitiveness Index in detail INDICATOR VALUE RANK/144 INDICATOR VALUE RANK/144 1st pillar: Institutions 6th pillar: Goods market efficiency 1.01 Property rights ....................................................... 4.0 ............85 6.01 Intensity of local competition .................................. 4.0 ..........121 1.02 Intellectual property protection ............................... 3.3 ............83 6.02 Extent of market dominance .................................. 3.2 ..........118 1.03 Diversion of public funds ........................................ 2.6 ..........113 6.03 Effectiveness of anti-monopoly policy ..................... 3.2 ..........133 1.04 Public trust in politicians ......................................... 2.8 ............69 6.04 Extent and effect of taxation................................... 3.3 ............87 1.05 Irregular payments and bribes ................................ 3.4 ..........100 6.05 Total tax rate, % profits* ....................................... 43.6 ............87 1.06 Judicial independence............................................ 4.1 ............53 6.06 No. procedures to start a business* .......................... 6 ............47 1.07 Favoritism in decisions of government officials ....... 3.0 ............74 6.07 No. days to start a business* .................................... 7 ............25 1.08 Wastefulness of government spending ................... 2.5 ..........113 6.08 Agricultural policy costs.......................................... 3.2 ..........126 1.09 Burden of government regulation ........................... 2.9 ..........113 6.09 Prevalence of trade barriers ................................... 3.7 ..........124 1.10 Efficiency of legal framework in settling disputes .... 3.4 ............86 6.10 Trade tariffs, % duty* ............................................ 15.2 ..........133 1.11 Efficiency of legal framework in challenging regs. ... 3.2 ..........100 6.11 Prevalence of foreign ownership............................. 4.0 ..........112 1.12 Transparency of government policymaking............. 3.8 ..........113 6.12 Business impact of rules on FDI ............................. 4.0 ..........110 1.13 Gov’t services for improved business performance... 3.5 ............80 6.13 Burden of customs procedures .............................. 3.7 ............90 1.14 Business costs of terrorism .................................... 3.1 ..........142 6.14 Imports as a percentage of GDP* ........................ 30.5 ..........116 1.15 Business costs of crime and violence..................... 3.0 ..........133 6.15 Degree of customer orientation .............................. 4.5 ............86 1.16 Organized crime ..................................................... 5.0 ............82 6.16 Buyer sophistication ............................................... 2.5 ..........126 1.17 Reliability of police services .................................... 3.5 ..........106 1.18 Ethical behavior of firms ......................................... 3.8 ............73 7th pillar: Labor market efficiency 1.19 Strength of auditing and reporting standards ......... 4.1 ..........104 7.01 Cooperation in labor-employer relations ................. 3.6 ..........128 1.20 Efficacy of corporate boards .................................. 3.8 ..........136 7.02 Flexibility of wage determination ............................. 5.2 ............55 1.21 Protection of minority shareholders’ interests ......... 4.1 ............75 7.03 Hiring and firing practices ....................................... 3.3 ..........116 1.22 Strength of investor protection, 0–10 (best)* .......... 5.3 ............65 7.04 Redundancy costs, weeks of salary* ....................... 37 ..........132 7.05 Pay and productivity............................................... 3.4 ..........112 2nd pillar: Infrastructure 7.06 Reliance on professional management ................... 3.3 ..........134 2.01 Quality of overall infrastructure ............................... 3.8 ............88 7.07 Brain drain ............................................................. 2.2 ..........132 2.02 Quality of roads ...................................................... 2.9 ..........109 7.08 Women in labor force, ratio to men* ..................... 0.32 ..........139 2.03 Quality of railroad infrastructure .............................. 3.1 ............52 2.04 Quality of port infrastructure ................................... 4.0 ............79 8th pillar: Financial market development 2.05 Quality of air transport infrastructure....................... 5.0 ............54 8.01 Availability of financial services ............................... 4.2 ............88 2.06 Available airline seat kms/week, millions* ........... 668.1 ............34 8.02 Affordability of financial services ............................. 4.1 ............71 2.07 Quality of electricity supply ..................................... 4.4 ............82 8.03 Financing through local equity market .................... 4.2 ............37 2.08 Mobile telephone subscriptions/100 pop.* ......... 101.1 ............84 8.04 Ease of access to loans ......................................... 2.6 ............84 2.09 Fixed telephone lines/100 pop.* ........................... 10.6 ............90 8.05 Venture capital availability ....................................... 3.0 ............40 8.06 Soundness of banks .............................................. 4.3 ..........123 3rd pillar: Macroeconomic environment 8.07 Regulation of securities exchanges ........................ 4.1 ............69 3.01 Government budget balance, % GDP* ..................-9.9 ..........142 8.08 Legal rights index, 0–10 (best)* ................................. 3 ..........118 3.02 Gross national savings, % GDP* .......................... 15.1 ............96 3.03 Inflation, annual % change* .................................. 11.1 ..........128 9th pillar: Technological readiness 3.04 General government debt, % GDP* ..................... 76.4 ..........122 9.01 Availability of latest technologies ............................ 4.2 ..........115 3.05 Country credit rating, 0–100 (best)* ...................... 39.7 ............80 9.02 Firm-level technology absorption ............................ 4.6 ............86 9.03 FDI and technology transfer ................................... 4.6 ............75 4th pillar: Health and primary education 9.04 Individuals using Internet, %* ............................... 35.6 ............78 4.01 Business impact of malaria .............................. n/appl. ..............1 9.05 Broadband Internet subscriptions/100 pop.* .......... 2.2 ............90 4.02 Malaria cases/100,000 pop.* ................................. 0.0 ..............1 9.06 Int’l Internet bandwidth, kb/s per user* .................. 6.8 ............97 4.03 Business impact of tuberculosis ............................. 4.8 ............96 9.07 Mobile broadband subscriptions/100 pop.*.......... 21.0 ............46 4.04 Tuberculosis cases/100,000 pop.* ....................... 18.0 ............40 4.05 Business impact of HIV/AIDS ................................. 5.1 ............86 10th pillar: Market size 4.06 HIV prevalence, % adult pop.* ............................... 0.1 ............12 10.01 Domestic market size index, 1–7 (best)*................. 4.7 ............25 4.07 Infant mortality, deaths/1,000 live births* .............. 18.6 ............81 10.02 Foreign market size index, 1–7 (best)* .................... 4.9 ............47 4.08 Life expectancy, years*......................................... 73.0 ............81 4.09 Quality of primary education ................................... 2.1 ..........137 11th pillar: Business sophistication 4.10 Primary education enrollment, net %* .................. 94.4 ............59 11.01 Local supplier quantity ........................................... 4.6 ............80 11.02 Local supplier quality.............................................. 3.8 ..........118 5th pillar: Higher education and training 11.03 State of cluster development.................................. 3.7 ............70 5.01 Secondary education enrollment, gross %* .......... 72.5 ..........101 11.04 Nature of competitive advantage ............................ 3.4 ............76 5.02 Tertiary education enrollment, gross %*................ 32.4 ............73 11.05 Value chain breadth................................................ 3.6 ............72 5.03 Quality of the educational system ........................... 2.3 ..........139 11.06 Control of international distribution ......................... 4.0 ............72 5.04 Quality of math and science education .................. 2.3 ..........139 11.07 Production process sophistication.......................... 3.4 ............86 5.05 Quality of management schools ............................. 2.8 ..........137 11.08 Extent of marketing ................................................ 3.7 ..........100 5.06 Internet access in schools ...................................... 3.0 ..........116 11.09 Willingness to delegate authority ............................ 4.0 ............45 5.07 Availability of research and training services ........... 3.7 ............99 5.08 Extent of staff training ............................................ 3.1 ..........129 12th pillar: Innovation 12.01 Capacity for innovation........................................... 3.0 ............80 12.02 Quality of scientific research institutions ................. 2.9 ..........114 12.03 Company spending on R&D................................... 2.6 ..........116 12.04 University-industry collaboration in R&D ................. 2.7 ..........128 12.05 Gov’t procurement of advanced tech products ...... 3.3 ............95 12.06 Availability of scientists and engineers .................... 4.2 ............61 12.07 PCT patents, applications/million pop.* .................. 0.6 ............73 Notes: Values are on a 1-to-7 scale unless otherwise annotated with an asterisk (*). For further details and explanation, please refer to the section “How to Read the Competitiveness Profiles� on page 109. The Africa Competitiveness Report 2013 | 143 Part 3: Competitiveness Profiles Ethiopia Key indicators, 2011 Population (millions) ..............................................85.1 GDP (PPP) per capita (int’l $), 1990–2011 GDP (US$ billions)* ...............................................31.7 2,500 Ethiopia Sub-Saharan Africa GDP per capita (US$) .........................................365.2 GDP (PPP) as share (%) of world total ..................0.12 2,000 Sectoral value-added (% GDP), 2011 1,500 Agriculture ............................................................41.9 1,000 Industry ................................................................12.6 Services ...............................................................45.5 500 Human Development Index, 2011 0 Score, (0–1) best ..................................................0.36 1991 1993 1995 1997 1999 2001 2003 2005 2007 2009 2011 Rank (out of 187 economies).................................174 Sources: IMF; UNFPA; UNDP; World Bank The Global Competitiveness Index Rank Score Stage of development (out of 144) (1–7) GCI 2012–2013 ................................................ 121 ..... 3.6 Transition Transition GCI 2011–2012 (out of 142) ......................................... 106 ...... 3.8 1 1–2 2 2–3 3 GCI 2010–2011 (out of 139) ......................................... 119 ...... 3.5 Factor Efficiency Innovation driven driven driven Basic requirements (60.0%) ....................................... 118 ...... 3.7 Institutions ...................................................................... 74 ...... 3.8 Institutions 7 Infrastructure ................................................................ 119 ...... 2.6 Innovation Infrastructure 6 Macroeconomic environment ....................................... 114 ...... 3.9 5 Health and primary education ....................................... 116 ...... 4.6 Business Macroeconomic 4 environment sophistication 3 Efficiency enhancers (35.0%) .................................... 123 ...... 3.3 2 Health and Higher education and training ....................................... 134 ...... 2.7 Market size 1 primary Goods market efficiency .............................................. 120 ...... 3.8 education Labor market efficiency .................................................. 87 ...... 4.2 Financial market development ...................................... 129 ...... 3.2 Technological Higher education readiness and training Technological readiness ................................................ 140 ...... 2.5 Market size ..................................................................... 66 ...... 3.6 Financial market Goods market development ef�ciency Innovation and sophistication factors (5.0%) ........... 125 ...... 3.0 Labor market ef�ciency Business sophistication ............................................... 129 ...... 3.2 Ethiopia Factor-driven economies Innovation ..................................................................... 114 ...... 2.7 The most problematic factors for doing business Access to financing ................................................................. 14.9 Corruption ............................................................................... 13.9 Inefficient government bureaucracy ......................................... 12.8 Inflation .................................................................................... 12.0 Policy instability ......................................................................... 9.6 Tax regulations .......................................................................... 7.8 Inadequate supply of infrastructure ............................................ 7.1 Inadequately educated workforce .............................................. 5.9 Foreign currency regulations ...................................................... 5.7 Tax rates.................................................................................... 3.8 Poor work ethic in national labor force....................................... 2.5 Restrictive labor regulations ....................................................... 1.7 Insufficient capacity to innovate ................................................. 1.3 Poor public health ..................................................................... 1.0 Crime and theft ......................................................................... 0.0 Government instability/coups .................................................... 0.0 0 5 10 15 20 25 30 Percent of responses Note: From the list of factors above, respondents were asked to select the five most problematic for doing business in their country and to rank them between 1 (most problematic) and 5. The bars in the figure show the responses weighted according to their rankings. 144 | The Africa Competitiveness Report 2013 Part 3: Competitiveness Profiles Ethiopia The Global Competitiveness Index in detail INDICATOR VALUE RANK/144 INDICATOR VALUE RANK/144 1st pillar: Institutions 6th pillar: Goods market efficiency 1.01 Property rights ....................................................... 4.1 ............79 6.01 Intensity of local competition .................................. 3.6 ..........139 1.02 Intellectual property protection ............................... 3.7 ............65 6.02 Extent of market dominance .................................. 2.8 ..........135 1.03 Diversion of public funds ........................................ 3.4 ............62 6.03 Effectiveness of anti-monopoly policy ..................... 3.2 ..........129 1.04 Public trust in politicians ......................................... 3.2 ............48 6.04 Extent and effect of taxation................................... 3.5 ............69 1.05 Irregular payments and bribes ................................ 3.3 ..........105 6.05 Total tax rate, % profits* ....................................... 31.1 ............37 1.06 Judicial independence............................................ 2.8 ..........109 6.06 No. procedures to start a business* .......................... 5 ............29 1.07 Favoritism in decisions of government officials ....... 3.0 ............71 6.07 No. days to start a business* .................................... 9 ............43 1.08 Wastefulness of government spending ................... 3.9 ............29 6.08 Agricultural policy costs.......................................... 4.0 ............59 1.09 Burden of government regulation ........................... 3.4 ............63 6.09 Prevalence of trade barriers ................................... 2.9 ..........143 1.10 Efficiency of legal framework in settling disputes .... 3.8 ............62 6.10 Trade tariffs, % duty* ............................................ 12.8 ..........128 1.11 Efficiency of legal framework in challenging regs. ... 3.5 ............75 6.11 Prevalence of foreign ownership............................. 3.3 ..........135 1.12 Transparency of government policymaking............. 3.5 ..........129 6.12 Business impact of rules on FDI ............................. 3.9 ..........114 1.13 Gov’t services for improved business performance... 4.0 ............48 6.13 Burden of customs procedures .............................. 3.2 ..........125 1.14 Business costs of terrorism .................................... 5.6 ............64 6.14 Imports as a percentage of GDP* ........................ 37.5 ............91 1.15 Business costs of crime and violence..................... 5.8 ............22 6.15 Degree of customer orientation .............................. 3.9 ..........119 1.16 Organized crime ..................................................... 6.2 ............24 6.16 Buyer sophistication ............................................... 2.8 ..........117 1.17 Reliability of police services .................................... 4.0 ............82 1.18 Ethical behavior of firms ......................................... 3.5 ..........103 7th pillar: Labor market efficiency 1.19 Strength of auditing and reporting standards ......... 4.0 ..........106 7.01 Cooperation in labor-employer relations ................. 4.0 ..........100 1.20 Efficacy of corporate boards .................................. 4.2 ..........104 7.02 Flexibility of wage determination ............................. 4.8 ............93 1.21 Protection of minority shareholders’ interests ......... 4.1 ............74 7.03 Hiring and firing practices ....................................... 3.8 ............81 1.22 Strength of investor protection, 0–10 (best)* .......... 4.3 ..........101 7.04 Redundancy costs, weeks of salary* ....................... 21 ............91 7.05 Pay and productivity............................................... 3.6 ............93 2nd pillar: Infrastructure 7.06 Reliance on professional management ................... 3.5 ..........117 2.01 Quality of overall infrastructure ............................... 3.6 ..........100 7.07 Brain drain ............................................................. 2.7 ..........118 2.02 Quality of roads ...................................................... 4.1 ............64 7.08 Women in labor force, ratio to men* ..................... 0.89 ............32 2.03 Quality of railroad infrastructure .............................. 1.4 ..........112 2.04 Quality of port infrastructure ................................... 3.5 ..........110 8th pillar: Financial market development 2.05 Quality of air transport infrastructure....................... 5.1 ............50 8.01 Availability of financial services ............................... 3.0 ..........137 2.06 Available airline seat kms/week, millions* ........... 223.8 ............60 8.02 Affordability of financial services ............................. 3.2 ..........130 2.07 Quality of electricity supply ..................................... 3.2 ..........112 8.03 Financing through local equity market .................... 3.2 ............85 2.08 Mobile telephone subscriptions/100 pop.* ........... 16.7 ..........143 8.04 Ease of access to loans ......................................... 1.9 ..........133 2.09 Fixed telephone lines/100 pop.* ............................. 1.0 ..........128 8.05 Venture capital availability ....................................... 2.1 ..........118 8.06 Soundness of banks .............................................. 4.6 ..........105 3rd pillar: Macroeconomic environment 8.07 Regulation of securities exchanges ........................ 3.4 ..........113 3.01 Government budget balance, % GDP* ..................-1.6 ............47 8.08 Legal rights index, 0–10 (best)* ................................. 4 ............99 3.02 Gross national savings, % GDP* .......................... 25.6 ............41 3.03 Inflation, annual % change* .................................. 18.1 ..........139 9th pillar: Technological readiness 3.04 General government debt, % GDP* ..................... 37.3 ............63 9.01 Availability of latest technologies ............................ 3.8 ..........132 3.05 Country credit rating, 0–100 (best)* ...................... 17.6 ..........135 9.02 Firm-level technology absorption ............................ 3.7 ..........139 9.03 FDI and technology transfer ................................... 3.7 ..........128 4th pillar: Health and primary education 9.04 Individuals using Internet, %* ................................. 1.1 ..........142 4.01 Business impact of malaria .................................... 4.2 ..........116 9.05 Broadband Internet subscriptions/100 pop.* .......... 0.0 ..........131 4.02 Malaria cases/100,000 pop.* .......................... 2,995.5 ..........115 9.06 Int’l Internet bandwidth, kb/s per user* .................. 6.5 ............98 4.03 Business impact of tuberculosis ............................. 3.7 ..........129 9.07 Mobile broadband subscriptions/100 pop.*............ 0.3 ..........120 4.04 Tuberculosis cases/100,000 pop.* ..................... 261.0 ..........123 4.05 Business impact of HIV/AIDS ................................. 3.7 ..........126 10th pillar: Market size 4.06 HIV prevalence, % adult pop.* ............................... 2.1 ..........124 10.01 Domestic market size index, 1–7 (best)*................. 3.6 ............63 4.07 Infant mortality, deaths/1,000 live births* .............. 67.8 ..........128 10.02 Foreign market size index, 1–7 (best)* .................... 3.6 ............92 4.08 Life expectancy, years*......................................... 58.7 ..........119 4.09 Quality of primary education ................................... 3.2 ..........105 11th pillar: Business sophistication 4.10 Primary education enrollment, net %* .................. 81.3 ..........122 11.01 Local supplier quantity ........................................... 4.0 ..........126 11.02 Local supplier quality.............................................. 3.5 ..........136 5th pillar: Higher education and training 11.03 State of cluster development.................................. 3.2 ..........105 5.01 Secondary education enrollment, gross %* .......... 35.7 ..........129 11.04 Nature of competitive advantage ............................ 2.5 ..........137 5.02 Tertiary education enrollment, gross %*.................. 5.5 ..........124 11.05 Value chain breadth................................................ 3.0 ..........115 5.03 Quality of the educational system ........................... 3.4 ............85 11.06 Control of international distribution ......................... 4.1 ............61 5.04 Quality of math and science education .................. 3.4 ..........105 11.07 Production process sophistication.......................... 2.4 ..........137 5.05 Quality of management schools ............................. 3.6 ..........108 11.08 Extent of marketing ................................................ 2.7 ..........133 5.06 Internet access in schools ...................................... 2.8 ..........119 11.09 Willingness to delegate authority ............................ 3.1 ..........119 5.07 Availability of research and training services ........... 2.9 ..........133 5.08 Extent of staff training ............................................ 3.1 ..........130 12th pillar: Innovation 12.01 Capacity for innovation........................................... 2.3 ..........133 12.02 Quality of scientific research institutions ................. 3.2 ............99 12.03 Company spending on R&D................................... 2.1 ..........139 12.04 University-industry collaboration in R&D ................. 3.2 ..........101 12.05 Gov’t procurement of advanced tech products ...... 3.7 ............59 12.06 Availability of scientists and engineers .................... 3.1 ..........132 12.07 PCT patents, applications/million pop.* .................. 0.0 ..........119 Notes: Values are on a 1-to-7 scale unless otherwise annotated with an asterisk (*). For further details and explanation, please refer to the section “How to Read the Competitiveness Profiles� on page 109. The Africa Competitiveness Report 2013 | 145 Part 3: Competitiveness Profiles Gabon Key indicators, 2011 Population (millions) ................................................1.5 GDP (PPP) per capita (int’l $), 1990–2011 GDP (US$ billions)* ...............................................16.0 20,000 Gabon Sub-Saharan Africa GDP per capita (US$) ....................................10,518.3 GDP (PPP) as share (%) of world total ..................0.03 15,000 Sectoral value-added (% GDP), 2011 Agriculture ..............................................................3.7 10,000 Industry ................................................................60.6 Services ...............................................................35.6 5,000 Human Development Index, 2011 0 Score, (0–1) best ..................................................0.67 1991 1993 1995 1997 1999 2001 2003 2005 2007 2009 2011 Rank (out of 187 economies).................................106 Sources: IMF; UNFPA; UNDP; World Bank The Global Competitiveness Index Rank Score Stage of development (out of 144) (1–7) GCI 2012–2013 .................................................. 99 ..... 3.8 Transition Transition GCI 2011–2012 (out of 142) .......................................... n/a ...... n/a 1 1–2 2 2–3 3 GCI 2010–2011 (out of 139) .......................................... n/a ...... n/a Factor Efficiency Innovation driven driven driven Basic requirements (50.5%) ......................................... 86 ...... 4.3 Institutions ...................................................................... 67 ...... 3.9 Institutions 7 Infrastructure ................................................................ 117 ...... 2.7 Innovation Infrastructure 6 Macroeconomic environment ........................................... 9 ...... 6.2 5 Health and primary education ....................................... 128 ...... 4.1 Business Macroeconomic 4 environment sophistication 3 Efficiency enhancers (42.1%) .................................... 116 ...... 3.5 2 Health and Higher education and training ....................................... 122 ...... 3.1 Market size 1 primary Goods market efficiency .............................................. 126 ...... 3.7 education Labor market efficiency .................................................. 63 ...... 4.4 Financial market development ...................................... 106 ...... 3.6 Technological Higher education readiness and training Technological readiness .................................................. 86 ...... 3.5 Market size ................................................................... 110 ...... 2.7 Financial market Goods market development ef�ciency Innovation and sophistication factors (7.4%) ........... 139 ...... 2.6 Labor market ef�ciency Business sophistication ............................................... 141 ...... 2.9 Gabon Economies in transition from 1 to 2 Innovation ..................................................................... 136 ...... 2.4 The most problematic factors for doing business Inadequate supply of infrastructure .......................................... 20.4 Inadequately educated workforce ............................................ 14.5 Access to financing ................................................................. 12.3 Inefficient government bureaucracy ......................................... 11.3 Restrictive labor regulations ..................................................... 10.9 Corruption ................................................................................. 8.5 Tax rates.................................................................................... 5.3 Poor work ethic in national labor force....................................... 4.7 Tax regulations .......................................................................... 3.9 Inflation ...................................................................................... 2.8 Insufficient capacity to innovate ................................................. 2.2 Foreign currency regulations ...................................................... 1.7 Crime and theft ......................................................................... 0.7 Poor public health ..................................................................... 0.7 Policy instability ......................................................................... 0.1 Government instability/coups .................................................... 0.0 0 5 10 15 20 25 30 Percent of responses Note: From the list of factors above, respondents were asked to select the five most problematic for doing business in their country and to rank them between 1 (most problematic) and 5. The bars in the figure show the responses weighted according to their rankings. 146 | The Africa Competitiveness Report 2013 Part 3: Competitiveness Profiles Gabon The Global Competitiveness Index in detail INDICATOR VALUE RANK/144 INDICATOR VALUE RANK/144 1st pillar: Institutions 6th pillar: Goods market efficiency 1.01 Property rights ....................................................... 4.9 ............44 6.01 Intensity of local competition .................................. 3.8 ..........132 1.02 Intellectual property protection ............................... 3.1 ............99 6.02 Extent of market dominance .................................. 2.8 ..........136 1.03 Diversion of public funds ........................................ 2.7 ..........102 6.03 Effectiveness of anti-monopoly policy ..................... 3.2 ..........128 1.04 Public trust in politicians ......................................... 3.1 ............55 6.04 Extent and effect of taxation................................... 3.6 ............63 1.05 Irregular payments and bribes ................................ 3.8 ............77 6.05 Total tax rate, % profits* ....................................... 43.5 ............86 1.06 Judicial independence............................................ 2.6 ..........117 6.06 No. procedures to start a business* .......................... 9 ............97 1.07 Favoritism in decisions of government officials ....... 3.0 ............69 6.07 No. days to start a business* .................................. 58 ..........129 1.08 Wastefulness of government spending ................... 3.3 ............64 6.08 Agricultural policy costs.......................................... 4.0 ............61 1.09 Burden of government regulation ........................... 4.2 ............19 6.09 Prevalence of trade barriers ................................... 3.3 ..........139 1.10 Efficiency of legal framework in settling disputes .... 3.8 ............60 6.10 Trade tariffs, % duty* .............................................. 0.1 ..............4 1.11 Efficiency of legal framework in challenging regs. ... 4.0 ............50 6.11 Prevalence of foreign ownership............................. 5.3 ............39 1.12 Transparency of government policymaking............. 4.7 ............39 6.12 Business impact of rules on FDI ............................. 4.9 ............43 1.13 Gov’t services for improved business performance... 3.2 ............98 6.13 Burden of customs procedures .............................. 3.6 ............99 1.14 Business costs of terrorism .................................... 5.9 ............49 6.14 Imports as a percentage of GDP* ........................ 34.3 ..........102 1.15 Business costs of crime and violence..................... 5.3 ............48 6.15 Degree of customer orientation .............................. 4.2 ..........106 1.16 Organized crime ..................................................... 6.0 ............31 6.16 Buyer sophistication ............................................... 2.7 ..........120 1.17 Reliability of police services .................................... 3.7 ............99 1.18 Ethical behavior of firms ......................................... 4.3 ............49 7th pillar: Labor market efficiency 1.19 Strength of auditing and reporting standards ......... 4.4 ............85 7.01 Cooperation in labor-employer relations ................. 4.2 ............82 1.20 Efficacy of corporate boards .................................. 4.8 ............44 7.02 Flexibility of wage determination ............................. 4.7 ............99 1.21 Protection of minority shareholders’ interests ......... 3.6 ..........113 7.03 Hiring and firing practices ....................................... 3.2 ..........119 1.22 Strength of investor protection, 0–10 (best)* .......... 3.3 ..........125 7.04 Redundancy costs, weeks of salary* ....................... 15 ............68 7.05 Pay and productivity............................................... 4.0 ............63 2nd pillar: Infrastructure 7.06 Reliance on professional management ................... 4.5 ............51 2.01 Quality of overall infrastructure ............................... 3.3 ..........114 7.07 Brain drain ............................................................. 3.5 ............65 2.02 Quality of roads ...................................................... 2.3 ..........138 7.08 Women in labor force, ratio to men* ..................... 0.86 ............45 2.03 Quality of railroad infrastructure .............................. 2.6 ............67 2.04 Quality of port infrastructure ................................... 2.6 ..........138 8th pillar: Financial market development 2.05 Quality of air transport infrastructure....................... 3.7 ..........108 8.01 Availability of financial services ............................... 3.6 ..........124 2.06 Available airline seat kms/week, millions* ............. 22.5 ..........117 8.02 Affordability of financial services ............................. 3.4 ..........121 2.07 Quality of electricity supply ..................................... 2.5 ..........123 8.03 Financing through local equity market .................... 3.1 ............89 2.08 Mobile telephone subscriptions/100 pop.* ......... 117.3 ............48 8.04 Ease of access to loans ......................................... 2.6 ............87 2.09 Fixed telephone lines/100 pop.* ............................. 2.0 ..........120 8.05 Venture capital availability ....................................... 2.3 ..........100 8.06 Soundness of banks .............................................. 5.0 ............79 3rd pillar: Macroeconomic environment 8.07 Regulation of securities exchanges ........................ 3.1 ..........127 3.01 Government budget balance, % GDP* ................... 2.1 ............18 8.08 Legal rights index, 0–10 (best)* ................................. 6 ............65 3.02 Gross national savings, % GDP* .......................... 40.5 ............12 3.03 Inflation, annual % change* .................................... 1.3 ..............1 9th pillar: Technological readiness 3.04 General government debt, % GDP* ..................... 20.5 ............25 9.01 Availability of latest technologies ............................ 4.1 ..........121 3.05 Country credit rating, 0–100 (best)* ...................... 37.8 ............83 9.02 Firm-level technology absorption ............................ 4.4 ............97 9.03 FDI and technology transfer ................................... 4.5 ............84 4th pillar: Health and primary education 9.04 Individuals using Internet, %* ................................. 8.0 ..........123 4.01 Business impact of malaria .................................... 3.1 ..........132 9.05 Broadband Internet subscriptions/100 pop.* .......... 0.3 ..........112 4.02 Malaria cases/100,000 pop.* ........................ 19,021.1 ..........126 9.06 Int’l Internet bandwidth, kb/s per user* ................ 46.2 ............34 4.03 Business impact of tuberculosis ............................. 3.8 ..........127 9.07 Mobile broadband subscriptions/100 pop.*............ 0.0 ..........128 4.04 Tuberculosis cases/100,000 pop.* ..................... 553.0 ..........138 4.05 Business impact of HIV/AIDS ................................. 3.7 ..........127 10th pillar: Market size 4.06 HIV prevalence, % adult pop.* ............................... 5.2 ..........131 10.01 Domestic market size index, 1–7 (best)*................. 2.5 ..........116 4.07 Infant mortality, deaths/1,000 live births* .............. 54.4 ..........117 10.02 Foreign market size index, 1–7 (best)* .................... 3.6 ............95 4.08 Life expectancy, years*......................................... 62.3 ..........114 4.09 Quality of primary education ................................... 2.6 ..........124 11th pillar: Business sophistication 4.10 Primary education enrollment, net %* .................. 80.0 ..........124 11.01 Local supplier quantity ........................................... 3.2 ..........144 11.02 Local supplier quality.............................................. 3.8 ..........124 5th pillar: Higher education and training 11.03 State of cluster development.................................. 3.1 ..........108 5.01 Secondary education enrollment, gross %* .......... 53.1 ..........115 11.04 Nature of competitive advantage ............................ 2.5 ..........136 5.02 Tertiary education enrollment, gross %*.................. n/a ...........n/a 11.05 Value chain breadth................................................ 2.3 ..........142 5.03 Quality of the educational system ........................... 2.7 ..........127 11.06 Control of international distribution ......................... 2.8 ..........143 5.04 Quality of math and science education .................. 2.8 ..........123 11.07 Production process sophistication.......................... 2.5 ..........136 5.05 Quality of management schools ............................. 3.1 ..........130 11.08 Extent of marketing ................................................ 2.5 ..........137 5.06 Internet access in schools ...................................... 1.7 ..........142 11.09 Willingness to delegate authority ............................ 2.9 ..........134 5.07 Availability of research and training services ........... 2.6 ..........139 5.08 Extent of staff training ............................................ 3.7 ............93 12th pillar: Innovation 12.01 Capacity for innovation........................................... 2.0 ..........141 12.02 Quality of scientific research institutions ................. 2.7 ..........123 12.03 Company spending on R&D................................... 2.2 ..........136 12.04 University-industry collaboration in R&D ................. 2.2 ..........140 12.05 Gov’t procurement of advanced tech products ...... 3.0 ..........117 12.06 Availability of scientists and engineers .................... 3.1 ..........133 12.07 PCT patents, applications/million pop.* .................. 0.2 ............93 Notes: Values are on a 1-to-7 scale unless otherwise annotated with an asterisk (*). For further details and explanation, please refer to the section “How to Read the Competitiveness Profiles� on page 109. The Africa Competitiveness Report 2013 | 147 Part 3: Competitiveness Profiles Gambia, The Key indicators, 2011 Population (millions) ................................................1.8 GDP (PPP) per capita (int’l $), 1990–2011 GDP (US$ billions)* .................................................1.0 2,500 The Gambia Sub-Saharan Africa GDP per capita (US$) .........................................543.0 GDP (PPP) as share (%) of world total ..................0.00 2,000 Sectoral value-added (% GDP), 2011 Agriculture ............................................................29.9 Industry ................................................................12.0 1,500 Services ...............................................................58.1 Human Development Index, 2011 1,000 Score, (0–1) best ..................................................0.42 1991 1993 1995 1997 1999 2001 2003 2005 2007 2009 2011 Rank (out of 187 economies).................................168 Sources: IMF; UNFPA; UNDP; World Bank The Global Competitiveness Index Rank Score Stage of development (out of 144) (1–7) GCI 2012–2013 .................................................. 98 ..... 3.8 Transition Transition GCI 2011–2012 (out of 142) ........................................... 99 ...... 3.8 1 1–2 2 2–3 3 GCI 2010–2011 (out of 139) ........................................... 90 ...... 3.9 Factor Efficiency Innovation driven driven driven Basic requirements (60.0%) ....................................... 103 ...... 4.0 Institutions ...................................................................... 35 ...... 4.7 Institutions 7 Infrastructure .................................................................. 82 ...... 3.6 Innovation Infrastructure 6 Macroeconomic environment ....................................... 129 ...... 3.6 5 Health and primary education ....................................... 126 ...... 4.2 Business Macroeconomic 4 environment sophistication 3 Efficiency enhancers (35.0%) .................................... 114 ...... 3.5 2 Health and Higher education and training ......................................... 94 ...... 3.8 Market size 1 primary Goods market efficiency ................................................ 94 ...... 4.1 education Labor market efficiency .................................................. 31 ...... 4.7 Financial market development ........................................ 69 ...... 4.1 Technological Higher education readiness and training Technological readiness ................................................ 109 ...... 3.1 Market size ................................................................... 141 ...... 1.4 Financial market Goods market development ef�ciency Innovation and sophistication factors (5.0%) ............. 54 ...... 3.7 Labor market ef�ciency Business sophistication ................................................. 59 ...... 4.1 The Gambia Factor-driven economies Innovation ....................................................................... 52 ...... 3.4 The most problematic factors for doing business Tax rates.................................................................................. 24.8 Access to financing ................................................................. 23.3 Tax regulations .......................................................................... 6.6 Foreign currency regulations ...................................................... 6.0 Inadequate supply of infrastructure ............................................ 5.3 Policy instability ......................................................................... 4.7 Inadequately educated workforce .............................................. 4.6 Inflation ...................................................................................... 4.5 Corruption ................................................................................. 4.1 Insufficient capacity to innovate ................................................. 3.7 Poor work ethic in national labor force....................................... 3.7 Inefficient government bureaucracy ........................................... 2.6 Restrictive labor regulations ....................................................... 2.6 Crime and theft ......................................................................... 2.1 Poor public health ..................................................................... 1.2 Government instability/coups .................................................... 0.3 0 5 10 15 20 25 30 Percent of responses Note: From the list of factors above, respondents were asked to select the five most problematic for doing business in their country and to rank them between 1 (most problematic) and 5. The bars in the figure show the responses weighted according to their rankings. 148 | The Africa Competitiveness Report 2013 Part 3: Competitiveness Profiles Gambia, The The Global Competitiveness Index in detail INDICATOR VALUE RANK/144 INDICATOR VALUE RANK/144 1st pillar: Institutions 6th pillar: Goods market efficiency 1.01 Property rights ....................................................... 4.9 ............45 6.01 Intensity of local competition .................................. 4.7 ............82 1.02 Intellectual property protection ............................... 4.7 ............36 6.02 Extent of market dominance .................................. 4.3 ............37 1.03 Diversion of public funds ........................................ 4.5 ............35 6.03 Effectiveness of anti-monopoly policy ..................... 4.3 ............50 1.04 Public trust in politicians ......................................... 4.4 ............18 6.04 Extent and effect of taxation................................... 3.5 ............67 1.05 Irregular payments and bribes ................................ 4.4 ............51 6.05 Total tax rate, % profits* ..................................... 283.5 ..........141 1.06 Judicial independence............................................ 4.3 ............49 6.06 No. procedures to start a business* .......................... 8 ............87 1.07 Favoritism in decisions of government officials ....... 4.3 ............17 6.07 No. days to start a business* .................................. 27 ............96 1.08 Wastefulness of government spending ................... 4.7 ............12 6.08 Agricultural policy costs.......................................... 4.8 ............10 1.09 Burden of government regulation ........................... 4.4 ............12 6.09 Prevalence of trade barriers ................................... 4.6 ............44 1.10 Efficiency of legal framework in settling disputes .... 4.9 ............21 6.10 Trade tariffs, % duty* ............................................ 17.9 ..........137 1.11 Efficiency of legal framework in challenging regs. ... 4.5 ............26 6.11 Prevalence of foreign ownership............................. 5.3 ............38 1.12 Transparency of government policymaking............. 4.7 ............44 6.12 Business impact of rules on FDI ............................. 5.2 ............28 1.13 Gov’t services for improved business performance... 4.8 ..............9 6.13 Burden of customs procedures .............................. 4.9 ............25 1.14 Business costs of terrorism .................................... 5.6 ............65 6.14 Imports as a percentage of GDP* ........................ 36.8 ............95 1.15 Business costs of crime and violence..................... 5.3 ............45 6.15 Degree of customer orientation .............................. 5.1 ............32 1.16 Organized crime ..................................................... 5.8 ............41 6.16 Buyer sophistication ............................................... 3.2 ............89 1.17 Reliability of police services .................................... 4.9 ............44 1.18 Ethical behavior of firms ......................................... 4.7 ............38 7th pillar: Labor market efficiency 1.19 Strength of auditing and reporting standards ......... 4.9 ............52 7.01 Cooperation in labor-employer relations ................. 5.1 ............24 1.20 Efficacy of corporate boards .................................. 5.1 ............25 7.02 Flexibility of wage determination ............................. 5.2 ............57 1.21 Protection of minority shareholders’ interests ......... 4.8 ............35 7.03 Hiring and firing practices ....................................... 4.4 ............40 1.22 Strength of investor protection, 0–10 (best)* .......... 2.7 ..........138 7.04 Redundancy costs, weeks of salary* ....................... 26 ..........111 7.05 Pay and productivity............................................... 4.3 ............36 2nd pillar: Infrastructure 7.06 Reliance on professional management ................... 4.9 ............37 2.01 Quality of overall infrastructure ............................... 4.5 ............63 7.07 Brain drain ............................................................. 4.3 ............33 2.02 Quality of roads ...................................................... 4.5 ............51 7.08 Women in labor force, ratio to men* ..................... 0.88 ............35 2.03 Quality of railroad infrastructure ........................ n/appl. ...........n/a 2.04 Quality of port infrastructure ................................... 4.8 ............47 8th pillar: Financial market development 2.05 Quality of air transport infrastructure....................... 4.9 ............62 8.01 Availability of financial services ............................... 4.6 ............69 2.06 Available airline seat kms/week, millions* ............. 12.6 ..........130 8.02 Affordability of financial services ............................. 4.6 ............38 2.07 Quality of electricity supply ..................................... 4.1 ............89 8.03 Financing through local equity market .................... 3.5 ............66 2.08 Mobile telephone subscriptions/100 pop.* ........... 89.0 ............97 8.04 Ease of access to loans ......................................... 2.7 ............73 2.09 Fixed telephone lines/100 pop.* ............................. 2.8 ..........116 8.05 Venture capital availability ....................................... 2.6 ............66 8.06 Soundness of banks .............................................. 5.4 ............60 3rd pillar: Macroeconomic environment 8.07 Regulation of securities exchanges ........................ 4.2 ............63 3.01 Government budget balance, % GDP* ..................-4.4 ..........103 8.08 Legal rights index, 0–10 (best)* ................................. 5 ............89 3.02 Gross national savings, % GDP* ............................ 3.6 ..........137 3.03 Inflation, annual % change* .................................... 4.8 ............71 9th pillar: Technological readiness 3.04 General government debt, % GDP* ..................... 68.8 ..........113 9.01 Availability of latest technologies ............................ 4.9 ............71 3.05 Country credit rating, 0–100 (best)* ...................... 21.1 ..........124 9.02 Firm-level technology absorption ............................ 4.8 ............68 9.03 FDI and technology transfer ................................... 4.6 ............76 4th pillar: Health and primary education 9.04 Individuals using Internet, %* ............................... 10.9 ..........117 4.01 Business impact of malaria .................................... 3.4 ..........130 9.05 Broadband Internet subscriptions/100 pop.* .......... 0.0 ..........134 4.02 Malaria cases/100,000 pop.* ........................ 28,226.0 ..........134 9.06 Int’l Internet bandwidth, kb/s per user* .................. 1.7 ..........128 4.03 Business impact of tuberculosis ............................. 4.5 ..........106 9.07 Mobile broadband subscriptions/100 pop.*............ 0.5 ..........116 4.04 Tuberculosis cases/100,000 pop.* ..................... 273.0 ..........125 4.05 Business impact of HIV/AIDS ................................. 4.8 ............96 10th pillar: Market size 4.06 HIV prevalence, % adult pop.* ............................... 2.0 ..........123 10.01 Domestic market size index, 1–7 (best)*................. 1.4 ..........141 4.07 Infant mortality, deaths/1,000 live births* .............. 56.9 ..........121 10.02 Foreign market size index, 1–7 (best)* .................... 1.5 ..........142 4.08 Life expectancy, years*......................................... 58.2 ..........121 4.09 Quality of primary education ................................... 4.6 ............32 11th pillar: Business sophistication 4.10 Primary education enrollment, net %* .................. 65.5 ..........135 11.01 Local supplier quantity ........................................... 4.8 ............66 11.02 Local supplier quality.............................................. 4.9 ............47 5th pillar: Higher education and training 11.03 State of cluster development.................................. 3.9 ............59 5.01 Secondary education enrollment, gross %* .......... 54.1 ..........114 11.04 Nature of competitive advantage ............................ 3.7 ............54 5.02 Tertiary education enrollment, gross %*.................. 4.1 ..........129 11.05 Value chain breadth................................................ 3.6 ............71 5.03 Quality of the educational system ........................... 4.6 ............29 11.06 Control of international distribution ......................... 4.1 ............64 5.04 Quality of math and science education .................. 4.0 ............74 11.07 Production process sophistication.......................... 3.5 ............77 5.05 Quality of management schools ............................. 4.9 ............31 11.08 Extent of marketing ................................................ 3.8 ............88 5.06 Internet access in schools ...................................... 4.0 ............77 11.09 Willingness to delegate authority ............................ 4.3 ............35 5.07 Availability of research and training services ........... 4.4 ............52 5.08 Extent of staff training ............................................ 4.7 ............22 12th pillar: Innovation 12.01 Capacity for innovation........................................... 3.3 ............52 12.02 Quality of scientific research institutions ................. 3.7 ............61 12.03 Company spending on R&D................................... 3.3 ............54 12.04 University-industry collaboration in R&D ................. 3.8 ............58 12.05 Gov’t procurement of advanced tech products ...... 4.5 ............13 12.06 Availability of scientists and engineers .................... 3.4 ..........115 12.07 PCT patents, applications/million pop.* .................. 0.0 ..........119 Notes: Values are on a 1-to-7 scale unless otherwise annotated with an asterisk (*). For further details and explanation, please refer to the section “How to Read the Competitiveness Profiles� on page 109. The Africa Competitiveness Report 2013 | 149 Part 3: Competitiveness Profiles Ghana Key indicators, 2011 Population (millions) ..............................................25.1 GDP (PPP) per capita (int’l $), 1990–2011 GDP (US$ billions)* ...............................................38.4 3,000 Ghana Sub-Saharan Africa GDP per capita (US$) ......................................1,579.7 GDP (PPP) as share (%) of world total ..................0.10 2,500 Sectoral value-added (% GDP), 2011 2,000 Agriculture ............................................................27.3 1,500 Industry ................................................................25.3 Services ...............................................................47.4 1,000 Human Development Index, 2011 500 Score, (0–1) best ..................................................0.54 1991 1993 1995 1997 1999 2001 2003 2005 2007 2009 2011 Rank (out of 187 economies).................................135 Sources: IMF; UNFPA; UNDP; World Bank The Global Competitiveness Index Rank Score Stage of development (out of 144) (1–7) GCI 2012–2013 ................................................ 103 ..... 3.8 Transition Transition GCI 2011–2012 (out of 142) ......................................... 114 ...... 3.6 1 1–2 2 2–3 3 GCI 2010–2011 (out of 139) ......................................... 114 ...... 3.6 Factor Efficiency Innovation driven driven driven Basic requirements (60.0%) ....................................... 112 ...... 3.9 Institutions ...................................................................... 75 ...... 3.8 Institutions 7 Infrastructure ................................................................ 110 ...... 2.9 Innovation Infrastructure 6 Macroeconomic environment ....................................... 108 ...... 4.1 5 Health and primary education ....................................... 112 ...... 4.7 Business Macroeconomic 4 environment sophistication 3 Efficiency enhancers (35.0%) ...................................... 95 ...... 3.8 2 Health and Higher education and training ....................................... 107 ...... 3.4 Market size 1 primary Goods market efficiency ................................................ 76 ...... 4.2 education Labor market efficiency .................................................. 97 ...... 4.1 Financial market development ........................................ 59 ...... 4.2 Technological Higher education readiness and training Technological readiness ................................................ 108 ...... 3.1 Market size ..................................................................... 70 ...... 3.6 Financial market Goods market development ef�ciency Innovation and sophistication factors (5.0%) ........... 102 ...... 3.3 Labor market ef�ciency Business sophistication ............................................... 101 ...... 3.6 Ghana Factor-driven economies Innovation ....................................................................... 95 ...... 3.0 The most problematic factors for doing business Access to financing ................................................................. 17.9 Corruption ............................................................................... 11.9 Tax rates.................................................................................. 11.5 Poor work ethic in national labor force..................................... 11.0 Inadequate supply of infrastructure ............................................ 9.4 Inflation ...................................................................................... 8.8 Policy instability ......................................................................... 5.9 Inefficient government bureaucracy ........................................... 5.1 Tax regulations .......................................................................... 4.5 Foreign currency regulations ...................................................... 4.2 Inadequately educated workforce .............................................. 2.8 Crime and theft ......................................................................... 2.7 Insufficient capacity to innovate ................................................. 1.3 Restrictive labor regulations ....................................................... 1.3 Government instability/coups .................................................... 1.1 Poor public health ..................................................................... 0.6 0 5 10 15 20 25 30 Percent of responses Note: From the list of factors above, respondents were asked to select the five most problematic for doing business in their country and to rank them between 1 (most problematic) and 5. The bars in the figure show the responses weighted according to their rankings. 150 | The Africa Competitiveness Report 2013 Part 3: Competitiveness Profiles Ghana The Global Competitiveness Index in detail INDICATOR VALUE RANK/144 INDICATOR VALUE RANK/144 1st pillar: Institutions 6th pillar: Goods market efficiency 1.01 Property rights ....................................................... 3.9 ............91 6.01 Intensity of local competition .................................. 5.0 ............53 1.02 Intellectual property protection ............................... 3.1 ............93 6.02 Extent of market dominance .................................. 3.7 ............77 1.03 Diversion of public funds ........................................ 3.2 ............70 6.03 Effectiveness of anti-monopoly policy ..................... 4.0 ............73 1.04 Public trust in politicians ......................................... 2.6 ............76 6.04 Extent and effect of taxation................................... 3.6 ............61 1.05 Irregular payments and bribes ................................ 3.1 ..........115 6.05 Total tax rate, % profits* ....................................... 33.6 ............49 1.06 Judicial independence............................................ 4.1 ............58 6.06 No. procedures to start a business* .......................... 7 ............74 1.07 Favoritism in decisions of government officials ....... 3.0 ............78 6.07 No. days to start a business* .................................. 12 ............53 1.08 Wastefulness of government spending ................... 3.3 ............69 6.08 Agricultural policy costs.......................................... 4.2 ............49 1.09 Burden of government regulation ........................... 3.4 ............66 6.09 Prevalence of trade barriers ................................... 4.2 ............83 1.10 Efficiency of legal framework in settling disputes .... 4.0 ............50 6.10 Trade tariffs, % duty* ............................................ 10.6 ..........108 1.11 Efficiency of legal framework in challenging regs. ... 3.5 ............78 6.11 Prevalence of foreign ownership............................. 5.2 ............42 1.12 Transparency of government policymaking............. 4.0 ............90 6.12 Business impact of rules on FDI ............................. 4.6 ............74 1.13 Gov’t services for improved business performance... 3.6 ............77 6.13 Burden of customs procedures .............................. 3.4 ..........115 1.14 Business costs of terrorism .................................... 5.2 ............94 6.14 Imports as a percentage of GDP* ........................ 48.0 ............64 1.15 Business costs of crime and violence..................... 4.4 ............94 6.15 Degree of customer orientation .............................. 4.3 ..........101 1.16 Organized crime ..................................................... 5.1 ............78 6.16 Buyer sophistication ............................................... 2.9 ..........112 1.17 Reliability of police services .................................... 4.6 ............55 1.18 Ethical behavior of firms ......................................... 3.8 ............75 7th pillar: Labor market efficiency 1.19 Strength of auditing and reporting standards ......... 4.4 ............79 7.01 Cooperation in labor-employer relations ................. 4.2 ............76 1.20 Efficacy of corporate boards .................................. 4.4 ............77 7.02 Flexibility of wage determination ............................. 4.6 ..........105 1.21 Protection of minority shareholders’ interests ......... 4.4 ............51 7.03 Hiring and firing practices ....................................... 4.5 ............30 1.22 Strength of investor protection, 0–10 (best)* .......... 6.0 ............39 7.04 Redundancy costs, weeks of salary* ....................... 50 ..........135 7.05 Pay and productivity............................................... 3.6 ............97 2nd pillar: Infrastructure 7.06 Reliance on professional management ................... 4.5 ............50 2.01 Quality of overall infrastructure ............................... 3.9 ............86 7.07 Brain drain ............................................................. 3.6 ............53 2.02 Quality of roads ...................................................... 3.5 ............85 7.08 Women in labor force, ratio to men* ..................... 0.95 ............10 2.03 Quality of railroad infrastructure .............................. 1.7 ..........104 2.04 Quality of port infrastructure ................................... 4.0 ............76 8th pillar: Financial market development 2.05 Quality of air transport infrastructure....................... 4.1 ............97 8.01 Availability of financial services ............................... 4.3 ............85 2.06 Available airline seat kms/week, millions* ............. 98.6 ............77 8.02 Affordability of financial services ............................. 4.0 ............81 2.07 Quality of electricity supply ..................................... 3.0 ..........116 8.03 Financing through local equity market .................... 4.0 ............41 2.08 Mobile telephone subscriptions/100 pop.* ........... 84.8 ..........103 8.04 Ease of access to loans ......................................... 2.0 ..........125 2.09 Fixed telephone lines/100 pop.* ............................. 1.1 ..........125 8.05 Venture capital availability ....................................... 2.1 ..........116 8.06 Soundness of banks .............................................. 5.0 ............76 3rd pillar: Macroeconomic environment 8.07 Regulation of securities exchanges ........................ 4.5 ............47 3.01 Government budget balance, % GDP* ..................-4.3 ............98 8.08 Legal rights index, 0–10 (best)* ................................. 8 ............24 3.02 Gross national savings, % GDP* .......................... 16.2 ............92 3.03 Inflation, annual % change* .................................... 8.7 ..........118 9th pillar: Technological readiness 3.04 General government debt, % GDP* ..................... 43.4 ............81 9.01 Availability of latest technologies ............................ 4.7 ............86 3.05 Country credit rating, 0–100 (best)* ...................... 37.2 ............85 9.02 Firm-level technology absorption ............................ 4.2 ..........115 9.03 FDI and technology transfer ................................... 4.5 ............82 4th pillar: Health and primary education 9.04 Individuals using Internet, %* ............................... 14.1 ..........109 4.01 Business impact of malaria .................................... 2.9 ..........133 9.05 Broadband Internet subscriptions/100 pop.* .......... 0.3 ..........115 4.02 Malaria cases/100,000 pop.* ........................ 26,354.5 ..........129 9.06 Int’l Internet bandwidth, kb/s per user* .................. 0.2 ..........142 4.03 Business impact of tuberculosis ............................. 4.1 ..........122 9.07 Mobile broadband subscriptions/100 pop.*.......... 23.0 ............42 4.04 Tuberculosis cases/100,000 pop.* ....................... 86.0 ............87 4.05 Business impact of HIV/AIDS ................................. 4.0 ..........120 10th pillar: Market size 4.06 HIV prevalence, % adult pop.* ............................... 1.8 ..........121 10.01 Domestic market size index, 1–7 (best)*................. 3.4 ............70 4.07 Infant mortality, deaths/1,000 live births* .............. 50.0 ..........114 10.02 Foreign market size index, 1–7 (best)* .................... 4.1 ............73 4.08 Life expectancy, years*......................................... 63.8 ..........112 4.09 Quality of primary education ................................... 3.6 ............73 11th pillar: Business sophistication 4.10 Primary education enrollment, net %* .................. 84.0 ..........118 11.01 Local supplier quantity ........................................... 4.5 ............85 11.02 Local supplier quality.............................................. 4.0 ..........103 5th pillar: Higher education and training 11.03 State of cluster development.................................. 3.1 ..........111 5.01 Secondary education enrollment, gross %* .......... 58.1 ..........110 11.04 Nature of competitive advantage ............................ 3.2 ............87 5.02 Tertiary education enrollment, gross %*................ 12.1 ..........103 11.05 Value chain breadth................................................ 3.3 ............96 5.03 Quality of the educational system ........................... 3.8 ............62 11.06 Control of international distribution ......................... 3.6 ..........109 5.04 Quality of math and science education .................. 3.6 ............93 11.07 Production process sophistication.......................... 3.2 ..........107 5.05 Quality of management schools ............................. 4.3 ............65 11.08 Extent of marketing ................................................ 3.4 ..........112 5.06 Internet access in schools ...................................... 3.2 ..........109 11.09 Willingness to delegate authority ............................ 3.3 ............99 5.07 Availability of research and training services ........... 3.7 ............96 5.08 Extent of staff training ............................................ 3.7 ............96 12th pillar: Innovation 12.01 Capacity for innovation........................................... 3.0 ............81 12.02 Quality of scientific research institutions ................. 3.5 ............79 12.03 Company spending on R&D................................... 2.8 ............98 12.04 University-industry collaboration in R&D ................. 3.2 ..........107 12.05 Gov’t procurement of advanced tech products ...... 3.4 ............87 12.06 Availability of scientists and engineers .................... 3.8 ............87 12.07 PCT patents, applications/million pop.* .................. 0.0 ..........109 Notes: Values are on a 1-to-7 scale unless otherwise annotated with an asterisk (*). For further details and explanation, please refer to the section “How to Read the Competitiveness Profiles� on page 109. The Africa Competitiveness Report 2013 | 151 Part 3: Competitiveness Profiles Guinea Key indicators, 2011 Population (millions) ..............................................10.3 GDP (PPP) per capita (int’l $), 1990–2011 GDP (US$ billions)* .................................................5.2 2,500 Guinea Sub-Saharan Africa GDP per capita (US$) .........................................488.2 GDP (PPP) as share (%) of world total ..................0.02 2,000 Sectoral value-added (% GDP), 2010 Agriculture ............................................................13.0 1,500 Industry ................................................................47.2 Services ...............................................................39.4 1,000 Human Development Index, 2011 500 Score, (0–1) best ..................................................0.34 1991 1993 1995 1997 1999 2001 2003 2005 2007 2009 2011 Rank (out of 187 economies).................................178 Sources: IMF; UNFPA; UNDP; World Bank The Global Competitiveness Index Rank Score Stage of development (out of 144) (1–7) GCI 2012–2013 ................................................ 141 ..... 2.9 Transition Transition GCI 2011–2012 (out of 142) .......................................... n/a ...... n/a 1 1–2 2 2–3 3 GCI 2010–2011 (out of 139) .......................................... n/a ...... n/a Factor Efficiency Innovation driven driven driven Basic requirements (60.0%) ....................................... 143 ...... 2.8 Institutions .................................................................... 128 ...... 3.2 Institutions 7 Infrastructure ................................................................ 142 ...... 1.9 Innovation Infrastructure 6 Macroeconomic environment ....................................... 142 ...... 2.6 5 Health and primary education ....................................... 138 ...... 3.5 Business Macroeconomic 4 environment sophistication 3 Efficiency enhancers (35.0%) .................................... 134 ...... 3.1 2 Health and Higher education and training ....................................... 136 ...... 2.6 Market size 1 primary Goods market efficiency .............................................. 127 ...... 3.7 education Labor market efficiency .................................................. 56 ...... 4.5 Financial market development ...................................... 135 ...... 3.1 Technological Higher education readiness and training Technological readiness ................................................ 142 ...... 2.5 Market size ................................................................... 129 ...... 2.3 Financial market Goods market development ef�ciency Innovation and sophistication factors (5.0%) ........... 132 ...... 2.8 Labor market ef�ciency Business sophistication ............................................... 139 ...... 3.0 Guinea Factor-driven economies Innovation ..................................................................... 125 ...... 2.6 The most problematic factors for doing business Access to financing ................................................................. 15.9 Inadequate supply of infrastructure .......................................... 13.7 Corruption ............................................................................... 13.2 Foreign currency regulations ...................................................... 9.2 Inflation ...................................................................................... 9.2 Inadequately educated workforce .............................................. 8.0 Policy instability ......................................................................... 5.3 Inefficient government bureaucracy ........................................... 5.1 Poor work ethic in national labor force....................................... 4.7 Crime and theft ......................................................................... 3.4 Restrictive labor regulations ....................................................... 3.1 Government instability/coups .................................................... 2.6 Tax rates.................................................................................... 2.0 Tax regulations .......................................................................... 1.7 Insufficient capacity to innovate ................................................. 1.5 Poor public health ..................................................................... 1.5 0 5 10 15 20 25 30 Percent of responses Note: From the list of factors above, respondents were asked to select the five most problematic for doing business in their country and to rank them between 1 (most problematic) and 5. The bars in the figure show the responses weighted according to their rankings. 152 | The Africa Competitiveness Report 2013 Part 3: Competitiveness Profiles Guinea The Global Competitiveness Index in detail INDICATOR VALUE RANK/144 INDICATOR VALUE RANK/144 1st pillar: Institutions 6th pillar: Goods market efficiency 1.01 Property rights ....................................................... 3.2 ..........127 6.01 Intensity of local competition .................................. 4.1 ..........116 1.02 Intellectual property protection ............................... 2.2 ..........137 6.02 Extent of market dominance .................................. 3.7 ............72 1.03 Diversion of public funds ........................................ 2.8 ............94 6.03 Effectiveness of anti-monopoly policy ..................... 3.5 ..........109 1.04 Public trust in politicians ......................................... 2.6 ............78 6.04 Extent and effect of taxation................................... 4.1 ............27 1.05 Irregular payments and bribes ................................ 2.3 ..........142 6.05 Total tax rate, % profits* ....................................... 54.3 ..........118 1.06 Judicial independence............................................ 2.6 ..........119 6.06 No. procedures to start a business* ........................ 12 ..........121 1.07 Favoritism in decisions of government officials ....... 3.3 ............57 6.07 No. days to start a business* .................................. 40 ..........120 1.08 Wastefulness of government spending ................... 3.7 ............41 6.08 Agricultural policy costs.......................................... 3.9 ............71 1.09 Burden of government regulation ........................... 4.0 ............30 6.09 Prevalence of trade barriers ................................... 3.6 ..........126 1.10 Efficiency of legal framework in settling disputes .... 2.7 ..........128 6.10 Trade tariffs, % duty* .............................................. 0.1 ..............3 1.11 Efficiency of legal framework in challenging regs. ... 2.8 ..........122 6.11 Prevalence of foreign ownership............................. 4.1 ..........109 1.12 Transparency of government policymaking............. 3.6 ..........126 6.12 Business impact of rules on FDI ............................. 3.7 ..........122 1.13 Gov’t services for improved business performance... 3.4 ............90 6.13 Burden of customs procedures .............................. 3.3 ..........119 1.14 Business costs of terrorism .................................... 5.0 ..........108 6.14 Imports as a percentage of GDP* ........................ 36.2 ............96 1.15 Business costs of crime and violence..................... 3.1 ..........130 6.15 Degree of customer orientation .............................. 4.5 ............84 1.16 Organized crime ..................................................... 4.1 ..........119 6.16 Buyer sophistication ............................................... 2.1 ..........140 1.17 Reliability of police services .................................... 3.0 ..........120 1.18 Ethical behavior of firms ......................................... 3.3 ..........120 7th pillar: Labor market efficiency 1.19 Strength of auditing and reporting standards ......... 2.9 ..........142 7.01 Cooperation in labor-employer relations ................. 4.2 ............74 1.20 Efficacy of corporate boards .................................. 4.3 ............88 7.02 Flexibility of wage determination ............................. 5.3 ............52 1.21 Protection of minority shareholders’ interests ......... 4.0 ............80 7.03 Hiring and firing practices ....................................... 4.6 ............27 1.22 Strength of investor protection, 0–10 (best)* .......... 2.7 ..........138 7.04 Redundancy costs, weeks of salary* ......................... 8 ............22 7.05 Pay and productivity............................................... 3.0 ..........129 2nd pillar: Infrastructure 7.06 Reliance on professional management ................... 3.0 ..........139 2.01 Quality of overall infrastructure ............................... 2.1 ..........143 7.07 Brain drain ............................................................. 3.0 ..........101 2.02 Quality of roads ...................................................... 2.0 ..........140 7.08 Women in labor force, ratio to men* ..................... 0.84 ............60 2.03 Quality of railroad infrastructure .............................. 1.6 ..........108 2.04 Quality of port infrastructure ................................... 3.5 ..........107 8th pillar: Financial market development 2.05 Quality of air transport infrastructure....................... 3.6 ..........110 8.01 Availability of financial services ............................... 3.3 ..........133 2.06 Available airline seat kms/week, millions* ............... 9.5 ..........134 8.02 Affordability of financial services ............................. 3.2 ..........129 2.07 Quality of electricity supply ..................................... 1.5 ..........141 8.03 Financing through local equity market .................... 2.2 ..........132 2.08 Mobile telephone subscriptions/100 pop.* ........... 44.0 ..........134 8.04 Ease of access to loans ......................................... 2.0 ..........124 2.09 Fixed telephone lines/100 pop.* ............................. 0.2 ..........143 8.05 Venture capital availability ....................................... 1.6 ..........142 8.06 Soundness of banks .............................................. 4.0 ..........127 3rd pillar: Macroeconomic environment 8.07 Regulation of securities exchanges ........................ 2.4 ..........137 3.01 Government budget balance, % GDP* ..................-2.9 ............71 8.08 Legal rights index, 0–10 (best)* ................................. 6 ............65 3.02 Gross national savings, % GDP* ............................ 8.6 ..........128 3.03 Inflation, annual % change* .................................. 21.5 ..........143 9th pillar: Technological readiness 3.04 General government debt, % GDP* ..................... 72.2 ..........119 9.01 Availability of latest technologies ............................ 3.6 ..........135 3.05 Country credit rating, 0–100 (best)* ...................... 11.8 ..........141 9.02 Firm-level technology absorption ............................ 3.8 ..........135 9.03 FDI and technology transfer ................................... 3.9 ..........114 4th pillar: Health and primary education 9.04 Individuals using Internet, %* ................................. 1.3 ..........140 4.01 Business impact of malaria .................................... 2.8 ..........135 9.05 Broadband Internet subscriptions/100 pop.* .......... 0.0 ..........138 4.02 Malaria cases/100,000 pop.* ........................ 39,709.6 ..........144 9.06 Int’l Internet bandwidth, kb/s per user* .................. 1.7 ..........127 4.03 Business impact of tuberculosis ............................. 3.4 ..........135 9.07 Mobile broadband subscriptions/100 pop.*............ 0.0 ..........128 4.04 Tuberculosis cases/100,000 pop.* ..................... 334.0 ..........131 4.05 Business impact of HIV/AIDS ................................. 3.3 ..........129 10th pillar: Market size 4.06 HIV prevalence, % adult pop.* ............................... 1.3 ..........114 10.01 Domestic market size index, 1–7 (best)*................. 2.1 ..........126 4.07 Infant mortality, deaths/1,000 live births* .............. 81.2 ..........135 10.02 Foreign market size index, 1–7 (best)* .................... 2.8 ..........125 4.08 Life expectancy, years*......................................... 53.6 ..........129 4.09 Quality of primary education ................................... 2.5 ..........125 11th pillar: Business sophistication 4.10 Primary education enrollment, net %* .................. 77.0 ..........128 11.01 Local supplier quantity ........................................... 3.8 ..........134 11.02 Local supplier quality.............................................. 4.0 ..........109 5th pillar: Higher education and training 11.03 State of cluster development.................................. 3.1 ..........106 5.01 Secondary education enrollment, gross %* .......... 38.1 ..........124 11.04 Nature of competitive advantage ............................ 2.6 ..........129 5.02 Tertiary education enrollment, gross %*.................. 9.5 ..........114 11.05 Value chain breadth................................................ 2.5 ..........139 5.03 Quality of the educational system ........................... 2.7 ..........128 11.06 Control of international distribution ......................... 2.9 ..........141 5.04 Quality of math and science education .................. 3.4 ..........106 11.07 Production process sophistication.......................... 2.8 ..........123 5.05 Quality of management schools ............................. 2.7 ..........139 11.08 Extent of marketing ................................................ 2.6 ..........135 5.06 Internet access in schools ...................................... 1.7 ..........139 11.09 Willingness to delegate authority ............................ 2.9 ..........132 5.07 Availability of research and training services ........... 3.1 ..........127 5.08 Extent of staff training ............................................ 3.3 ..........114 12th pillar: Innovation 12.01 Capacity for innovation........................................... 2.4 ..........127 12.02 Quality of scientific research institutions ................. 2.5 ..........130 12.03 Company spending on R&D................................... 2.7 ..........105 12.04 University-industry collaboration in R&D ................. 2.4 ..........135 12.05 Gov’t procurement of advanced tech products ...... 3.5 ............77 12.06 Availability of scientists and engineers .................... 4.0 ............74 12.07 PCT patents, applications/million pop.* .................. 0.0 ..........119 Notes: Values are on a 1-to-7 scale unless otherwise annotated with an asterisk (*). For further details and explanation, please refer to the section “How to Read the Competitiveness Profiles� on page 109. The Africa Competitiveness Report 2013 | 153 Part 3: Competitiveness Profiles Kenya Key indicators, 2011 Population (millions) ..............................................41.8 GDP (PPP) per capita (int’l $), 1990–2011 GDP (US$ billions)* ...............................................34.1 2,500 Kenya Sub-Saharan Africa GDP per capita (US$) .........................................832.5 GDP (PPP) as share (%) of world total ..................0.09 2,000 Sectoral value-added (% GDP), 2011 Agriculture ............................................................23.1 Industry ................................................................19.2 1,500 Services ...............................................................57.7 Human Development Index, 2011 1,000 Score, (0–1) best ..................................................0.51 1991 1993 1995 1997 1999 2001 2003 2005 2007 2009 2011 Rank (out of 187 economies).................................143 Sources: IMF; UNFPA; UNDP; World Bank The Global Competitiveness Index Rank Score Stage of development (out of 144) (1–7) GCI 2012–2013 ................................................ 106 ..... 3.7 Transition Transition GCI 2011–2012 (out of 142) ......................................... 102 ...... 3.8 1 1–2 2 2–3 3 GCI 2010–2011 (out of 139) ......................................... 106 ...... 3.6 Factor Efficiency Innovation driven driven driven Basic requirements (60.0%) ....................................... 123 ...... 3.6 Institutions .................................................................... 106 ...... 3.4 Institutions 7 Infrastructure ................................................................ 103 ...... 3.1 Innovation Infrastructure 6 Macroeconomic environment ....................................... 133 ...... 3.4 5 Health and primary education ....................................... 115 ...... 4.6 Business Macroeconomic 4 environment sophistication 3 Efficiency enhancers (35.0%) ...................................... 76 ...... 4.0 2 Health and Higher education and training ....................................... 100 ...... 3.6 Market size 1 primary Goods market efficiency ................................................ 93 ...... 4.1 education Labor market efficiency .................................................. 39 ...... 4.6 Financial market development ........................................ 24 ...... 4.7 Technological Higher education readiness and training Technological readiness ................................................ 101 ...... 3.3 Market size ..................................................................... 75 ...... 3.5 Financial market Goods market development ef�ciency Innovation and sophistication factors (5.0%) ............. 56 ...... 3.7 Labor market ef�ciency Business sophistication ................................................. 67 ...... 4.0 Kenya Factor-driven economies Innovation ....................................................................... 50 ...... 3.4 The most problematic factors for doing business Corruption ............................................................................... 20.8 Inflation .................................................................................... 13.9 Tax rates.................................................................................. 11.0 Crime and theft ......................................................................... 9.3 Access to financing ................................................................... 9.0 Inadequate supply of infrastructure ............................................ 8.1 Inefficient government bureaucracy ........................................... 5.6 Policy instability ......................................................................... 4.4 Poor work ethic in national labor force....................................... 3.3 Foreign currency regulations ...................................................... 2.9 Inadequately educated workforce .............................................. 2.4 Tax regulations .......................................................................... 2.3 Insufficient capacity to innovate ................................................. 2.2 Government instability/coups .................................................... 2.1 Poor public health ..................................................................... 1.4 Restrictive labor regulations ....................................................... 1.4 0 5 10 15 20 25 30 Percent of responses Note: From the list of factors above, respondents were asked to select the five most problematic for doing business in their country and to rank them between 1 (most problematic) and 5. The bars in the figure show the responses weighted according to their rankings. 154 | The Africa Competitiveness Report 2013 Part 3: Competitiveness Profiles Kenya The Global Competitiveness Index in detail INDICATOR VALUE RANK/144 INDICATOR VALUE RANK/144 1st pillar: Institutions 6th pillar: Goods market efficiency 1.01 Property rights ....................................................... 3.6 ..........110 6.01 Intensity of local competition .................................. 4.9 ............63 1.02 Intellectual property protection ............................... 3.1 ............96 6.02 Extent of market dominance .................................. 3.8 ............62 1.03 Diversion of public funds ........................................ 2.8 ............93 6.03 Effectiveness of anti-monopoly policy ..................... 4.3 ............47 1.04 Public trust in politicians ......................................... 2.4 ............92 6.04 Extent and effect of taxation................................... 3.3 ............90 1.05 Irregular payments and bribes ................................ 3.0 ..........125 6.05 Total tax rate, % profits* ....................................... 49.6 ..........111 1.06 Judicial independence............................................ 3.4 ............85 6.06 No. procedures to start a business* ........................ 11 ..........119 1.07 Favoritism in decisions of government officials ....... 2.5 ..........120 6.07 No. days to start a business* .................................. 33 ..........108 1.08 Wastefulness of government spending ................... 3.1 ............81 6.08 Agricultural policy costs.......................................... 4.0 ............62 1.09 Burden of government regulation ........................... 3.4 ............74 6.09 Prevalence of trade barriers ................................... 3.9 ..........105 1.10 Efficiency of legal framework in settling disputes .... 3.7 ............72 6.10 Trade tariffs, % duty* .............................................. 9.0 ..........100 1.11 Efficiency of legal framework in challenging regs. ... 3.6 ............69 6.11 Prevalence of foreign ownership............................. 4.4 ............93 1.12 Transparency of government policymaking............. 3.8 ..........105 6.12 Business impact of rules on FDI ............................. 4.4 ............90 1.13 Gov’t services for improved business performance... 3.8 ............61 6.13 Burden of customs procedures .............................. 3.4 ..........109 1.14 Business costs of terrorism .................................... 3.8 ..........137 6.14 Imports as a percentage of GDP* ........................ 43.3 ............76 1.15 Business costs of crime and violence..................... 3.5 ..........120 6.15 Degree of customer orientation .............................. 4.6 ............63 1.16 Organized crime ..................................................... 4.2 ..........115 6.16 Buyer sophistication ............................................... 3.3 ............86 1.17 Reliability of police services .................................... 3.4 ..........113 1.18 Ethical behavior of firms ......................................... 3.6 ..........102 7th pillar: Labor market efficiency 1.19 Strength of auditing and reporting standards ......... 4.4 ............81 7.01 Cooperation in labor-employer relations ................. 4.2 ............77 1.20 Efficacy of corporate boards .................................. 4.4 ............79 7.02 Flexibility of wage determination ............................. 5.0 ............75 1.21 Protection of minority shareholders’ interests ......... 3.9 ............87 7.03 Hiring and firing practices ....................................... 5.0 ............11 1.22 Strength of investor protection, 0–10 (best)* .......... 5.0 ............80 7.04 Redundancy costs, weeks of salary* ....................... 16 ............73 7.05 Pay and productivity............................................... 4.0 ............59 2nd pillar: Infrastructure 7.06 Reliance on professional management ................... 4.3 ............63 2.01 Quality of overall infrastructure ............................... 4.0 ............80 7.07 Brain drain ............................................................. 3.4 ............67 2.02 Quality of roads ...................................................... 3.9 ............72 7.08 Women in labor force, ratio to men* ..................... 0.86 ............47 2.03 Quality of railroad infrastructure .............................. 2.5 ............72 2.04 Quality of port infrastructure ................................... 3.8 ............91 8th pillar: Financial market development 2.05 Quality of air transport infrastructure....................... 4.8 ............65 8.01 Availability of financial services ............................... 4.7 ............63 2.06 Available airline seat kms/week, millions* ........... 283.2 ............55 8.02 Affordability of financial services ............................. 4.4 ............54 2.07 Quality of electricity supply ..................................... 3.6 ..........102 8.03 Financing through local equity market .................... 4.4 ............26 2.08 Mobile telephone subscriptions/100 pop.* ........... 64.8 ..........120 8.04 Ease of access to loans ......................................... 3.6 ............25 2.09 Fixed telephone lines/100 pop.* ............................. 0.7 ..........130 8.05 Venture capital availability ....................................... 3.2 ............32 8.06 Soundness of banks .............................................. 5.0 ............77 3rd pillar: Macroeconomic environment 8.07 Regulation of securities exchanges ........................ 4.2 ............65 3.01 Government budget balance, % GDP* ..................-4.1 ............93 8.08 Legal rights index, 0–10 (best)* ............................... 10 ..............1 3.02 Gross national savings, % GDP* .......................... 11.3 ..........119 3.03 Inflation, annual % change* .................................. 14.0 ..........133 9th pillar: Technological readiness 3.04 General government debt, % GDP* ..................... 48.9 ............95 9.01 Availability of latest technologies ............................ 4.9 ............74 3.05 Country credit rating, 0–100 (best)* ...................... 29.1 ..........106 9.02 Firm-level technology absorption ............................ 4.9 ............58 9.03 FDI and technology transfer ................................... 4.8 ............53 4th pillar: Health and primary education 9.04 Individuals using Internet, %* ............................... 28.0 ............92 4.01 Business impact of malaria .................................... 3.4 ..........128 9.05 Broadband Internet subscriptions/100 pop.* .......... 0.1 ..........120 4.02 Malaria cases/100,000 pop.* .......................... 5,852.6 ..........121 9.06 Int’l Internet bandwidth, kb/s per user* .................. 4.5 ..........110 4.03 Business impact of tuberculosis ............................. 3.7 ..........128 9.07 Mobile broadband subscriptions/100 pop.*............ 0.3 ..........119 4.04 Tuberculosis cases/100,000 pop.* ..................... 298.0 ..........130 4.05 Business impact of HIV/AIDS ................................. 3.3 ..........130 10th pillar: Market size 4.06 HIV prevalence, % adult pop.* ............................... 6.3 ..........134 10.01 Domestic market size index, 1–7 (best)*................. 3.4 ............69 4.07 Infant mortality, deaths/1,000 live births* .............. 55.1 ..........118 10.02 Foreign market size index, 1–7 (best)* .................... 3.8 ............87 4.08 Life expectancy, years*......................................... 56.5 ..........123 4.09 Quality of primary education ................................... 3.6 ............78 11th pillar: Business sophistication 4.10 Primary education enrollment, net %* .................. 82.8 ..........120 11.01 Local supplier quantity ........................................... 5.0 ............39 11.02 Local supplier quality.............................................. 4.5 ............64 5th pillar: Higher education and training 11.03 State of cluster development.................................. 3.8 ............65 5.01 Secondary education enrollment, gross %* .......... 60.2 ..........108 11.04 Nature of competitive advantage ............................ 3.5 ............66 5.02 Tertiary education enrollment, gross %*.................. 4.0 ..........130 11.05 Value chain breadth................................................ 3.8 ............53 5.03 Quality of the educational system ........................... 4.3 ............37 11.06 Control of international distribution ......................... 3.8 ............94 5.04 Quality of math and science education .................. 3.9 ............76 11.07 Production process sophistication.......................... 3.6 ............68 5.05 Quality of management schools ............................. 4.3 ............56 11.08 Extent of marketing ................................................ 3.8 ............86 5.06 Internet access in schools ...................................... 3.8 ............85 11.09 Willingness to delegate authority ............................ 3.6 ............86 5.07 Availability of research and training services ........... 4.3 ............64 5.08 Extent of staff training ............................................ 3.9 ............70 12th pillar: Innovation 12.01 Capacity for innovation........................................... 3.5 ............46 12.02 Quality of scientific research institutions ................. 4.0 ............50 12.03 Company spending on R&D................................... 3.7 ............31 12.04 University-industry collaboration in R&D ................. 4.2 ............41 12.05 Gov’t procurement of advanced tech products ...... 3.5 ............76 12.06 Availability of scientists and engineers .................... 4.1 ............66 12.07 PCT patents, applications/million pop.* .................. 0.1 ............95 Notes: Values are on a 1-to-7 scale unless otherwise annotated with an asterisk (*). For further details and explanation, please refer to the section “How to Read the Competitiveness Profiles� on page 109. The Africa Competitiveness Report 2013 | 155 Part 3: Competitiveness Profiles Lesotho Key indicators, 2011 Population (millions) ................................................2.2 GDP (PPP) per capita (int’l $), 1990–2011 GDP (US$ billions)* .................................................2.5 2,500 Lesotho Sub-Saharan Africa GDP per capita (US$) ......................................1,282.6 GDP (PPP) as share (%) of world total ..................0.01 2,000 Sectoral value-added (% GDP), 2011 Agriculture ..............................................................7.8 1,500 Industry ................................................................33.7 Services ...............................................................58.5 1,000 Human Development Index, 2011 500 Score, (0–1) best ..................................................0.45 1991 1993 1995 1997 1999 2001 2003 2005 2007 2009 2011 Rank (out of 187 economies).................................160 Sources: IMF; UNFPA; UNDP; World Bank The Global Competitiveness Index Rank Score Stage of development (out of 144) (1–7) GCI 2012–2013 ................................................ 137 ..... 3.2 Transition Transition GCI 2011–2012 (out of 142) ......................................... 135 ...... 3.3 1 1–2 2 2–3 3 GCI 2010–2011 (out of 139) ......................................... 128 ...... 3.4 Factor Efficiency Innovation driven driven driven Basic requirements (60.0%) ....................................... 136 ...... 3.3 Institutions .................................................................... 121 ...... 3.3 Institutions 7 Infrastructure ................................................................ 126 ...... 2.5 Innovation Infrastructure 6 Macroeconomic environment ....................................... 113 ...... 3.9 5 Health and primary education ....................................... 136 ...... 3.5 Business Macroeconomic 4 environment sophistication 3 Efficiency enhancers (35.0%) .................................... 137 ...... 3.0 2 Health and Higher education and training ....................................... 135 ...... 2.7 Market size 1 primary Goods market efficiency .............................................. 102 ...... 4.0 education Labor market efficiency ................................................ 116 ...... 3.9 Financial market development ...................................... 122 ...... 3.4 Technological Higher education readiness and training Technological readiness ................................................ 136 ...... 2.5 Market size ................................................................... 136 ...... 1.9 Financial market Goods market development ef�ciency Innovation and sophistication factors (5.0%) ........... 137 ...... 2.7 Labor market ef�ciency Business sophistication ............................................... 135 ...... 3.1 Lesotho Factor-driven economies Innovation ..................................................................... 138 ...... 2.3 The most problematic factors for doing business Access to financing ................................................................. 13.7 Corruption ............................................................................... 13.2 Crime and theft ....................................................................... 12.5 Tax rates.................................................................................... 8.9 Inefficient government bureaucracy ........................................... 7.9 Inadequate supply of infrastructure ............................................ 7.1 Inadequately educated workforce .............................................. 6.5 Poor work ethic in national labor force....................................... 6.3 Inflation ...................................................................................... 6.1 Restrictive labor regulations ....................................................... 4.1 Insufficient capacity to innovate ................................................. 3.2 Policy instability ......................................................................... 2.7 Tax regulations .......................................................................... 2.4 Foreign currency regulations ...................................................... 2.0 Poor public health ..................................................................... 1.8 Government instability/coups .................................................... 1.5 0 5 10 15 20 25 30 Percent of responses Note: From the list of factors above, respondents were asked to select the five most problematic for doing business in their country and to rank them between 1 (most problematic) and 5. The bars in the figure show the responses weighted according to their rankings. 156 | The Africa Competitiveness Report 2013 Part 3: Competitiveness Profiles Lesotho The Global Competitiveness Index in detail INDICATOR VALUE RANK/144 INDICATOR VALUE RANK/144 1st pillar: Institutions 6th pillar: Goods market efficiency 1.01 Property rights ....................................................... 3.3 ..........125 6.01 Intensity of local competition .................................. 4.1 ..........118 1.02 Intellectual property protection ............................... 3.0 ..........104 6.02 Extent of market dominance .................................. 3.1 ..........123 1.03 Diversion of public funds ........................................ 3.0 ............83 6.03 Effectiveness of anti-monopoly policy ..................... 3.3 ..........125 1.04 Public trust in politicians ......................................... 2.4 ............94 6.04 Extent and effect of taxation................................... 3.3 ............89 1.05 Irregular payments and bribes ................................ 3.5 ............95 6.05 Total tax rate, % profits* ....................................... 16.0 ............10 1.06 Judicial independence............................................ 3.0 ..........100 6.06 No. procedures to start a business* .......................... 7 ............74 1.07 Favoritism in decisions of government officials ....... 2.5 ..........118 6.07 No. days to start a business* .................................. 40 ..........120 1.08 Wastefulness of government spending ................... 2.9 ............98 6.08 Agricultural policy costs.......................................... 2.9 ..........138 1.09 Burden of government regulation ........................... 3.0 ..........100 6.09 Prevalence of trade barriers ................................... 3.6 ..........129 1.10 Efficiency of legal framework in settling disputes .... 3.3 ............99 6.10 Trade tariffs, % duty* .............................................. 6.7 ............80 1.11 Efficiency of legal framework in challenging regs. ... 3.0 ..........111 6.11 Prevalence of foreign ownership............................. 4.9 ............59 1.12 Transparency of government policymaking............. 3.3 ..........135 6.12 Business impact of rules on FDI ............................. 4.4 ............93 1.13 Gov’t services for improved business performance... 3.0 ..........111 6.13 Burden of customs procedures .............................. 3.4 ..........110 1.14 Business costs of terrorism .................................... 5.6 ............67 6.14 Imports as a percentage of GDP* ...................... 124.7 ..............3 1.15 Business costs of crime and violence..................... 3.8 ..........114 6.15 Degree of customer orientation .............................. 3.8 ..........130 1.16 Organized crime ..................................................... 4.9 ............89 6.16 Buyer sophistication ............................................... 3.0 ..........110 1.17 Reliability of police services .................................... 3.5 ..........109 1.18 Ethical behavior of firms ......................................... 3.1 ..........133 7th pillar: Labor market efficiency 1.19 Strength of auditing and reporting standards ......... 3.8 ..........121 7.01 Cooperation in labor-employer relations ................. 3.8 ..........121 1.20 Efficacy of corporate boards .................................. 4.2 ..........106 7.02 Flexibility of wage determination ............................. 4.4 ..........112 1.21 Protection of minority shareholders’ interests ......... 3.5 ..........121 7.03 Hiring and firing practices ....................................... 3.6 ............96 1.22 Strength of investor protection, 0–10 (best)* .......... 3.7 ..........120 7.04 Redundancy costs, weeks of salary* ....................... 15 ............70 7.05 Pay and productivity............................................... 2.8 ..........137 2nd pillar: Infrastructure 7.06 Reliance on professional management ................... 3.9 ............96 2.01 Quality of overall infrastructure ............................... 3.4 ..........104 7.07 Brain drain ............................................................. 2.1 ..........134 2.02 Quality of roads ...................................................... 2.9 ..........111 7.08 Women in labor force, ratio to men* ..................... 0.81 ............69 2.03 Quality of railroad infrastructure .............................. 1.6 ..........110 2.04 Quality of port infrastructure ................................... 3.4 ..........114 8th pillar: Financial market development 2.05 Quality of air transport infrastructure....................... 2.5 ..........142 8.01 Availability of financial services ............................... 3.4 ..........131 2.06 Available airline seat kms/week, millions* ............... 0.2 ..........144 8.02 Affordability of financial services ............................. 3.1 ..........134 2.07 Quality of electricity supply ..................................... 3.7 ..........101 8.03 Financing through local equity market .................... 2.1 ..........135 2.08 Mobile telephone subscriptions/100 pop.* ........... 47.9 ..........131 8.04 Ease of access to loans ......................................... 2.3 ..........108 2.09 Fixed telephone lines/100 pop.* ............................. 1.6 ..........122 8.05 Venture capital availability ....................................... 1.9 ..........131 8.06 Soundness of banks .............................................. 4.9 ............88 3rd pillar: Macroeconomic environment 8.07 Regulation of securities exchanges ........................ 3.0 ..........129 3.01 Government budget balance, % GDP* ................-10.5 ..........144 8.08 Legal rights index, 0–10 (best)* ................................. 6 ............65 3.02 Gross national savings, % GDP* .......................... 20.3 ............72 3.03 Inflation, annual % change* .................................... 5.6 ............84 9th pillar: Technological readiness 3.04 General government debt, % GDP* ..................... 39.6 ............71 9.01 Availability of latest technologies ............................ 3.9 ..........126 3.05 Country credit rating, 0–100 (best)* ...................... 33.2 ............97 9.02 Firm-level technology absorption ............................ 4.0 ..........127 9.03 FDI and technology transfer ................................... 3.6 ..........133 4th pillar: Health and primary education 9.04 Individuals using Internet, %* ................................. 4.2 ..........130 4.01 Business impact of malaria .............................. n/appl. ..............1 9.05 Broadband Internet subscriptions/100 pop.* .......... 0.0 ..........135 4.02 Malaria cases/100,000 pop.* ................................(NE) ..............1 9.06 Int’l Internet bandwidth, kb/s per user* .................. 2.4 ..........120 4.03 Business impact of tuberculosis ............................. 3.0 ..........140 9.07 Mobile broadband subscriptions/100 pop.*............ 1.7 ..........103 4.04 Tuberculosis cases/100,000 pop.* ..................... 633.0 ..........140 4.05 Business impact of HIV/AIDS ................................. 2.8 ..........140 10th pillar: Market size 4.06 HIV prevalence, % adult pop.* ............................. 23.6 ..........142 10.01 Domestic market size index, 1–7 (best)*................. 1.7 ..........136 4.07 Infant mortality, deaths/1,000 live births* .............. 64.6 ..........127 10.02 Foreign market size index, 1–7 (best)* .................... 2.3 ..........137 4.08 Life expectancy, years*......................................... 47.4 ..........144 4.09 Quality of primary education ................................... 3.1 ..........107 11th pillar: Business sophistication 4.10 Primary education enrollment, net %* .................. 73.4 ..........133 11.01 Local supplier quantity ........................................... 3.4 ..........141 11.02 Local supplier quality.............................................. 3.4 ..........140 5th pillar: Higher education and training 11.03 State of cluster development.................................. 3.0 ..........120 5.01 Secondary education enrollment, gross %* .......... 46.4 ..........117 11.04 Nature of competitive advantage ............................ 3.2 ............93 5.02 Tertiary education enrollment, gross %*.................. 3.5 ..........133 11.05 Value chain breadth................................................ 2.8 ..........126 5.03 Quality of the educational system ........................... 3.2 ..........102 11.06 Control of international distribution ......................... 3.0 ..........140 5.04 Quality of math and science education .................. 3.0 ..........119 11.07 Production process sophistication.......................... 2.8 ..........124 5.05 Quality of management schools ............................. 2.8 ..........134 11.08 Extent of marketing ................................................ 2.8 ..........131 5.06 Internet access in schools ...................................... 2.4 ..........129 11.09 Willingness to delegate authority ............................ 3.3 ............98 5.07 Availability of research and training services ........... 2.8 ..........135 5.08 Extent of staff training ............................................ 3.3 ..........117 12th pillar: Innovation 12.01 Capacity for innovation........................................... 2.5 ..........119 12.02 Quality of scientific research institutions ................. 2.2 ..........138 12.03 Company spending on R&D................................... 2.5 ..........126 12.04 University-industry collaboration in R&D ................. 2.5 ..........132 12.05 Gov’t procurement of advanced tech products ...... 2.6 ..........133 12.06 Availability of scientists and engineers .................... 2.6 ..........142 12.07 PCT patents, applications/million pop.* .................. 0.2 ............87 Notes: Values are on a 1-to-7 scale unless otherwise annotated with an asterisk (*). For further details and explanation, please refer to the section “How to Read the Competitiveness Profiles� on page 109. The Africa Competitiveness Report 2013 | 157 Part 3: Competitiveness Profiles Liberia Key indicators, 2011 Population (millions) ................................................4.1 GDP (PPP) per capita (int’l $), 1990–2011 GDP (US$ billions)* .................................................1.5 2,500 Liberia Sub-Saharan Africa GDP per capita (US$) .........................................398.7 GDP (PPP) as share (%) of world total ..................0.00 2,000 Sectoral value-added (% GDP), 0 1,500 Agriculture ..............................................................n/a 1,000 Industry ..................................................................n/a Services .................................................................n/a 500 Human Development Index, 2011 0 Score, (0–1) best ..................................................0.33 1991 1993 1995 1997 1999 2001 2003 2005 2007 2009 2011 Rank (out of 187 economies).................................182 Sources: IMF; UNFPA; UNDP; World Bank The Global Competitiveness Index Rank Score Stage of development (out of 144) (1–7) GCI 2012–2013 ................................................ 111 ..... 3.7 Transition Transition GCI 2011–2012 (out of 142) .......................................... n/a ...... n/a 1 1–2 2 2–3 3 GCI 2010–2011 (out of 139) .......................................... n/a ...... n/a Factor Efficiency Innovation driven driven driven Basic requirements (60.0%) ....................................... 109 ...... 3.9 Institutions ...................................................................... 45 ...... 4.3 Institutions 7 Infrastructure ................................................................ 115 ...... 2.8 Innovation Infrastructure 6 Macroeconomic environment ......................................... 82 ...... 4.5 5 Health and primary education ....................................... 130 ...... 4.1 Business Macroeconomic 4 environment sophistication 3 Efficiency enhancers (35.0%) .................................... 121 ...... 3.4 2 Health and Higher education and training ....................................... 114 ...... 3.3 Market size 1 primary Goods market efficiency ................................................ 40 ...... 4.5 education Labor market efficiency .................................................. 61 ...... 4.4 Financial market development ........................................ 74 ...... 4.0 Technological Higher education readiness and training Technological readiness ................................................ 132 ...... 2.6 Market size ................................................................... 144 ...... 1.2 Financial market Goods market development ef�ciency Innovation and sophistication factors (5.0%) ............. 59 ...... 3.7 Labor market ef�ciency Business sophistication ................................................. 62 ...... 4.0 Liberia Factor-driven economies Innovation ....................................................................... 54 ...... 3.3 The most problematic factors for doing business Access to financing ................................................................. 19.6 Inadequately educated workforce ............................................ 13.3 Inadequate supply of infrastructure ............................................ 9.7 Corruption ................................................................................. 9.6 Poor public health ..................................................................... 7.8 Poor work ethic in national labor force....................................... 7.4 Tax rates.................................................................................... 5.8 Crime and theft ......................................................................... 5.5 Insufficient capacity to innovate ................................................. 4.0 Inflation ...................................................................................... 3.9 Inefficient government bureaucracy ........................................... 3.2 Policy instability ......................................................................... 2.7 Foreign currency regulations ...................................................... 2.1 Government instability/coups .................................................... 2.0 Restrictive labor regulations ....................................................... 2.0 Tax regulations .......................................................................... 1.4 0 5 10 15 20 25 30 Percent of responses Note: From the list of factors above, respondents were asked to select the five most problematic for doing business in their country and to rank them between 1 (most problematic) and 5. The bars in the figure show the responses weighted according to their rankings. 158 | The Africa Competitiveness Report 2013 Part 3: Competitiveness Profiles Liberia The Global Competitiveness Index in detail INDICATOR VALUE RANK/144 INDICATOR VALUE RANK/144 1st pillar: Institutions 6th pillar: Goods market efficiency 1.01 Property rights ....................................................... 4.4 ............62 6.01 Intensity of local competition .................................. 4.6 ............87 1.02 Intellectual property protection ............................... 4.6 ............37 6.02 Extent of market dominance .................................. 4.2 ............40 1.03 Diversion of public funds ........................................ 4.4 ............38 6.03 Effectiveness of anti-monopoly policy ..................... 4.1 ............67 1.04 Public trust in politicians ......................................... 4.1 ............25 6.04 Extent and effect of taxation................................... 4.0 ............33 1.05 Irregular payments and bribes ................................ 4.0 ............66 6.05 Total tax rate, % profits* ....................................... 43.7 ............90 1.06 Judicial independence............................................ 4.2 ............52 6.06 No. procedures to start a business* .......................... 4 ............20 1.07 Favoritism in decisions of government officials ....... 4.0 ............30 6.07 No. days to start a business* .................................... 6 ............16 1.08 Wastefulness of government spending ................... 4.3 ............22 6.08 Agricultural policy costs.......................................... 4.1 ............50 1.09 Burden of government regulation ........................... 4.3 ............15 6.09 Prevalence of trade barriers ................................... 4.6 ............49 1.10 Efficiency of legal framework in settling disputes .... 4.2 ............42 6.10 Trade tariffs, % duty* .............................................. n/a ...........n/a 1.11 Efficiency of legal framework in challenging regs. ... 4.2 ............38 6.11 Prevalence of foreign ownership............................. 4.4 ............87 1.12 Transparency of government policymaking............. 4.5 ............50 6.12 Business impact of rules on FDI ............................. 4.1 ..........106 1.13 Gov’t services for improved business performance... 3.8 ............59 6.13 Burden of customs procedures .............................. 4.5 ............43 1.14 Business costs of terrorism .................................... 5.3 ............89 6.14 Imports as a percentage of GDP* ........................ 95.4 ............11 1.15 Business costs of crime and violence..................... 4.5 ............92 6.15 Degree of customer orientation .............................. 4.5 ............75 1.16 Organized crime ..................................................... 4.9 ............91 6.16 Buyer sophistication ............................................... 3.9 ............38 1.17 Reliability of police services .................................... 4.0 ............79 1.18 Ethical behavior of firms ......................................... 4.4 ............44 7th pillar: Labor market efficiency 1.19 Strength of auditing and reporting standards ......... 4.4 ............78 7.01 Cooperation in labor-employer relations ................. 4.2 ............85 1.20 Efficacy of corporate boards .................................. 4.4 ............74 7.02 Flexibility of wage determination ............................. 4.7 ..........100 1.21 Protection of minority shareholders’ interests ......... 4.3 ............64 7.03 Hiring and firing practices ....................................... 4.0 ............66 1.22 Strength of investor protection, 0–10 (best)* .......... 3.7 ..........120 7.04 Redundancy costs, weeks of salary* ....................... 26 ..........110 7.05 Pay and productivity............................................... 4.2 ............48 2nd pillar: Infrastructure 7.06 Reliance on professional management ................... 4.3 ............65 2.01 Quality of overall infrastructure ............................... 4.2 ............75 7.07 Brain drain ............................................................. 3.8 ............49 2.02 Quality of roads ...................................................... 3.8 ............76 7.08 Women in labor force, ratio to men* ..................... 0.92 ............23 2.03 Quality of railroad infrastructure .............................. 2.9 ............59 2.04 Quality of port infrastructure ................................... 4.1 ............72 8th pillar: Financial market development 2.05 Quality of air transport infrastructure....................... 4.0 ............98 8.01 Availability of financial services ............................... 4.0 ............96 2.06 Available airline seat kms/week, millions* ............... 5.8 ..........139 8.02 Affordability of financial services ............................. 3.9 ............86 2.07 Quality of electricity supply ..................................... 3.0 ..........114 8.03 Financing through local equity market .................... 3.0 ............98 2.08 Mobile telephone subscriptions/100 pop.* ........... 49.2 ..........129 8.04 Ease of access to loans ......................................... 3.5 ............31 2.09 Fixed telephone lines/100 pop.* ............................. 0.1 ..........144 8.05 Venture capital availability ....................................... 3.4 ............25 8.06 Soundness of banks .............................................. 5.2 ............70 3rd pillar: Macroeconomic environment 8.07 Regulation of securities exchanges ........................ 3.1 ..........126 3.01 Government budget balance, % GDP* ..................-3.4 ............76 8.08 Legal rights index, 0–10 (best)* ................................. 7 ............43 3.02 Gross national savings, % GDP* ............................ n/a ...........n/a 3.03 Inflation, annual % change* .................................... 8.5 ..........114 9th pillar: Technological readiness 3.04 General government debt, % GDP* ..................... 13.9 ............18 9.01 Availability of latest technologies ............................ 4.0 ..........124 3.05 Country credit rating, 0–100 (best)* ...................... 16.3 ..........137 9.02 Firm-level technology absorption ............................ 4.5 ............89 9.03 FDI and technology transfer ................................... 3.8 ..........124 4th pillar: Health and primary education 9.04 Individuals using Internet, %* ................................. 3.0 ..........134 4.01 Business impact of malaria .................................... 3.9 ..........122 9.05 Broadband Internet subscriptions/100 pop.* .......... 0.0 ..........141 4.02 Malaria cases/100,000 pop.* ........................ 29,414.2 ..........136 9.06 Int’l Internet bandwidth, kb/s per user* .................. 0.6 ..........136 4.03 Business impact of tuberculosis ............................. 4.4 ..........110 9.07 Mobile broadband subscriptions/100 pop.*............ 0.2 ..........123 4.04 Tuberculosis cases/100,000 pop.* ..................... 293.0 ..........129 4.05 Business impact of HIV/AIDS ................................. 5.2 ............75 10th pillar: Market size 4.06 HIV prevalence, % adult pop.* ............................... 1.5 ..........117 10.01 Domestic market size index, 1–7 (best)*................. 1.1 ..........142 4.07 Infant mortality, deaths/1,000 live births* .............. 73.6 ..........133 10.02 Foreign market size index, 1–7 (best)* .................... 1.6 ..........141 4.08 Life expectancy, years*......................................... 56.1 ..........124 4.09 Quality of primary education ................................... 3.6 ............75 11th pillar: Business sophistication 4.10 Primary education enrollment, net %* .................. 75.2 ..........130 11.01 Local supplier quantity ........................................... 4.2 ..........108 11.02 Local supplier quality.............................................. 4.4 ............74 5th pillar: Higher education and training 11.03 State of cluster development.................................. 4.0 ............49 5.01 Secondary education enrollment, gross %* .......... 34.8 ..........130 11.04 Nature of competitive advantage ............................ 3.9 ............40 5.02 Tertiary education enrollment, gross %*................ 19.1 ............91 11.05 Value chain breadth................................................ 3.8 ............59 5.03 Quality of the educational system ........................... 4.0 ............56 11.06 Control of international distribution ......................... 4.0 ............70 5.04 Quality of math and science education .................. 3.7 ............87 11.07 Production process sophistication.......................... 3.8 ............59 5.05 Quality of management schools ............................. 4.2 ............69 11.08 Extent of marketing ................................................ 3.7 ............97 5.06 Internet access in schools ...................................... 3.2 ..........108 11.09 Willingness to delegate authority ............................ 3.9 ............52 5.07 Availability of research and training services ........... 4.0 ............79 5.08 Extent of staff training ............................................ 4.0 ............64 12th pillar: Innovation 12.01 Capacity for innovation........................................... 3.6 ............36 12.02 Quality of scientific research institutions ................. 3.5 ............80 12.03 Company spending on R&D................................... 3.5 ............40 12.04 University-industry collaboration in R&D ................. 3.5 ............74 12.05 Gov’t procurement of advanced tech products ...... 4.1 ............27 12.06 Availability of scientists and engineers .................... 3.6 ............97 12.07 PCT patents, applications/million pop.* .................. 0.0 ..........119 Notes: Values are on a 1-to-7 scale unless otherwise annotated with an asterisk (*). For further details and explanation, please refer to the section “How to Read the Competitiveness Profiles� on page 109. The Africa Competitiveness Report 2013 | 159 Part 3: Competitiveness Profiles Libya Key indicators, 2011 Population (millions) ................................................6.5 GDP (PPP) per capita (int’l $), 1990–2011 GDP (US$ billions)* ...............................................35.7 15,000 Lybia Middle East and North Africa GDP per capita (US$) ......................................5,510.0 GDP (PPP) as share (%) of world total ..................0.05 12,000 Sectoral value-added (% GDP), 2008 Agriculture ..............................................................1.9 9,000 Industry ................................................................78.2 Services ...............................................................19.9 6,000 Human Development Index, 2011 3,000 Score, (0–1) best ..................................................0.76 1991 1993 1995 1997 1999 2001 2003 2005 2007 2009 2011 Rank (out of 187 economies)...................................64 Sources: IMF; UNFPA; UNDP; World Bank The Global Competitiveness Index Rank Score Stage of development (out of 144) (1–7) GCI 2012–2013 ................................................ 113 ..... 3.7 Transition Transition GCI 2011–2012 (out of 142) .......................................... n/a ...... n/a 1 1–2 2 2–3 3 GCI 2010–2011 (out of 139) ......................................... 100 ...... 3.7 Factor Efficiency Innovation driven driven driven Basic requirements (57.9%) ....................................... 102 ...... 4.1 Institutions ...................................................................... 81 ...... 3.7 Institutions 7 Infrastructure .................................................................. 88 ...... 3.6 Innovation Infrastructure 6 Macroeconomic environment ......................................... 73 ...... 4.6 5 Health and primary education ....................................... 121 ...... 4.4 Business Macroeconomic 4 environment sophistication 3 Efficiency enhancers (36.6%) .................................... 131 ...... 3.2 2 Health and Higher education and training ....................................... 103 ...... 3.6 Market size 1 primary Goods market efficiency .............................................. 137 ...... 3.5 education Labor market efficiency ................................................ 137 ...... 3.5 Financial market development ...................................... 140 ...... 2.7 Technological Higher education readiness and training Technological readiness ................................................ 110 ...... 3.1 Market size ................................................................... 102 ...... 2.9 Financial market Goods market development ef�ciency Innovation and sophistication factors (5.5%) ........... 127 ...... 2.9 Labor market ef�ciency Business sophistication ............................................... 116 ...... 3.4 Lybia Economies in transition from 1 to 2 Innovation ..................................................................... 129 ...... 2.5 The most problematic factors for doing business Inefficient government bureaucracy ......................................... 14.4 Corruption ............................................................................... 13.0 Access to financing ................................................................... 9.9 Inadequately educated workforce .............................................. 9.7 Inadequate supply of infrastructure ............................................ 9.6 Policy instability ......................................................................... 8.8 Government instability/coups .................................................... 8.3 Restrictive labor regulations ....................................................... 6.2 Foreign currency regulations ...................................................... 5.5 Poor work ethic in national labor force....................................... 5.2 Tax regulations .......................................................................... 2.2 Tax rates.................................................................................... 2.1 Insufficient capacity to innovate ................................................. 1.9 Poor public health ..................................................................... 1.2 Crime and theft ......................................................................... 1.0 Inflation ...................................................................................... 0.9 0 5 10 15 20 25 30 Percent of responses Note: From the list of factors above, respondents were asked to select the five most problematic for doing business in their country and to rank them between 1 (most problematic) and 5. The bars in the figure show the responses weighted according to their rankings. 160 | The Africa Competitiveness Report 2013 Part 3: Competitiveness Profiles Libya The Global Competitiveness Index in detail INDICATOR VALUE RANK/144 INDICATOR VALUE RANK/144 1st pillar: Institutions 6th pillar: Goods market efficiency 1.01 Property rights ....................................................... 3.7 ..........101 6.01 Intensity of local competition .................................. 4.1 ..........115 1.02 Intellectual property protection ............................... 2.9 ..........111 6.02 Extent of market dominance .................................. 3.2 ..........119 1.03 Diversion of public funds ........................................ 2.9 ............90 6.03 Effectiveness of anti-monopoly policy ..................... 3.4 ..........117 1.04 Public trust in politicians ......................................... 3.5 ............39 6.04 Extent and effect of taxation................................... 3.8 ............47 1.05 Irregular payments and bribes ................................ 3.8 ............75 6.05 Total tax rate, % profits* ......................................... n/a ...........n/a 1.06 Judicial independence............................................ 3.4 ............84 6.06 No. procedures to start a business* ....................... n/a ...........n/a 1.07 Favoritism in decisions of government officials ....... 3.4 ............50 6.07 No. days to start a business* ................................. n/a ...........n/a 1.08 Wastefulness of government spending ................... 3.2 ............72 6.08 Agricultural policy costs.......................................... 3.1 ..........127 1.09 Burden of government regulation ........................... 3.4 ............61 6.09 Prevalence of trade barriers ................................... 3.8 ..........116 1.10 Efficiency of legal framework in settling disputes .... 3.2 ..........103 6.10 Trade tariffs, % duty* .............................................. n/a ...........n/a 1.11 Efficiency of legal framework in challenging regs. ... 3.3 ............88 6.11 Prevalence of foreign ownership............................. 2.8 ..........142 1.12 Transparency of government policymaking............. 4.0 ............92 6.12 Business impact of rules on FDI ............................. 3.8 ..........119 1.13 Gov’t services for improved business performance... 3.0 ..........116 6.13 Burden of customs procedures .............................. 3.3 ..........118 1.14 Business costs of terrorism .................................... 5.4 ............86 6.14 Imports as a percentage of GDP* ........................ 19.6 ..........139 1.15 Business costs of crime and violence..................... 5.6 ............31 6.15 Degree of customer orientation .............................. 3.8 ..........123 1.16 Organized crime ..................................................... 6.0 ............34 6.16 Buyer sophistication ............................................... 3.0 ..........105 1.17 Reliability of police services .................................... 3.3 ..........114 1.18 Ethical behavior of firms ......................................... 3.7 ............85 7th pillar: Labor market efficiency 1.19 Strength of auditing and reporting standards ......... 3.3 ..........136 7.01 Cooperation in labor-employer relations ................. 4.1 ............97 1.20 Efficacy of corporate boards .................................. 3.7 ..........140 7.02 Flexibility of wage determination ............................. 4.4 ..........113 1.21 Protection of minority shareholders’ interests ......... 3.1 ..........139 7.03 Hiring and firing practices ....................................... 4.0 ............67 1.22 Strength of investor protection, 0–10 (best)* .......... n/a ...........n/a 7.04 Redundancy costs, weeks of salary* ...................... n/a ...........n/a 7.05 Pay and productivity............................................... 3.3 ..........118 2nd pillar: Infrastructure 7.06 Reliance on professional management ................... 3.5 ..........123 2.01 Quality of overall infrastructure ............................... 2.9 ..........128 7.07 Brain drain ............................................................. 2.4 ..........125 2.02 Quality of roads ...................................................... 3.1 ..........102 7.08 Women in labor force, ratio to men* ..................... 0.40 ..........132 2.03 Quality of railroad infrastructure ........................ n/appl. ...........n/a 2.04 Quality of port infrastructure ................................... 3.5 ..........112 8th pillar: Financial market development 2.05 Quality of air transport infrastructure....................... 3.3 ..........129 8.01 Availability of financial services ............................... 2.8 ..........140 2.06 Available airline seat kms/week, millions* ............. 44.8 ..........101 8.02 Affordability of financial services ............................. 2.5 ..........143 2.07 Quality of electricity supply ..................................... 4.3 ............85 8.03 Financing through local equity market .................... 2.1 ..........133 2.08 Mobile telephone subscriptions/100 pop.* ......... 155.7 ............10 8.04 Ease of access to loans ......................................... 2.4 ..........101 2.09 Fixed telephone lines/100 pop.* ........................... 15.6 ............79 8.05 Venture capital availability ....................................... 2.3 ............93 8.06 Soundness of banks .............................................. 3.4 ..........139 3rd pillar: Macroeconomic environment 8.07 Regulation of securities exchanges ........................ 2.4 ..........136 3.01 Government budget balance, % GDP* ................... 6.2 ............11 8.08 Legal rights index, 0–10 (best)* .............................. n/a ...........n/a 3.02 Gross national savings, % GDP* .......................... 18.1 ............82 3.03 Inflation, annual % change* .................................. 14.1 ..........134 9th pillar: Technological readiness 3.04 General government debt, % GDP* ....................... 0.0 ..............1 9.01 Availability of latest technologies ............................ 3.9 ..........125 3.05 Country credit rating, 0–100 (best)* ...................... 31.6 ..........101 9.02 Firm-level technology absorption ............................ 4.3 ..........108 9.03 FDI and technology transfer ................................... 3.6 ..........136 4th pillar: Health and primary education 9.04 Individuals using Internet, %* ............................... 17.0 ..........103 4.01 Business impact of malaria .............................. n/appl. ..............1 9.05 Broadband Internet subscriptions/100 pop.* .......... 1.1 ..........100 4.02 Malaria cases/100,000 pop.* ................................(NE) ..............1 9.06 Int’l Internet bandwidth, kb/s per user* ................ 11.0 ............82 4.03 Business impact of tuberculosis ............................. 4.9 ............89 9.07 Mobile broadband subscriptions/100 pop.*............ 1.6 ..........104 4.04 Tuberculosis cases/100,000 pop.* ....................... 40.0 ............64 4.05 Business impact of HIV/AIDS ................................. 5.2 ............72 10th pillar: Market size 4.06 HIV prevalence, % adult pop.* ............................. <0.2 ............50 10.01 Domestic market size index, 1–7 (best)*................. 2.5 ..........111 4.07 Infant mortality, deaths/1,000 live births* .............. 13.4 ............63 10.02 Foreign market size index, 1–7 (best)* .................... 4.0 ............79 4.08 Life expectancy, years*......................................... 74.8 ............53 4.09 Quality of primary education ................................... 2.2 ..........134 11th pillar: Business sophistication 4.10 Primary education enrollment, net %* .................... n/a ...........n/a 11.01 Local supplier quantity ........................................... 4.8 ............63 11.02 Local supplier quality.............................................. 3.6 ..........130 5th pillar: Higher education and training 11.03 State of cluster development.................................. 2.8 ..........132 5.01 Secondary education enrollment, gross %* ........ 110.3 ............11 11.04 Nature of competitive advantage ............................ 2.6 ..........132 5.02 Tertiary education enrollment, gross %*................ 54.4 ............46 11.05 Value chain breadth................................................ 2.6 ..........136 5.03 Quality of the educational system ........................... 2.0 ..........142 11.06 Control of international distribution ......................... 3.9 ............84 5.04 Quality of math and science education .................. 2.4 ..........135 11.07 Production process sophistication.......................... 3.1 ..........116 5.05 Quality of management schools ............................. 2.3 ..........144 11.08 Extent of marketing ................................................ 3.0 ..........124 5.06 Internet access in schools ...................................... 2.2 ..........134 11.09 Willingness to delegate authority ............................ 3.7 ............74 5.07 Availability of research and training services ........... 2.4 ..........143 5.08 Extent of staff training ............................................ 2.9 ..........140 12th pillar: Innovation 12.01 Capacity for innovation........................................... 2.5 ..........123 12.02 Quality of scientific research institutions ................. 2.7 ..........122 12.03 Company spending on R&D................................... 2.2 ..........138 12.04 University-industry collaboration in R&D ................. 2.5 ..........133 12.05 Gov’t procurement of advanced tech products ...... 3.0 ..........118 12.06 Availability of scientists and engineers .................... 3.4 ..........118 12.07 PCT patents, applications/million pop.* .................. 0.5 ............75 Notes: Values are on a 1-to-7 scale unless otherwise annotated with an asterisk (*). For further details and explanation, please refer to the section “How to Read the Competitiveness Profiles� on page 109. The Africa Competitiveness Report 2013 | 161 Part 3: Competitiveness Profiles Madagascar Key indicators, 2011 Population (millions) ..............................................21.4 GDP (PPP) per capita (int’l $), 1990–2011 GDP (US$ billions)* .................................................9.9 2,500 Madagascar Sub-Saharan Africa GDP per capita (US$) .........................................453.1 GDP (PPP) as share (%) of world total ..................0.03 2,000 Sectoral value-added (% GDP), 2009 Agriculture ............................................................29.1 1,500 Industry ................................................................16.0 Services ...............................................................54.9 1,000 Human Development Index, 2011 500 Score, (0–1) best ..................................................0.48 1991 1993 1995 1997 1999 2001 2003 2005 2007 2009 2011 Rank (out of 187 economies).................................151 Sources: IMF; UNFPA; UNDP; World Bank The Global Competitiveness Index Rank Score Stage of development (out of 144) (1–7) GCI 2012–2013 ................................................ 130 ..... 3.4 Transition Transition GCI 2011–2012 (out of 142) ......................................... 130 ...... 3.4 1 1–2 2 2–3 3 GCI 2010–2011 (out of 139) ......................................... 124 ...... 3.5 Factor Efficiency Innovation driven driven driven Basic requirements (60.0%) ....................................... 129 ...... 3.5 Institutions .................................................................... 136 ...... 2.9 Institutions 7 Infrastructure ................................................................ 137 ...... 2.1 Innovation Infrastructure 6 Macroeconomic environment ......................................... 95 ...... 4.3 5 Health and primary education ....................................... 110 ...... 4.7 Business Macroeconomic 4 environment sophistication 3 Efficiency enhancers (35.0%) .................................... 132 ...... 3.2 2 Health and Higher education and training ....................................... 133 ...... 2.7 Market size 1 primary Goods market efficiency .............................................. 115 ...... 3.8 education Labor market efficiency .................................................. 54 ...... 4.5 Financial market development ...................................... 138 ...... 2.9 Technological Higher education readiness and training Technological readiness ................................................ 135 ...... 2.5 Market size ................................................................... 113 ...... 2.7 Financial market Goods market development ef�ciency Innovation and sophistication factors (5.0%) ........... 115 ...... 3.1 Labor market ef�ciency Business sophistication ............................................... 122 ...... 3.3 Madagascar Factor-driven economies Innovation ..................................................................... 106 ...... 2.9 The most problematic factors for doing business Policy instability ....................................................................... 18.5 Government instability/coups .................................................. 17.6 Access to financing ................................................................. 14.3 Corruption ............................................................................... 12.4 Crime and theft ......................................................................... 7.6 Inadequate supply of infrastructure ............................................ 6.3 Inflation ...................................................................................... 4.0 Tax regulations .......................................................................... 3.9 Inefficient government bureaucracy ........................................... 3.3 Insufficient capacity to innovate ................................................. 2.7 Inadequately educated workforce .............................................. 2.6 Poor work ethic in national labor force....................................... 2.6 Tax rates.................................................................................... 2.1 Restrictive labor regulations ....................................................... 1.0 Foreign currency regulations ...................................................... 0.7 Poor public health ..................................................................... 0.5 0 5 10 15 20 25 30 Percent of responses Note: From the list of factors above, respondents were asked to select the five most problematic for doing business in their country and to rank them between 1 (most problematic) and 5. The bars in the figure show the responses weighted according to their rankings. 162 | The Africa Competitiveness Report 2013 Part 3: Competitiveness Profiles Madagascar The Global Competitiveness Index in detail INDICATOR VALUE RANK/144 INDICATOR VALUE RANK/144 1st pillar: Institutions 6th pillar: Goods market efficiency 1.01 Property rights ....................................................... 2.6 ..........138 6.01 Intensity of local competition .................................. 4.4 ..........100 1.02 Intellectual property protection ............................... 2.4 ..........135 6.02 Extent of market dominance .................................. 3.3 ..........103 1.03 Diversion of public funds ........................................ 2.5 ..........124 6.03 Effectiveness of anti-monopoly policy ..................... 3.3 ..........127 1.04 Public trust in politicians ......................................... 1.8 ..........132 6.04 Extent and effect of taxation................................... 3.3 ............95 1.05 Irregular payments and bribes ................................ 2.9 ..........130 6.05 Total tax rate, % profits* ....................................... 36.6 ............65 1.06 Judicial independence............................................ 2.2 ..........135 6.06 No. procedures to start a business* .......................... 3 ..............8 1.07 Favoritism in decisions of government officials ....... 2.9 ............85 6.07 No. days to start a business* .................................... 8 ............34 1.08 Wastefulness of government spending ................... 2.2 ..........131 6.08 Agricultural policy costs.......................................... 3.2 ..........125 1.09 Burden of government regulation ........................... 2.9 ..........117 6.09 Prevalence of trade barriers ................................... 3.5 ..........133 1.10 Efficiency of legal framework in settling disputes .... 2.7 ..........125 6.10 Trade tariffs, % duty* .............................................. 7.9 ............91 1.11 Efficiency of legal framework in challenging regs. ... 2.8 ..........123 6.11 Prevalence of foreign ownership............................. 4.0 ..........114 1.12 Transparency of government policymaking............. 3.0 ..........141 6.12 Business impact of rules on FDI ............................. 3.8 ..........121 1.13 Gov’t services for improved business performance... 3.0 ..........114 6.13 Burden of customs procedures .............................. 3.3 ..........123 1.14 Business costs of terrorism .................................... 5.1 ..........104 6.14 Imports as a percentage of GDP* ........................ 39.6 ............89 1.15 Business costs of crime and violence..................... 3.3 ..........129 6.15 Degree of customer orientation .............................. 4.4 ............93 1.16 Organized crime ..................................................... 4.0 ..........123 6.16 Buyer sophistication ............................................... 2.1 ..........139 1.17 Reliability of police services .................................... 2.3 ..........140 1.18 Ethical behavior of firms ......................................... 3.1 ..........135 7th pillar: Labor market efficiency 1.19 Strength of auditing and reporting standards ......... 3.3 ..........134 7.01 Cooperation in labor-employer relations ................. 4.2 ............83 1.20 Efficacy of corporate boards .................................. 4.4 ............85 7.02 Flexibility of wage determination ............................. 4.9 ............81 1.21 Protection of minority shareholders’ interests ......... 3.1 ..........135 7.03 Hiring and firing practices ....................................... 4.3 ............45 1.22 Strength of investor protection, 0–10 (best)* .......... 5.7 ............52 7.04 Redundancy costs, weeks of salary* ....................... 12 ............52 7.05 Pay and productivity............................................... 3.8 ............82 2nd pillar: Infrastructure 7.06 Reliance on professional management ................... 3.7 ..........108 2.01 Quality of overall infrastructure ............................... 3.0 ..........125 7.07 Brain drain ............................................................. 2.7 ..........116 2.02 Quality of roads ...................................................... 2.5 ..........130 7.08 Women in labor force, ratio to men* ..................... 0.95 ..............8 2.03 Quality of railroad infrastructure .............................. 1.9 ............98 2.04 Quality of port infrastructure ................................... 3.2 ..........123 8th pillar: Financial market development 2.05 Quality of air transport infrastructure....................... 3.6 ..........114 8.01 Availability of financial services ............................... 3.4 ..........132 2.06 Available airline seat kms/week, millions* ............. 50.1 ............95 8.02 Affordability of financial services ............................. 3.2 ..........131 2.07 Quality of electricity supply ..................................... 2.2 ..........127 8.03 Financing through local equity market .................... 2.1 ..........136 2.08 Mobile telephone subscriptions/100 pop.* ........... 38.3 ..........138 8.04 Ease of access to loans ......................................... 2.6 ............83 2.09 Fixed telephone lines/100 pop.* ............................. 0.6 ..........132 8.05 Venture capital availability ....................................... 2.5 ............71 8.06 Soundness of banks .............................................. 4.4 ..........111 3rd pillar: Macroeconomic environment 8.07 Regulation of securities exchanges ........................ 2.4 ..........139 3.01 Government budget balance, % GDP* ..................-1.6 ............46 8.08 Legal rights index, 0–10 (best)* ................................. 2 ..........135 3.02 Gross national savings, % GDP* .......................... 17.9 ............83 3.03 Inflation, annual % change* .................................. 10.6 ..........125 9th pillar: Technological readiness 3.04 General government debt, % GDP* ....................... 5.7 ..............5 9.01 Availability of latest technologies ............................ 3.9 ..........128 3.05 Country credit rating, 0–100 (best)* ...................... 18.1 ..........133 9.02 Firm-level technology absorption ............................ 3.8 ..........132 9.03 FDI and technology transfer ................................... 3.8 ..........121 4th pillar: Health and primary education 9.04 Individuals using Internet, %* ................................. 1.9 ..........138 4.01 Business impact of malaria .................................... 3.6 ..........125 9.05 Broadband Internet subscriptions/100 pop.* .......... 0.0 ..........132 4.02 Malaria cases/100,000 pop.* .......................... 3,999.8 ..........119 9.06 Int’l Internet bandwidth, kb/s per user* .................. 5.7 ..........103 4.03 Business impact of tuberculosis ............................. 4.6 ..........103 9.07 Mobile broadband subscriptions/100 pop.*............ 0.1 ..........125 4.04 Tuberculosis cases/100,000 pop.* ..................... 266.0 ..........124 4.05 Business impact of HIV/AIDS ................................. 5.1 ............82 10th pillar: Market size 4.06 HIV prevalence, % adult pop.* ............................... 0.2 ............54 10.01 Domestic market size index, 1–7 (best)*................. 2.6 ..........107 4.07 Infant mortality, deaths/1,000 live births* .............. 43.1 ..........111 10.02 Foreign market size index, 1–7 (best)* .................... 3.0 ..........119 4.08 Life expectancy, years*......................................... 66.5 ..........107 4.09 Quality of primary education ................................... 2.8 ..........121 11th pillar: Business sophistication 4.10 Primary education enrollment, net %* .................. 79.2 ..........126 11.01 Local supplier quantity ........................................... 4.5 ............86 11.02 Local supplier quality.............................................. 3.8 ..........121 5th pillar: Higher education and training 11.03 State of cluster development.................................. 2.8 ..........130 5.01 Secondary education enrollment, gross %* .......... 31.1 ..........133 11.04 Nature of competitive advantage ............................ 3.1 ............99 5.02 Tertiary education enrollment, gross %*.................. 3.7 ..........132 11.05 Value chain breadth................................................ 3.0 ..........112 5.03 Quality of the educational system ........................... 3.0 ..........117 11.06 Control of international distribution ......................... 3.1 ..........134 5.04 Quality of math and science education .................. 3.8 ............82 11.07 Production process sophistication.......................... 2.7 ..........125 5.05 Quality of management schools ............................. 3.9 ............90 11.08 Extent of marketing ................................................ 3.0 ..........123 5.06 Internet access in schools ...................................... 2.2 ..........133 11.09 Willingness to delegate authority ............................ 3.2 ..........114 5.07 Availability of research and training services ........... 3.2 ..........123 5.08 Extent of staff training ............................................ 3.4 ..........113 12th pillar: Innovation 12.01 Capacity for innovation........................................... 2.8 ............97 12.02 Quality of scientific research institutions ................. 3.0 ..........109 12.03 Company spending on R&D................................... 2.9 ............93 12.04 University-industry collaboration in R&D ................. 3.2 ..........103 12.05 Gov’t procurement of advanced tech products ...... 3.1 ..........111 12.06 Availability of scientists and engineers .................... 4.4 ............47 12.07 PCT patents, applications/million pop.* .................. 0.0 ..........119 Notes: Values are on a 1-to-7 scale unless otherwise annotated with an asterisk (*). For further details and explanation, please refer to the section “How to Read the Competitiveness Profiles� on page 109. The Africa Competitiveness Report 2013 | 163 Part 3: Competitiveness Profiles Malawi Key indicators, 2011 Population (millions) ..............................................15.4 GDP (PPP) per capita (int’l $), 1990–2011 GDP (US$ billions)* .................................................5.6 2,500 Malawi Sub-Saharan Africa GDP per capita (US$) .........................................346.8 GDP (PPP) as share (%) of world total ..................0.02 2,000 Sectoral value-added (% GDP), 2009 1,500 Agriculture ............................................................30.5 1,000 Industry ................................................................16.1 Services ...............................................................53.4 500 Human Development Index, 2011 0 Score, (0–1) best ..................................................0.40 1991 1993 1995 1997 1999 2001 2003 2005 2007 2009 2011 Rank (out of 187 economies).................................171 Sources: IMF; UNFPA; UNDP; World Bank The Global Competitiveness Index Rank Score Stage of development (out of 144) (1–7) GCI 2012–2013 ................................................ 129 ..... 3.4 Transition Transition GCI 2011–2012 (out of 142) ......................................... 117 ...... 3.6 1 1–2 2 2–3 3 GCI 2010–2011 (out of 139) ......................................... 125 ...... 3.4 Factor Efficiency Innovation driven driven driven Basic requirements (60.0%) ....................................... 135 ...... 3.4 Institutions ...................................................................... 76 ...... 3.8 Institutions 7 Infrastructure ................................................................ 135 ...... 2.2 Innovation Infrastructure 6 Macroeconomic environment ....................................... 136 ...... 3.3 5 Health and primary education ....................................... 124 ...... 4.3 Business Macroeconomic 4 environment sophistication 3 Efficiency enhancers (35.0%) .................................... 120 ...... 3.4 2 Health and Higher education and training ....................................... 129 ...... 2.8 Market size 1 primary Goods market efficiency .............................................. 112 ...... 3.9 education Labor market efficiency .................................................. 43 ...... 4.6 Financial market development ........................................ 75 ...... 4.0 Technological Higher education readiness and training Technological readiness ................................................ 134 ...... 2.5 Market size ................................................................... 123 ...... 2.4 Financial market Goods market development ef�ciency Innovation and sophistication factors (5.0%) ........... 109 ...... 3.2 Labor market ef�ciency Business sophistication ............................................... 115 ...... 3.4 Malawi Factor-driven economies Innovation ....................................................................... 99 ...... 2.9 The most problematic factors for doing business Foreign currency regulations .................................................... 25.9 Access to financing ................................................................. 12.3 Inadequate supply of infrastructure .......................................... 11.5 Tax rates.................................................................................. 10.7 Policy instability ......................................................................... 7.5 Corruption ................................................................................. 6.5 Tax regulations .......................................................................... 5.3 Inefficient government bureaucracy ........................................... 4.7 Inadequately educated workforce .............................................. 3.5 Inflation ...................................................................................... 2.8 Poor work ethic in national labor force....................................... 2.8 Insufficient capacity to innovate ................................................. 2.2 Crime and theft ......................................................................... 1.9 Restrictive labor regulations ....................................................... 1.8 Poor public health ..................................................................... 0.6 Government instability/coups .................................................... 0.0 0 5 10 15 20 25 30 Percent of responses Note: From the list of factors above, respondents were asked to select the five most problematic for doing business in their country and to rank them between 1 (most problematic) and 5. The bars in the figure show the responses weighted according to their rankings. 164 | The Africa Competitiveness Report 2013 Part 3: Competitiveness Profiles Malawi The Global Competitiveness Index in detail INDICATOR VALUE RANK/144 INDICATOR VALUE RANK/144 1st pillar: Institutions 6th pillar: Goods market efficiency 1.01 Property rights ....................................................... 3.9 ............88 6.01 Intensity of local competition .................................. 3.9 ..........126 1.02 Intellectual property protection ............................... 3.6 ............72 6.02 Extent of market dominance .................................. 3.2 ..........116 1.03 Diversion of public funds ........................................ 3.1 ............73 6.03 Effectiveness of anti-monopoly policy ..................... 3.9 ............77 1.04 Public trust in politicians ......................................... 2.7 ............73 6.04 Extent and effect of taxation................................... 2.9 ..........120 1.05 Irregular payments and bribes ................................ 3.4 ............97 6.05 Total tax rate, % profits* ....................................... 28.2 ............30 1.06 Judicial independence............................................ 4.1 ............54 6.06 No. procedures to start a business* ........................ 10 ..........110 1.07 Favoritism in decisions of government officials ....... 2.7 ..........101 6.07 No. days to start a business* .................................. 39 ..........117 1.08 Wastefulness of government spending ................... 2.9 ............94 6.08 Agricultural policy costs.......................................... 3.5 ..........109 1.09 Burden of government regulation ........................... 3.3 ............79 6.09 Prevalence of trade barriers ................................... 4.1 ............87 1.10 Efficiency of legal framework in settling disputes .... 4.0 ............52 6.10 Trade tariffs, % duty* ............................................ 10.2 ..........105 1.11 Efficiency of legal framework in challenging regs. ... 3.9 ............51 6.11 Prevalence of foreign ownership............................. 4.6 ............72 1.12 Transparency of government policymaking............. 3.9 ..........103 6.12 Business impact of rules on FDI ............................. 4.1 ..........107 1.13 Gov’t services for improved business performance... 3.1 ..........103 6.13 Burden of customs procedures .............................. 3.3 ..........121 1.14 Business costs of terrorism .................................... 5.6 ............61 6.14 Imports as a percentage of GDP* ........................ 41.9 ............80 1.15 Business costs of crime and violence..................... 4.3 ............99 6.15 Degree of customer orientation .............................. 4.5 ............80 1.16 Organized crime ..................................................... 5.4 ............61 6.16 Buyer sophistication ............................................... 2.7 ..........122 1.17 Reliability of police services .................................... 3.8 ............91 1.18 Ethical behavior of firms ......................................... 3.8 ............77 7th pillar: Labor market efficiency 1.19 Strength of auditing and reporting standards ......... 4.8 ............56 7.01 Cooperation in labor-employer relations ................. 4.1 ............91 1.20 Efficacy of corporate boards .................................. 4.5 ............73 7.02 Flexibility of wage determination ............................. 5.4 ............32 1.21 Protection of minority shareholders’ interests ......... 4.4 ............55 7.03 Hiring and firing practices ....................................... 4.1 ............58 1.22 Strength of investor protection, 0–10 (best)* .......... 5.3 ............65 7.04 Redundancy costs, weeks of salary* ....................... 17 ............78 7.05 Pay and productivity............................................... 3.6 ............91 2nd pillar: Infrastructure 7.06 Reliance on professional management ................... 4.2 ............68 2.01 Quality of overall infrastructure ............................... 3.2 ..........116 7.07 Brain drain ............................................................. 3.3 ............86 2.02 Quality of roads ...................................................... 3.4 ............89 7.08 Women in labor force, ratio to men* ..................... 1.06 ..............1 2.03 Quality of railroad infrastructure .............................. 2.2 ............84 2.04 Quality of port infrastructure ................................... 3.7 ............94 8th pillar: Financial market development 2.05 Quality of air transport infrastructure....................... 3.1 ..........133 8.01 Availability of financial services ............................... 3.8 ..........104 2.06 Available airline seat kms/week, millions* ............... 5.8 ..........140 8.02 Affordability of financial services ............................. 3.9 ............89 2.07 Quality of electricity supply ..................................... 2.2 ..........128 8.03 Financing through local equity market .................... 3.9 ............48 2.08 Mobile telephone subscriptions/100 pop.* ........... 25.1 ..........142 8.04 Ease of access to loans ......................................... 2.3 ..........112 2.09 Fixed telephone lines/100 pop.* ............................. 1.1 ..........126 8.05 Venture capital availability ....................................... 2.0 ..........125 8.06 Soundness of banks .............................................. 5.4 ............56 3rd pillar: Macroeconomic environment 8.07 Regulation of securities exchanges ........................ 3.8 ............93 3.01 Government budget balance, % GDP* ..................-7.9 ..........133 8.08 Legal rights index, 0–10 (best)* ................................. 7 ............43 3.02 Gross national savings, % GDP* .......................... 11.6 ..........118 3.03 Inflation, annual % change* .................................... 7.6 ..........103 9th pillar: Technological readiness 3.04 General government debt, % GDP* ..................... 42.5 ............78 9.01 Availability of latest technologies ............................ 4.1 ..........120 3.05 Country credit rating, 0–100 (best)* ...................... 19.9 ..........128 9.02 Firm-level technology absorption ............................ 3.8 ..........134 9.03 FDI and technology transfer ................................... 3.9 ..........115 4th pillar: Health and primary education 9.04 Individuals using Internet, %* ................................. 3.3 ..........132 4.01 Business impact of malaria .................................... 2.5 ..........139 9.05 Broadband Internet subscriptions/100 pop.* .......... 0.1 ..........125 4.02 Malaria cases/100,000 pop.* ........................ 31,168.8 ..........137 9.06 Int’l Internet bandwidth, kb/s per user* .................. 1.4 ..........130 4.03 Business impact of tuberculosis ............................. 3.4 ..........134 9.07 Mobile broadband subscriptions/100 pop.*............ 3.1 ............94 4.04 Tuberculosis cases/100,000 pop.* ..................... 219.0 ..........118 4.05 Business impact of HIV/AIDS ................................. 2.6 ..........143 10th pillar: Market size 4.06 HIV prevalence, % adult pop.* ............................. 11.0 ..........136 10.01 Domestic market size index, 1–7 (best)*................. 2.3 ..........125 4.07 Infant mortality, deaths/1,000 live births* .............. 58.1 ..........123 10.02 Foreign market size index, 1–7 (best)* .................... 2.7 ..........131 4.08 Life expectancy, years*......................................... 53.5 ..........131 4.09 Quality of primary education ................................... 3.0 ..........112 11th pillar: Business sophistication 4.10 Primary education enrollment, net %* .................. 96.9 ............42 11.01 Local supplier quantity ........................................... 4.3 ..........105 11.02 Local supplier quality.............................................. 4.0 ..........106 5th pillar: Higher education and training 11.03 State of cluster development.................................. 3.3 ............97 5.01 Secondary education enrollment, gross %* .......... 32.1 ..........132 11.04 Nature of competitive advantage ............................ 2.7 ..........121 5.02 Tertiary education enrollment, gross %*.................. 0.7 ..........140 11.05 Value chain breadth................................................ 2.7 ..........132 5.03 Quality of the educational system ........................... 3.8 ............65 11.06 Control of international distribution ......................... 3.9 ............89 5.04 Quality of math and science education .................. 3.6 ............96 11.07 Production process sophistication.......................... 2.6 ..........131 5.05 Quality of management schools ............................. 3.7 ..........100 11.08 Extent of marketing ................................................ 2.9 ..........128 5.06 Internet access in schools ...................................... 2.6 ..........124 11.09 Willingness to delegate authority ............................ 3.6 ............84 5.07 Availability of research and training services ........... 3.5 ..........108 5.08 Extent of staff training ............................................ 3.7 ............94 12th pillar: Innovation 12.01 Capacity for innovation........................................... 2.8 ..........100 12.02 Quality of scientific research institutions ................. 3.4 ............89 12.03 Company spending on R&D................................... 2.6 ..........117 12.04 University-industry collaboration in R&D ................. 3.5 ............75 12.05 Gov’t procurement of advanced tech products ...... 3.3 ............91 12.06 Availability of scientists and engineers .................... 3.6 ..........100 12.07 PCT patents, applications/million pop.* .................. 0.0 ..........119 Notes: Values are on a 1-to-7 scale unless otherwise annotated with an asterisk (*). For further details and explanation, please refer to the section “How to Read the Competitiveness Profiles� on page 109. The Africa Competitiveness Report 2013 | 165 Part 3: Competitiveness Profiles Mali Key indicators, 2011 Population (millions) ..............................................15.9 GDP (PPP) per capita (int’l $), 1990–2011 GDP (US$ billions)* ...............................................10.6 2,500 Mali Sub-Saharan Africa GDP per capita (US$) .........................................669.1 GDP (PPP) as share (%) of world total ..................0.02 2,000 Sectoral value-added (% GDP), 2006 1,500 Agriculture ............................................................36.5 1,000 Industry ................................................................24.0 Services ...............................................................39.1 500 Human Development Index, 2011 0 Score, (0–1) best ..................................................0.36 1991 1993 1995 1997 1999 2001 2003 2005 2007 2009 2011 Rank (out of 187 economies).................................175 Sources: IMF; UNFPA; UNDP; World Bank The Global Competitiveness Index Rank Score Stage of development (out of 144) (1–7) GCI 2012–2013 ................................................ 128 ..... 3.4 Transition Transition GCI 2011–2012 (out of 142) ......................................... 128 ...... 3.4 1 1–2 2 2–3 3 GCI 2010–2011 (out of 139) ......................................... 132 ...... 3.3 Factor Efficiency Innovation driven driven driven Basic requirements (60.0%) ....................................... 125 ...... 3.6 Institutions .................................................................... 120 ...... 3.3 Institutions 7 Infrastructure ................................................................ 107 ...... 3.0 Innovation Infrastructure 6 Macroeconomic environment ......................................... 74 ...... 4.6 5 Health and primary education ....................................... 141 ...... 3.4 Business Macroeconomic 4 environment sophistication 3 Efficiency enhancers (35.0%) .................................... 127 ...... 3.3 2 Health and Higher education and training ....................................... 130 ...... 2.8 Market size 1 primary Goods market efficiency .............................................. 111 ...... 3.9 education Labor market efficiency ................................................ 118 ...... 3.9 Financial market development ...................................... 113 ...... 3.5 Technological Higher education readiness and training Technological readiness ................................................ 119 ...... 2.9 Market size ................................................................... 118 ...... 2.6 Financial market Goods market development ef�ciency Innovation and sophistication factors (5.0%) ........... 114 ...... 3.1 Labor market ef�ciency Business sophistication ............................................... 126 ...... 3.2 Mali Factor-driven economies Innovation ....................................................................... 88 ...... 3.0 The most problematic factors for doing business Access to financing ................................................................. 24.6 Corruption ............................................................................... 15.8 Inadequate supply of infrastructure ............................................ 9.4 Inefficient government bureaucracy ........................................... 9.4 Inadequately educated workforce .............................................. 7.2 Tax rates.................................................................................... 5.1 Tax regulations .......................................................................... 4.7 Poor work ethic in national labor force....................................... 4.4 Policy instability ......................................................................... 3.9 Government instability/coups .................................................... 3.6 Restrictive labor regulations ....................................................... 3.4 Foreign currency regulations ...................................................... 3.1 Crime and theft ......................................................................... 2.6 Insufficient capacity to innovate ................................................. 1.4 Inflation ...................................................................................... 0.7 Poor public health ..................................................................... 0.7 0 5 10 15 20 25 30 Percent of responses Note: From the list of factors above, respondents were asked to select the five most problematic for doing business in their country and to rank them between 1 (most problematic) and 5. The bars in the figure show the responses weighted according to their rankings. 166 | The Africa Competitiveness Report 2013 Part 3: Competitiveness Profiles Mali The Global Competitiveness Index in detail INDICATOR VALUE RANK/144 INDICATOR VALUE RANK/144 1st pillar: Institutions 6th pillar: Goods market efficiency 1.01 Property rights ....................................................... 3.6 ..........108 6.01 Intensity of local competition .................................. 4.2 ..........110 1.02 Intellectual property protection ............................... 2.9 ..........109 6.02 Extent of market dominance .................................. 3.7 ............68 1.03 Diversion of public funds ........................................ 2.5 ..........116 6.03 Effectiveness of anti-monopoly policy ..................... 3.9 ............76 1.04 Public trust in politicians ......................................... 2.6 ............82 6.04 Extent and effect of taxation................................... 3.1 ..........106 1.05 Irregular payments and bribes ................................ 2.4 ..........139 6.05 Total tax rate, % profits* ....................................... 51.8 ..........113 1.06 Judicial independence............................................ 2.8 ..........111 6.06 No. procedures to start a business* .......................... 4 ............20 1.07 Favoritism in decisions of government officials ....... 2.8 ............93 6.07 No. days to start a business* .................................... 8 ............34 1.08 Wastefulness of government spending ................... 3.2 ............74 6.08 Agricultural policy costs.......................................... 3.9 ............64 1.09 Burden of government regulation ........................... 3.5 ............56 6.09 Prevalence of trade barriers ................................... 3.8 ..........117 1.10 Efficiency of legal framework in settling disputes .... 3.5 ............85 6.10 Trade tariffs, % duty* ............................................ 11.4 ..........117 1.11 Efficiency of legal framework in challenging regs. ... 3.5 ............82 6.11 Prevalence of foreign ownership............................. 4.0 ..........115 1.12 Transparency of government policymaking............. 3.7 ..........117 6.12 Business impact of rules on FDI ............................. 4.2 ..........103 1.13 Gov’t services for improved business performance... 3.8 ............65 6.13 Burden of customs procedures .............................. 4.1 ............70 1.14 Business costs of terrorism .................................... 4.0 ..........132 6.14 Imports as a percentage of GDP* ........................ 39.6 ............88 1.15 Business costs of crime and violence..................... 4.2 ..........103 6.15 Degree of customer orientation .............................. 4.1 ..........113 1.16 Organized crime ..................................................... 4.4 ..........109 6.16 Buyer sophistication ............................................... 2.3 ..........136 1.17 Reliability of police services .................................... 3.6 ..........103 1.18 Ethical behavior of firms ......................................... 3.5 ..........110 7th pillar: Labor market efficiency 1.19 Strength of auditing and reporting standards ......... 3.2 ..........139 7.01 Cooperation in labor-employer relations ................. 4.2 ............78 1.20 Efficacy of corporate boards .................................. 3.8 ..........135 7.02 Flexibility of wage determination ............................. 4.6 ..........104 1.21 Protection of minority shareholders’ interests ......... 3.8 ..........101 7.03 Hiring and firing practices ....................................... 3.9 ............77 1.22 Strength of investor protection, 0–10 (best)* .......... 3.7 ..........120 7.04 Redundancy costs, weeks of salary* ....................... 14 ............62 7.05 Pay and productivity............................................... 3.3 ..........115 2nd pillar: Infrastructure 7.06 Reliance on professional management ................... 3.3 ..........136 2.01 Quality of overall infrastructure ............................... 3.8 ............89 7.07 Brain drain ............................................................. 3.0 ..........102 2.02 Quality of roads ...................................................... 3.6 ............82 7.08 Women in labor force, ratio to men* ..................... 0.53 ..........124 2.03 Quality of railroad infrastructure .............................. 2.7 ............61 2.04 Quality of port infrastructure ................................... 4.1 ............74 8th pillar: Financial market development 2.05 Quality of air transport infrastructure....................... 4.2 ............92 8.01 Availability of financial services ............................... 3.8 ..........112 2.06 Available airline seat kms/week, millions* ............. 23.6 ..........115 8.02 Affordability of financial services ............................. 3.8 ............94 2.07 Quality of electricity supply ..................................... 3.5 ..........109 8.03 Financing through local equity market .................... 3.1 ............93 2.08 Mobile telephone subscriptions/100 pop.* ........... 68.3 ..........119 8.04 Ease of access to loans ......................................... 2.4 ............99 2.09 Fixed telephone lines/100 pop.* ............................. 0.7 ..........131 8.05 Venture capital availability ....................................... 2.3 ............92 8.06 Soundness of banks .............................................. 4.4 ..........112 3rd pillar: Macroeconomic environment 8.07 Regulation of securities exchanges ........................ 2.9 ..........131 3.01 Government budget balance, % GDP* ..................-1.3 ............42 8.08 Legal rights index, 0–10 (best)* ................................. 6 ............65 3.02 Gross national savings, % GDP* .......................... 10.2 ..........125 3.03 Inflation, annual % change* .................................... 3.1 ............27 9th pillar: Technological readiness 3.04 General government debt, % GDP* ..................... 30.6 ............43 9.01 Availability of latest technologies ............................ 4.5 ............99 3.05 Country credit rating, 0–100 (best)* ...................... 23.7 ..........119 9.02 Firm-level technology absorption ............................ 4.5 ............87 9.03 FDI and technology transfer ................................... 4.3 ............93 4th pillar: Health and primary education 9.04 Individuals using Internet, %* ................................. 2.0 ..........137 4.01 Business impact of malaria .................................... 2.1 ..........143 9.05 Broadband Internet subscriptions/100 pop.* .......... 0.0 ..........136 4.02 Malaria cases/100,000 pop.* ........................ 18,093.2 ..........125 9.06 Int’l Internet bandwidth, kb/s per user* .................. 4.9 ..........106 4.03 Business impact of tuberculosis ............................. 4.4 ..........111 9.07 Mobile broadband subscriptions/100 pop.*............ 0.4 ..........118 4.04 Tuberculosis cases/100,000 pop.* ....................... 68.0 ............79 4.05 Business impact of HIV/AIDS ................................. 4.0 ..........121 10th pillar: Market size 4.06 HIV prevalence, % adult pop.* ............................... 1.0 ..........105 10.01 Domestic market size index, 1–7 (best)*................. 2.5 ..........117 4.07 Infant mortality, deaths/1,000 live births* .............. 99.2 ..........143 10.02 Foreign market size index, 1–7 (best)* .................... 2.9 ..........120 4.08 Life expectancy, years*......................................... 51.0 ..........136 4.09 Quality of primary education ................................... 2.5 ..........127 11th pillar: Business sophistication 4.10 Primary education enrollment, net %* .................. 62.9 ..........137 11.01 Local supplier quantity ........................................... 5.0 ............45 11.02 Local supplier quality.............................................. 3.9 ..........110 5th pillar: Higher education and training 11.03 State of cluster development.................................. 3.1 ..........113 5.01 Secondary education enrollment, gross %* .......... 39.4 ..........123 11.04 Nature of competitive advantage ............................ 2.8 ..........117 5.02 Tertiary education enrollment, gross %*.................. 6.1 ..........121 11.05 Value chain breadth................................................ 2.9 ..........123 5.03 Quality of the educational system ........................... 2.9 ..........118 11.06 Control of international distribution ......................... 3.3 ..........128 5.04 Quality of math and science education .................. 2.8 ..........121 11.07 Production process sophistication.......................... 2.7 ..........129 5.05 Quality of management schools ............................. 3.3 ..........122 11.08 Extent of marketing ................................................ 2.5 ..........138 5.06 Internet access in schools ...................................... 3.3 ..........106 11.09 Willingness to delegate authority ............................ 2.8 ..........137 5.07 Availability of research and training services ........... 3.6 ..........101 5.08 Extent of staff training ............................................ 3.1 ..........131 12th pillar: Innovation 12.01 Capacity for innovation........................................... 2.7 ..........111 12.02 Quality of scientific research institutions ................. 3.6 ............66 12.03 Company spending on R&D................................... 2.8 ..........101 12.04 University-industry collaboration in R&D ................. 3.1 ..........111 12.05 Gov’t procurement of advanced tech products ...... 3.7 ............54 12.06 Availability of scientists and engineers .................... 4.1 ............65 12.07 PCT patents, applications/million pop.* .................. 0.0 ..........119 Notes: Values are on a 1-to-7 scale unless otherwise annotated with an asterisk (*). For further details and explanation, please refer to the section “How to Read the Competitiveness Profiles� on page 109. The Africa Competitiveness Report 2013 | 167 Part 3: Competitiveness Profiles Mauritania Key indicators, 2011 Population (millions) ................................................3.5 GDP (PPP) per capita (int’l $), 1990–2011 GDP (US$ billions)* .................................................4.2 10,000 Mauritania Middle East and North Africa GDP per capita (US$) ......................................1,184.9 GDP (PPP) as share (%) of world total ..................0.01 8,000 Sectoral value-added (% GDP), 2011 6,000 Agriculture ............................................................16.3 4,000 Industry ................................................................46.2 Services ...............................................................37.5 2,000 Human Development Index, 2011 0 Score, (0–1) best ..................................................0.45 1991 1993 1995 1997 1999 2001 2003 2005 2007 2009 2011 Rank (out of 187 economies).................................159 Sources: IMF; UNFPA; UNDP; World Bank The Global Competitiveness Index Rank Score Stage of development (out of 144) (1–7) GCI 2012–2013 ................................................ 134 ..... 3.3 Transition Transition GCI 2011–2012 (out of 142) ......................................... 137 ...... 3.2 1 1–2 2 2–3 3 GCI 2010–2011 (out of 139) ......................................... 135 ...... 3.1 Factor Efficiency Innovation driven driven driven Basic requirements (60.0%) ....................................... 124 ...... 3.6 Institutions .................................................................... 122 ...... 3.3 Institutions 7 Infrastructure ................................................................ 113 ...... 2.8 Innovation Infrastructure 6 Macroeconomic environment ......................................... 89 ...... 4.4 5 Health and primary education ....................................... 133 ...... 3.9 Business Macroeconomic 4 environment sophistication 3 Efficiency enhancers (35.0%) .................................... 142 ...... 2.9 2 Health and Higher education and training ....................................... 142 ...... 2.2 Market size 1 primary Goods market efficiency .............................................. 135 ...... 3.6 education Labor market efficiency ................................................ 131 ...... 3.6 Financial market development ...................................... 136 ...... 3.0 Technological Higher education readiness and training Technological readiness ................................................ 123 ...... 2.7 Market size ................................................................... 131 ...... 2.1 Financial market Goods market development ef�ciency Innovation and sophistication factors (5.0%) ........... 118 ...... 3.0 Labor market ef�ciency Business sophistication ............................................... 117 ...... 3.4 Mauritania Factor-driven economies Innovation ..................................................................... 121 ...... 2.7 The most problematic factors for doing business Access to financing ................................................................. 26.5 Corruption ............................................................................... 10.0 Inadequately educated workforce .............................................. 9.9 Policy instability ......................................................................... 8.5 Government instability/coups .................................................... 7.5 Inadequate supply of infrastructure ............................................ 7.2 Inefficient government bureaucracy ........................................... 5.7 Restrictive labor regulations ....................................................... 5.5 Foreign currency regulations ...................................................... 5.0 Inflation ...................................................................................... 4.0 Poor work ethic in national labor force....................................... 4.0 Tax rates.................................................................................... 2.6 Tax regulations .......................................................................... 1.7 Insufficient capacity to innovate ................................................. 0.8 Crime and theft ......................................................................... 0.7 Poor public health ..................................................................... 0.5 0 5 10 15 20 25 30 Percent of responses Note: From the list of factors above, respondents were asked to select the five most problematic for doing business in their country and to rank them between 1 (most problematic) and 5. The bars in the figure show the responses weighted according to their rankings. 168 | The Africa Competitiveness Report 2013 Part 3: Competitiveness Profiles Mauritania The Global Competitiveness Index in detail INDICATOR VALUE RANK/144 INDICATOR VALUE RANK/144 1st pillar: Institutions 6th pillar: Goods market efficiency 1.01 Property rights ....................................................... 3.4 ..........117 6.01 Intensity of local competition .................................. 3.9 ..........125 1.02 Intellectual property protection ............................... 2.9 ..........107 6.02 Extent of market dominance .................................. 3.1 ..........122 1.03 Diversion of public funds ........................................ 2.6 ..........111 6.03 Effectiveness of anti-monopoly policy ..................... 3.5 ..........107 1.04 Public trust in politicians ......................................... 2.5 ............87 6.04 Extent and effect of taxation................................... 3.7 ............50 1.05 Irregular payments and bribes ................................ 3.0 ..........122 6.05 Total tax rate, % profits* ....................................... 68.3 ..........132 1.06 Judicial independence............................................ 2.8 ..........108 6.06 No. procedures to start a business* .......................... 9 ............97 1.07 Favoritism in decisions of government officials ....... 2.1 ..........140 6.07 No. days to start a business* .................................. 19 ............80 1.08 Wastefulness of government spending ................... 2.4 ..........117 6.08 Agricultural policy costs.......................................... 3.4 ..........112 1.09 Burden of government regulation ........................... 4.1 ............24 6.09 Prevalence of trade barriers ................................... 4.6 ............43 1.10 Efficiency of legal framework in settling disputes .... 3.3 ............92 6.10 Trade tariffs, % duty* ............................................ 11.5 ..........121 1.11 Efficiency of legal framework in challenging regs. ... 3.6 ............72 6.11 Prevalence of foreign ownership............................. 3.3 ..........134 1.12 Transparency of government policymaking............. 3.5 ..........131 6.12 Business impact of rules on FDI ............................. 4.0 ..........112 1.13 Gov’t services for improved business performance... 3.4 ............84 6.13 Burden of customs procedures .............................. 4.0 ............75 1.14 Business costs of terrorism .................................... 4.5 ..........122 6.14 Imports as a percentage of GDP* ........................ 69.0 ............33 1.15 Business costs of crime and violence..................... 5.3 ............50 6.15 Degree of customer orientation .............................. 3.7 ..........133 1.16 Organized crime ..................................................... 5.7 ............53 6.16 Buyer sophistication ............................................... 2.3 ..........135 1.17 Reliability of police services .................................... 2.9 ..........130 1.18 Ethical behavior of firms ......................................... 3.1 ..........128 7th pillar: Labor market efficiency 1.19 Strength of auditing and reporting standards ......... 3.2 ..........138 7.01 Cooperation in labor-employer relations ................. 3.3 ..........138 1.20 Efficacy of corporate boards .................................. 3.9 ..........128 7.02 Flexibility of wage determination ............................. 5.2 ............60 1.21 Protection of minority shareholders’ interests ......... 3.6 ..........118 7.03 Hiring and firing practices ....................................... 4.6 ............29 1.22 Strength of investor protection, 0–10 (best)* .......... 3.7 ..........120 7.04 Redundancy costs, weeks of salary* ....................... 10 ............43 7.05 Pay and productivity............................................... 2.5 ..........142 2nd pillar: Infrastructure 7.06 Reliance on professional management ................... 2.7 ..........140 2.01 Quality of overall infrastructure ............................... 2.8 ..........133 7.07 Brain drain ............................................................. 2.5 ..........119 2.02 Quality of roads ...................................................... 2.7 ..........119 7.08 Women in labor force, ratio to men* ..................... 0.36 ..........134 2.03 Quality of railroad infrastructure .............................. 2.0 ............91 2.04 Quality of port infrastructure ................................... 3.7 ............98 8th pillar: Financial market development 2.05 Quality of air transport infrastructure....................... 2.8 ..........138 8.01 Availability of financial services ............................... 3.6 ..........125 2.06 Available airline seat kms/week, millions* ............... 9.8 ..........133 8.02 Affordability of financial services ............................. 3.5 ..........114 2.07 Quality of electricity supply ..................................... 3.7 ............99 8.03 Financing through local equity market .................... 2.7 ..........111 2.08 Mobile telephone subscriptions/100 pop.* ........... 92.7 ............93 8.04 Ease of access to loans ......................................... 1.9 ..........130 2.09 Fixed telephone lines/100 pop.* ............................. 2.0 ..........119 8.05 Venture capital availability ....................................... 2.1 ..........119 8.06 Soundness of banks .............................................. 4.4 ..........118 3rd pillar: Macroeconomic environment 8.07 Regulation of securities exchanges ........................ 2.8 ..........133 3.01 Government budget balance, % GDP* ..................-1.5 ............44 8.08 Legal rights index, 0–10 (best)* ................................. 3 ..........118 3.02 Gross national savings, % GDP* .......................... 26.7 ............37 3.03 Inflation, annual % change* .................................... 5.7 ............86 9th pillar: Technological readiness 3.04 General government debt, % GDP* ..................... 92.4 ..........132 9.01 Availability of latest technologies ............................ 4.2 ..........116 3.05 Country credit rating, 0–100 (best)* ...................... 20.1 ..........125 9.02 Firm-level technology absorption ............................ 4.3 ..........107 9.03 FDI and technology transfer ................................... 3.5 ..........138 4th pillar: Health and primary education 9.04 Individuals using Internet, %* ................................. 4.5 ..........128 4.01 Business impact of malaria .................................... 4.4 ..........111 9.05 Broadband Internet subscriptions/100 pop.* .......... 0.2 ..........117 4.02 Malaria cases/100,000 pop.* ........................ 15,494.9 ..........124 9.06 Int’l Internet bandwidth, kb/s per user* .................. 3.9 ..........114 4.03 Business impact of tuberculosis ............................. 4.7 ..........101 9.07 Mobile broadband subscriptions/100 pop.*............ 0.5 ..........115 4.04 Tuberculosis cases/100,000 pop.* ..................... 337.0 ..........132 4.05 Business impact of HIV/AIDS ................................. 4.7 ............97 10th pillar: Market size 4.06 HIV prevalence, % adult pop.* ............................... 0.7 ............95 10.01 Domestic market size index, 1–7 (best)*................. 1.8 ..........133 4.07 Infant mortality, deaths/1,000 live births* .............. 75.3 ..........134 10.02 Foreign market size index, 1–7 (best)* .................... 2.9 ..........121 4.08 Life expectancy, years*......................................... 58.2 ..........120 4.09 Quality of primary education ................................... 2.0 ..........141 11th pillar: Business sophistication 4.10 Primary education enrollment, net %* .................. 74.0 ..........132 11.01 Local supplier quantity ........................................... 4.9 ............52 11.02 Local supplier quality.............................................. 3.6 ..........133 5th pillar: Higher education and training 11.03 State of cluster development.................................. 3.4 ............89 5.01 Secondary education enrollment, gross %* .......... 24.4 ..........142 11.04 Nature of competitive advantage ............................ 3.3 ............85 5.02 Tertiary education enrollment, gross %*.................. 4.4 ..........127 11.05 Value chain breadth................................................ 3.2 ..........101 5.03 Quality of the educational system ........................... 2.3 ..........138 11.06 Control of international distribution ......................... 4.1 ............57 5.04 Quality of math and science education .................. 2.7 ..........126 11.07 Production process sophistication.......................... 2.7 ..........126 5.05 Quality of management schools ............................. 2.7 ..........138 11.08 Extent of marketing ................................................ 2.4 ..........141 5.06 Internet access in schools ...................................... 2.1 ..........135 11.09 Willingness to delegate authority ............................ 2.9 ..........136 5.07 Availability of research and training services ........... 3.3 ..........122 5.08 Extent of staff training ............................................ 2.7 ..........141 12th pillar: Innovation 12.01 Capacity for innovation........................................... 2.7 ..........108 12.02 Quality of scientific research institutions ................. 2.7 ..........121 12.03 Company spending on R&D................................... 2.6 ..........114 12.04 University-industry collaboration in R&D ................. 2.6 ..........129 12.05 Gov’t procurement of advanced tech products ...... 3.4 ............82 12.06 Availability of scientists and engineers .................... 3.5 ..........114 12.07 PCT patents, applications/million pop.* .................. 0.0 ..........119 Notes: Values are on a 1-to-7 scale unless otherwise annotated with an asterisk (*). For further details and explanation, please refer to the section “How to Read the Competitiveness Profiles� on page 109. The Africa Competitiveness Report 2013 | 169 Part 3: Competitiveness Profiles Mauritius Key indicators, 2011 Population (millions) ................................................1.3 GDP (PPP) per capita (int’l $), 1990–2011 GDP (US$ billions)* ...............................................11.3 15,000 Mauritius Sub-Saharan Africa GDP per capita (US$) ......................................8,741.5 GDP (PPP) as share (%) of world total ..................0.02 12,000 Sectoral value-added (% GDP), 2011 9,000 Agriculture ..............................................................3.5 6,000 Industry ................................................................26.6 Services ...............................................................69.9 3,000 Human Development Index, 2011 0 Score, (0–1) best ..................................................0.73 1991 1993 1995 1997 1999 2001 2003 2005 2007 2009 2011 Rank (out of 187 economies)...................................77 Sources: IMF; UNFPA; UNDP; World Bank The Global Competitiveness Index Rank Score Stage of development (out of 144) (1–7) GCI 2012–2013 .................................................. 54 ..... 4.4 Transition Transition GCI 2011–2012 (out of 142) ........................................... 54 ...... 4.3 1 1–2 2 2–3 3 GCI 2010–2011 (out of 139) ........................................... 55 ...... 4.3 Factor Efficiency Innovation driven driven driven Basic requirements (40.0%) ......................................... 52 ...... 4.8 Institutions ...................................................................... 39 ...... 4.6 Institutions 7 Infrastructure .................................................................. 54 ...... 4.3 Innovation Infrastructure 6 Macroeconomic environment ......................................... 87 ...... 4.4 5 Health and primary education ......................................... 54 ...... 5.9 Business Macroeconomic 4 environment sophistication 3 Efficiency enhancers (50.0%) ...................................... 62 ...... 4.1 2 Health and Higher education and training ......................................... 65 ...... 4.3 Market size 1 primary Goods market efficiency ................................................ 27 ...... 4.8 education Labor market efficiency .................................................. 70 ...... 4.4 Financial market development ........................................ 35 ...... 4.6 Technological Higher education readiness and training Technological readiness .................................................. 63 ...... 4.0 Market size ................................................................... 109 ...... 2.7 Financial market Goods market development ef�ciency Innovation and sophistication factors (10.0%) ........... 63 ...... 3.6 Labor market ef�ciency Business sophistication ................................................. 41 ...... 4.3 Mauritius Efficiency-driven economies Innovation ....................................................................... 98 ...... 2.9 The most problematic factors for doing business Inefficient government bureaucracy ......................................... 17.3 Access to financing ................................................................. 13.5 Inadequate supply of infrastructure .......................................... 11.1 Inadequately educated workforce ............................................ 10.6 Insufficient capacity to innovate ................................................. 9.5 Corruption ................................................................................. 9.2 Poor work ethic in national labor force....................................... 8.6 Restrictive labor regulations ....................................................... 4.6 Inflation ...................................................................................... 4.5 Policy instability ......................................................................... 3.8 Crime and theft ......................................................................... 1.7 Foreign currency regulations ...................................................... 1.6 Tax rates.................................................................................... 1.3 Poor public health ..................................................................... 1.1 Government instability/coups .................................................... 0.8 Tax regulations .......................................................................... 0.8 0 5 10 15 20 25 30 Percent of responses Note: From the list of factors above, respondents were asked to select the five most problematic for doing business in their country and to rank them between 1 (most problematic) and 5. The bars in the figure show the responses weighted according to their rankings. 170 | The Africa Competitiveness Report 2013 Part 3: Competitiveness Profiles Mauritius The Global Competitiveness Index in detail INDICATOR VALUE RANK/144 INDICATOR VALUE RANK/144 1st pillar: Institutions 6th pillar: Goods market efficiency 1.01 Property rights ....................................................... 5.2 ............36 6.01 Intensity of local competition .................................. 5.2 ............42 1.02 Intellectual property protection ............................... 3.8 ............54 6.02 Extent of market dominance .................................. 3.5 ............86 1.03 Diversion of public funds ........................................ 3.8 ............48 6.03 Effectiveness of anti-monopoly policy ..................... 4.5 ............40 1.04 Public trust in politicians ......................................... 3.1 ............58 6.04 Extent and effect of taxation................................... 5.1 ..............9 1.05 Irregular payments and bribes ................................ 4.7 ............44 6.05 Total tax rate, % profits* ....................................... 25.0 ............21 1.06 Judicial independence............................................ 5.1 ............34 6.06 No. procedures to start a business* .......................... 5 ............29 1.07 Favoritism in decisions of government officials ....... 3.2 ............60 6.07 No. days to start a business* .................................... 6 ............16 1.08 Wastefulness of government spending ................... 3.7 ............38 6.08 Agricultural policy costs.......................................... 4.5 ............23 1.09 Burden of government regulation ........................... 3.7 ............50 6.09 Prevalence of trade barriers ................................... 4.9 ............27 1.10 Efficiency of legal framework in settling disputes .... 4.7 ............26 6.10 Trade tariffs, % duty* .............................................. 1.1 ............34 1.11 Efficiency of legal framework in challenging regs. ... 4.5 ............30 6.11 Prevalence of foreign ownership............................. 4.6 ............81 1.12 Transparency of government policymaking............. 4.7 ............42 6.12 Business impact of rules on FDI ............................. 5.5 ..............9 1.13 Gov’t services for improved business performance... 4.2 ............35 6.13 Burden of customs procedures .............................. 4.6 ............40 1.14 Business costs of terrorism .................................... 6.2 ............35 6.14 Imports as a percentage of GDP* ........................ 67.9 ............35 1.15 Business costs of crime and violence..................... 5.1 ............60 6.15 Degree of customer orientation .............................. 5.0 ............41 1.16 Organized crime ..................................................... 6.3 ............17 6.16 Buyer sophistication ............................................... 3.7 ............49 1.17 Reliability of police services .................................... 4.5 ............57 1.18 Ethical behavior of firms ......................................... 4.4 ............43 7th pillar: Labor market efficiency 1.19 Strength of auditing and reporting standards ......... 5.6 ............22 7.01 Cooperation in labor-employer relations ................. 4.6 ............44 1.20 Efficacy of corporate boards .................................. 4.9 ............32 7.02 Flexibility of wage determination ............................. 4.4 ..........108 1.21 Protection of minority shareholders’ interests ......... 5.2 ............19 7.03 Hiring and firing practices ....................................... 3.9 ............78 1.22 Strength of investor protection, 0–10 (best)* .......... 7.7 ............13 7.04 Redundancy costs, weeks of salary* ....................... 11 ............45 7.05 Pay and productivity............................................... 3.9 ............71 2nd pillar: Infrastructure 7.06 Reliance on professional management ................... 4.4 ............54 2.01 Quality of overall infrastructure ............................... 4.7 ............53 7.07 Brain drain ............................................................. 3.4 ............66 2.02 Quality of roads ...................................................... 4.3 ............58 7.08 Women in labor force, ratio to men* ..................... 0.60 ..........116 2.03 Quality of railroad infrastructure ........................ n/appl. ...........n/a 2.04 Quality of port infrastructure ................................... 4.8 ............48 8th pillar: Financial market development 2.05 Quality of air transport infrastructure....................... 5.2 ............49 8.01 Availability of financial services ............................... 5.0 ............47 2.06 Available airline seat kms/week, millions* ........... 175.6 ............68 8.02 Affordability of financial services ............................. 4.6 ............41 2.07 Quality of electricity supply ..................................... 5.0 ............66 8.03 Financing through local equity market .................... 4.0 ............43 2.08 Mobile telephone subscriptions/100 pop.* ........... 99.0 ............86 8.04 Ease of access to loans ......................................... 3.4 ............37 2.09 Fixed telephone lines/100 pop.* ........................... 28.7 ............43 8.05 Venture capital availability ....................................... 2.8 ............56 8.06 Soundness of banks .............................................. 6.2 ............15 3rd pillar: Macroeconomic environment 8.07 Regulation of securities exchanges ........................ 5.3 ............22 3.01 Government budget balance, % GDP* ..................-3.4 ............75 8.08 Legal rights index, 0–10 (best)* ................................. 6 ............65 3.02 Gross national savings, % GDP* .......................... 14.4 ..........103 3.03 Inflation, annual % change* .................................... 6.5 ............95 9th pillar: Technological readiness 3.04 General government debt, % GDP* ..................... 50.6 ............97 9.01 Availability of latest technologies ............................ 5.3 ............48 3.05 Country credit rating, 0–100 (best)* ...................... 53.5 ............61 9.02 Firm-level technology absorption ............................ 4.9 ............55 9.03 FDI and technology transfer ................................... 4.9 ............48 4th pillar: Health and primary education 9.04 Individuals using Internet, %* ............................... 35.0 ............81 4.01 Business impact of malaria .............................. n/appl. ..............1 9.05 Broadband Internet subscriptions/100 pop.* .......... 8.9 ............60 4.02 Malaria cases/100,000 pop.* ................................(NE) ..............1 9.06 Int’l Internet bandwidth, kb/s per user* ................ 12.7 ............74 4.03 Business impact of tuberculosis ............................. 5.7 ............53 9.07 Mobile broadband subscriptions/100 pop.*.......... 12.4 ............63 4.04 Tuberculosis cases/100,000 pop.* ....................... 22.0 ............50 4.05 Business impact of HIV/AIDS ................................. 5.1 ............85 10th pillar: Market size 4.06 HIV prevalence, % adult pop.* ............................... 1.0 ..........105 10.01 Domestic market size index, 1–7 (best)*................. 2.5 ..........110 4.07 Infant mortality, deaths/1,000 live births* .............. 13.0 ............62 10.02 Foreign market size index, 1–7 (best)* .................... 3.5 ..........103 4.08 Life expectancy, years*......................................... 73.0 ............82 4.09 Quality of primary education ................................... 4.2 ............53 11th pillar: Business sophistication 4.10 Primary education enrollment, net %* .................. 93.4 ............72 11.01 Local supplier quantity ........................................... 4.9 ............53 11.02 Local supplier quality.............................................. 4.7 ............55 5th pillar: Higher education and training 11.03 State of cluster development.................................. 3.9 ............56 5.01 Secondary education enrollment, gross %* .......... 89.4 ............67 11.04 Nature of competitive advantage ............................ 4.0 ............38 5.02 Tertiary education enrollment, gross %*................ 24.9 ............82 11.05 Value chain breadth................................................ 4.4 ............28 5.03 Quality of the educational system ........................... 4.1 ............46 11.06 Control of international distribution ......................... 4.6 ............23 5.04 Quality of math and science education .................. 4.3 ............49 11.07 Production process sophistication.......................... 4.1 ............47 5.05 Quality of management schools ............................. 4.1 ............76 11.08 Extent of marketing ................................................ 4.2 ............62 5.06 Internet access in schools ...................................... 4.1 ............72 11.09 Willingness to delegate authority ............................ 3.8 ............56 5.07 Availability of research and training services ........... 4.2 ............67 5.08 Extent of staff training ............................................ 4.3 ............37 12th pillar: Innovation 12.01 Capacity for innovation........................................... 2.7 ..........112 12.02 Quality of scientific research institutions ................. 3.4 ............83 12.03 Company spending on R&D................................... 2.8 ............96 12.04 University-industry collaboration in R&D ................. 3.3 ............91 12.05 Gov’t procurement of advanced tech products ...... 3.5 ............74 12.06 Availability of scientists and engineers .................... 3.4 ..........116 12.07 PCT patents, applications/million pop.* .................. 0.3 ............85 Notes: Values are on a 1-to-7 scale unless otherwise annotated with an asterisk (*). For further details and explanation, please refer to the section “How to Read the Competitiveness Profiles� on page 109. The Africa Competitiveness Report 2013 | 171 Part 3: Competitiveness Profiles Morocco Key indicators, 2011 Population (millions) ..............................................32.5 GDP (PPP) per capita (int’l $), 1990–2011 GDP (US$ billions)* ...............................................99.3 10,000 Morocco Middle East and North Africa GDP per capita (US$) ......................................3,084.4 GDP (PPP) as share (%) of world total ..................0.21 8,000 Sectoral value-added (% GDP), 2011 6,000 Agriculture ............................................................15.1 4,000 Industry ................................................................29.9 Services ...............................................................55.1 2,000 Human Development Index, 2011 0 Score, (0–1) best ..................................................0.58 1991 1993 1995 1997 1999 2001 2003 2005 2007 2009 2011 Rank (out of 187 economies).................................130 Sources: IMF; UNFPA; UNDP; World Bank The Global Competitiveness Index Rank Score Stage of development (out of 144) (1–7) GCI 2012–2013 .................................................. 70 ..... 4.1 Transition Transition GCI 2011–2012 (out of 142) ........................................... 73 ...... 4.2 1 1–2 2 2–3 3 GCI 2010–2011 (out of 139) ........................................... 75 ...... 4.1 Factor Efficiency Innovation driven driven driven Basic requirements (40.0%) ......................................... 68 ...... 4.6 Institutions ...................................................................... 54 ...... 4.1 Institutions 7 Infrastructure .................................................................. 61 ...... 4.1 Innovation Infrastructure 6 Macroeconomic environment ......................................... 70 ...... 4.6 5 Health and primary education ......................................... 81 ...... 5.5 Business Macroeconomic 4 environment sophistication 3 Efficiency enhancers (50.0%) ...................................... 79 ...... 3.9 2 Health and Higher education and training ....................................... 101 ...... 3.6 Market size 1 primary Goods market efficiency ................................................ 69 ...... 4.3 education Labor market efficiency ................................................ 122 ...... 3.8 Financial market development ........................................ 63 ...... 4.1 Technological Higher education readiness and training Technological readiness .................................................. 75 ...... 3.7 Market size ..................................................................... 57 ...... 4.1 Financial market Goods market development ef�ciency Innovation and sophistication factors (10.0%) ........... 84 ...... 3.4 Labor market ef�ciency Business sophistication ................................................. 81 ...... 3.8 Morocco Efficiency-driven economies Innovation ....................................................................... 97 ...... 3.0 The most problematic factors for doing business Inefficient government bureaucracy ......................................... 17.6 Access to financing ................................................................. 14.8 Corruption ............................................................................... 12.6 Inadequately educated workforce ............................................ 11.6 Foreign currency regulations .................................................... 10.7 Poor work ethic in national labor force....................................... 7.1 Insufficient capacity to innovate ................................................. 6.3 Restrictive labor regulations ....................................................... 6.3 Tax rates.................................................................................... 4.5 Inadequate supply of infrastructure ............................................ 4.3 Tax regulations .......................................................................... 2.4 Crime and theft ......................................................................... 1.0 Poor public health ..................................................................... 0.6 Policy instability ......................................................................... 0.2 Government instability/coups .................................................... 0.0 Inflation ...................................................................................... 0.0 0 5 10 15 20 25 30 Percent of responses Note: From the list of factors above, respondents were asked to select the five most problematic for doing business in their country and to rank them between 1 (most problematic) and 5. The bars in the figure show the responses weighted according to their rankings. 172 | The Africa Competitiveness Report 2013 Part 3: Competitiveness Profiles Morocco The Global Competitiveness Index in detail INDICATOR VALUE RANK/144 INDICATOR VALUE RANK/144 1st pillar: Institutions 6th pillar: Goods market efficiency 1.01 Property rights ....................................................... 4.6 ............53 6.01 Intensity of local competition .................................. 5.0 ............57 1.02 Intellectual property protection ............................... 3.4 ............82 6.02 Extent of market dominance .................................. 3.9 ............58 1.03 Diversion of public funds ........................................ 3.7 ............52 6.03 Effectiveness of anti-monopoly policy ..................... 4.2 ............56 1.04 Public trust in politicians ......................................... 3.2 ............52 6.04 Extent and effect of taxation................................... 3.6 ............62 1.05 Irregular payments and bribes ................................ 4.2 ............60 6.05 Total tax rate, % profits* ....................................... 49.6 ..........111 1.06 Judicial independence............................................ 3.5 ............81 6.06 No. procedures to start a business* .......................... 6 ............47 1.07 Favoritism in decisions of government officials ....... 3.6 ............42 6.07 No. days to start a business* .................................. 12 ............53 1.08 Wastefulness of government spending ................... 3.4 ............60 6.08 Agricultural policy costs.......................................... 3.8 ............80 1.09 Burden of government regulation ........................... 3.4 ............64 6.09 Prevalence of trade barriers ................................... 4.5 ............57 1.10 Efficiency of legal framework in settling disputes .... 4.0 ............54 6.10 Trade tariffs, % duty* ............................................ 16.5 ..........136 1.11 Efficiency of legal framework in challenging regs. ... 3.8 ............60 6.11 Prevalence of foreign ownership............................. 5.1 ............49 1.12 Transparency of government policymaking............. 4.4 ............53 6.12 Business impact of rules on FDI ............................. 5.1 ............33 1.13 Gov’t services for improved business performance... 4.0 ............47 6.13 Burden of customs procedures .............................. 4.5 ............42 1.14 Business costs of terrorism .................................... 5.6 ............72 6.14 Imports as a percentage of GDP* ........................ 50.8 ............61 1.15 Business costs of crime and violence..................... 5.1 ............57 6.15 Degree of customer orientation .............................. 4.6 ............65 1.16 Organized crime ..................................................... 5.8 ............42 6.16 Buyer sophistication ............................................... 3.3 ............77 1.17 Reliability of police services .................................... 4.3 ............64 1.18 Ethical behavior of firms ......................................... 4.0 ............67 7th pillar: Labor market efficiency 1.19 Strength of auditing and reporting standards ......... 4.3 ............89 7.01 Cooperation in labor-employer relations ................. 3.8 ..........120 1.20 Efficacy of corporate boards .................................. 4.8 ............45 7.02 Flexibility of wage determination ............................. 5.1 ............64 1.21 Protection of minority shareholders’ interests ......... 4.5 ............47 7.03 Hiring and firing practices ....................................... 3.9 ............74 1.22 Strength of investor protection, 0–10 (best)* .......... 5.0 ............80 7.04 Redundancy costs, weeks of salary* ....................... 21 ............92 7.05 Pay and productivity............................................... 4.2 ............50 2nd pillar: Infrastructure 7.06 Reliance on professional management ................... 3.8 ............98 2.01 Quality of overall infrastructure ............................... 4.8 ............52 7.07 Brain drain ............................................................. 3.6 ............55 2.02 Quality of roads ...................................................... 4.0 ............70 7.08 Women in labor force, ratio to men* ..................... 0.34 ..........137 2.03 Quality of railroad infrastructure .............................. 3.9 ............36 2.04 Quality of port infrastructure ................................... 4.8 ............49 8th pillar: Financial market development 2.05 Quality of air transport infrastructure....................... 5.1 ............52 8.01 Availability of financial services ............................... 4.7 ............59 2.06 Available airline seat kms/week, millions* ........... 402.1 ............46 8.02 Affordability of financial services ............................. 4.4 ............55 2.07 Quality of electricity supply ..................................... 5.2 ............56 8.03 Financing through local equity market .................... 4.3 ............31 2.08 Mobile telephone subscriptions/100 pop.* ......... 113.3 ............56 8.04 Ease of access to loans ......................................... 3.0 ............59 2.09 Fixed telephone lines/100 pop.* ........................... 11.0 ............88 8.05 Venture capital availability ....................................... 3.0 ............38 8.06 Soundness of banks .............................................. 5.5 ............53 3rd pillar: Macroeconomic environment 8.07 Regulation of securities exchanges ........................ 4.8 ............37 3.01 Government budget balance, % GDP* ..................-6.9 ..........131 8.08 Legal rights index, 0–10 (best)* ................................. 3 ..........118 3.02 Gross national savings, % GDP* .......................... 27.2 ............33 3.03 Inflation, annual % change* .................................... 0.9 ..............1 9th pillar: Technological readiness 3.04 General government debt, % GDP* ..................... 54.4 ..........102 9.01 Availability of latest technologies ............................ 5.3 ............53 3.05 Country credit rating, 0–100 (best)* ...................... 52.5 ............64 9.02 Firm-level technology absorption ............................ 4.7 ............75 9.03 FDI and technology transfer ................................... 4.9 ............46 4th pillar: Health and primary education 9.04 Individuals using Internet, %* ............................... 51.0 ............54 4.01 Business impact of malaria .............................. n/appl. ..............1 9.05 Broadband Internet subscriptions/100 pop.* .......... 1.8 ............93 4.02 Malaria cases/100,000 pop.* ................................(NE) ..............1 9.06 Int’l Internet bandwidth, kb/s per user* .................. 7.6 ............93 4.03 Business impact of tuberculosis ............................. 5.3 ............77 9.07 Mobile broadband subscriptions/100 pop.*............ 8.0 ............74 4.04 Tuberculosis cases/100,000 pop.* ....................... 91.0 ............89 4.05 Business impact of HIV/AIDS ................................. 5.1 ............81 10th pillar: Market size 4.06 HIV prevalence, % adult pop.* ............................... 0.1 ............12 10.01 Domestic market size index, 1–7 (best)*................. 4.0 ............54 4.07 Infant mortality, deaths/1,000 live births* .............. 30.4 ..........101 10.02 Foreign market size index, 1–7 (best)* .................... 4.5 ............61 4.08 Life expectancy, years*......................................... 71.9 ............89 4.09 Quality of primary education ................................... 3.1 ..........108 11th pillar: Business sophistication 4.10 Primary education enrollment, net %* .................. 95.7 ............48 11.01 Local supplier quantity ........................................... 4.8 ............65 11.02 Local supplier quality.............................................. 4.4 ............76 5th pillar: Higher education and training 11.03 State of cluster development.................................. 4.0 ............51 5.01 Secondary education enrollment, gross %* .......... 56.1 ..........113 11.04 Nature of competitive advantage ............................ 3.4 ............77 5.02 Tertiary education enrollment, gross %*................ 13.2 ..........102 11.05 Value chain breadth................................................ 3.6 ............70 5.03 Quality of the educational system ........................... 3.1 ..........105 11.06 Control of international distribution ......................... 3.6 ..........111 5.04 Quality of math and science education .................. 4.3 ............53 11.07 Production process sophistication.......................... 3.3 ............97 5.05 Quality of management schools ............................. 4.5 ............47 11.08 Extent of marketing ................................................ 3.8 ............82 5.06 Internet access in schools ...................................... 3.5 ............95 11.09 Willingness to delegate authority ............................ 3.3 ..........101 5.07 Availability of research and training services ........... 4.3 ............58 5.08 Extent of staff training ............................................ 3.9 ............75 12th pillar: Innovation 12.01 Capacity for innovation........................................... 2.6 ..........115 12.02 Quality of scientific research institutions ................. 3.2 ..........104 12.03 Company spending on R&D................................... 2.6 ..........119 12.04 University-industry collaboration in R&D ................. 3.0 ..........116 12.05 Gov’t procurement of advanced tech products ...... 3.6 ............72 12.06 Availability of scientists and engineers .................... 4.5 ............38 12.07 PCT patents, applications/million pop.* .................. 0.7 ............71 Notes: Values are on a 1-to-7 scale unless otherwise annotated with an asterisk (*). For further details and explanation, please refer to the section “How to Read the Competitiveness Profiles� on page 109. The Africa Competitiveness Report 2013 | 173 Part 3: Competitiveness Profiles Mozambique Key indicators, 2011 Population (millions) ..............................................24.0 GDP (PPP) per capita (int’l $), 1990–2011 GDP (US$ billions)* ...............................................12.6 2,500 Mozambique Sub-Saharan Africa GDP per capita (US$) .........................................571.0 GDP (PPP) as share (%) of world total ..................0.03 2000 Sectoral value-added (% GDP), 2011 1,500 Agriculture ............................................................32.0 1,000 Industry ................................................................24.2 Services ...............................................................43.8 500 Human Development Index, 2011 0 Score, (0–1) best ..................................................0.32 1991 1993 1995 1997 1999 2001 2003 2005 2007 2009 2011 Rank (out of 187 economies).................................184 Sources: IMF; UNFPA; UNDP; World Bank The Global Competitiveness Index Rank Score Stage of development (out of 144) (1–7) GCI 2012–2013 ................................................ 138 ..... 3.2 Transition Transition GCI 2011–2012 (out of 142) ......................................... 133 ...... 3.3 1 1–2 2 2–3 3 GCI 2010–2011 (out of 139) ......................................... 131 ...... 3.3 Factor Efficiency Innovation driven driven driven Basic requirements (60.0%) ....................................... 138 ...... 3.2 Institutions .................................................................... 112 ...... 3.4 Institutions 7 Infrastructure ................................................................ 129 ...... 2.4 Innovation Infrastructure 6 Macroeconomic environment ....................................... 125 ...... 3.7 5 Health and primary education ....................................... 137 ...... 3.5 Business Macroeconomic 4 environment sophistication 3 Efficiency enhancers (35.0%) .................................... 133 ...... 3.1 2 Health and Higher education and training ....................................... 138 ...... 2.4 Market size 1 primary Goods market efficiency .............................................. 124 ...... 3.8 education Labor market efficiency ................................................ 128 ...... 3.7 Financial market development ...................................... 134 ...... 3.1 Technological Higher education readiness and training Technological readiness ................................................ 121 ...... 2.8 Market size ................................................................... 101 ...... 2.9 Financial market Goods market development ef�ciency Innovation and sophistication factors (5.0%) ........... 130 ...... 2.9 Labor market ef�ciency Business sophistication ............................................... 131 ...... 3.1 Mozambique Factor-driven economies Innovation ..................................................................... 122 ...... 2.6 The most problematic factors for doing business Access to financing ................................................................. 16.9 Corruption ............................................................................... 16.6 Inadequate supply of infrastructure .......................................... 12.8 Inefficient government bureaucracy ......................................... 12.2 Inadequately educated workforce ............................................ 10.7 Poor work ethic in national labor force....................................... 4.9 Tax rates.................................................................................... 4.4 Tax regulations .......................................................................... 3.8 Crime and theft ......................................................................... 3.7 Inflation ...................................................................................... 3.7 Foreign currency regulations ...................................................... 3.5 Insufficient capacity to innovate ................................................. 2.6 Restrictive labor regulations ....................................................... 2.0 Poor public health ..................................................................... 1.1 Policy instability ......................................................................... 1.0 Government instability/coups .................................................... 0.0 0 5 10 15 20 25 30 Percent of responses Note: From the list of factors above, respondents were asked to select the five most problematic for doing business in their country and to rank them between 1 (most problematic) and 5. The bars in the figure show the responses weighted according to their rankings. 174 | The Africa Competitiveness Report 2013 Part 3: Competitiveness Profiles Mozambique The Global Competitiveness Index in detail INDICATOR VALUE RANK/144 INDICATOR VALUE RANK/144 1st pillar: Institutions 6th pillar: Goods market efficiency 1.01 Property rights ....................................................... 3.5 ..........112 6.01 Intensity of local competition .................................. 3.8 ..........133 1.02 Intellectual property protection ............................... 2.6 ..........128 6.02 Extent of market dominance .................................. 2.9 ..........133 1.03 Diversion of public funds ........................................ 2.3 ..........128 6.03 Effectiveness of anti-monopoly policy ..................... 3.1 ..........134 1.04 Public trust in politicians ......................................... 2.4 ............89 6.04 Extent and effect of taxation................................... 3.5 ............65 1.05 Irregular payments and bribes ................................ 3.6 ............88 6.05 Total tax rate, % profits* ....................................... 34.3 ............52 1.06 Judicial independence............................................ 2.4 ..........130 6.06 No. procedures to start a business* .......................... 9 ............97 1.07 Favoritism in decisions of government officials ....... 2.9 ............83 6.07 No. days to start a business* .................................. 13 ............59 1.08 Wastefulness of government spending ................... 2.8 ..........102 6.08 Agricultural policy costs.......................................... 3.0 ..........135 1.09 Burden of government regulation ........................... 3.4 ............70 6.09 Prevalence of trade barriers ................................... 3.7 ..........118 1.10 Efficiency of legal framework in settling disputes .... 3.3 ............93 6.10 Trade tariffs, % duty* .............................................. 7.5 ............89 1.11 Efficiency of legal framework in challenging regs. ... 3.0 ..........109 6.11 Prevalence of foreign ownership............................. 5.0 ............55 1.12 Transparency of government policymaking............. 4.3 ............70 6.12 Business impact of rules on FDI ............................. 4.6 ............73 1.13 Gov’t services for improved business performance... 3.7 ............67 6.13 Burden of customs procedures .............................. 3.5 ..........101 1.14 Business costs of terrorism .................................... 4.9 ..........111 6.14 Imports as a percentage of GDP* ........................ 59.1 ............43 1.15 Business costs of crime and violence..................... 4.2 ..........104 6.15 Degree of customer orientation .............................. 3.8 ..........127 1.16 Organized crime ..................................................... 4.1 ..........117 6.16 Buyer sophistication ............................................... 2.7 ..........121 1.17 Reliability of police services .................................... 3.4 ..........112 1.18 Ethical behavior of firms ......................................... 3.2 ..........122 7th pillar: Labor market efficiency 1.19 Strength of auditing and reporting standards ......... 3.9 ..........116 7.01 Cooperation in labor-employer relations ................. 3.6 ..........126 1.20 Efficacy of corporate boards .................................. 3.9 ..........123 7.02 Flexibility of wage determination ............................. 3.9 ..........127 1.21 Protection of minority shareholders’ interests ......... 3.8 ..........102 7.03 Hiring and firing practices ....................................... 3.5 ..........102 1.22 Strength of investor protection, 0–10 (best)* .......... 6.0 ............39 7.04 Redundancy costs, weeks of salary* ....................... 41 ..........133 7.05 Pay and productivity............................................... 2.9 ..........135 2nd pillar: Infrastructure 7.06 Reliance on professional management ................... 3.4 ..........132 2.01 Quality of overall infrastructure ............................... 3.0 ..........126 7.07 Brain drain ............................................................. 3.4 ............76 2.02 Quality of roads ...................................................... 2.4 ..........135 7.08 Women in labor force, ratio to men* ..................... 1.05 ..............2 2.03 Quality of railroad infrastructure .............................. 2.0 ............89 2.04 Quality of port infrastructure ................................... 3.4 ..........116 8th pillar: Financial market development 2.05 Quality of air transport infrastructure....................... 3.9 ..........103 8.01 Availability of financial services ............................... 3.8 ..........114 2.06 Available airline seat kms/week, millions* ............. 31.0 ..........107 8.02 Affordability of financial services ............................. 3.3 ..........126 2.07 Quality of electricity supply ..................................... 3.2 ..........111 8.03 Financing through local equity market .................... 2.6 ..........119 2.08 Mobile telephone subscriptions/100 pop.* ........... 32.8 ..........140 8.04 Ease of access to loans ......................................... 1.9 ..........131 2.09 Fixed telephone lines/100 pop.* ............................. 0.4 ..........137 8.05 Venture capital availability ....................................... 1.9 ..........128 8.06 Soundness of banks .............................................. 5.0 ............78 3rd pillar: Macroeconomic environment 8.07 Regulation of securities exchanges ........................ 3.2 ..........122 3.01 Government budget balance, % GDP* ..................-4.9 ..........108 8.08 Legal rights index, 0–10 (best)* ................................. 2 ..........135 3.02 Gross national savings, % GDP* .......................... 11.2 ..........121 3.03 Inflation, annual % change* .................................. 10.4 ..........124 9th pillar: Technological readiness 3.04 General government debt, % GDP* ..................... 33.2 ............51 9.01 Availability of latest technologies ............................ 4.3 ..........111 3.05 Country credit rating, 0–100 (best)* ...................... 27.9 ..........110 9.02 Firm-level technology absorption ............................ 4.3 ..........110 9.03 FDI and technology transfer ................................... 5.0 ............41 4th pillar: Health and primary education 9.04 Individuals using Internet, %* ................................. 4.3 ..........129 4.01 Business impact of malaria .................................... 2.9 ..........134 9.05 Broadband Internet subscriptions/100 pop.* .......... 0.1 ..........124 4.02 Malaria cases/100,000 pop.* ........................ 32,977.9 ..........140 9.06 Int’l Internet bandwidth, kb/s per user* .................. 1.2 ..........131 4.03 Business impact of tuberculosis ............................. 3.2 ..........138 9.07 Mobile broadband subscriptions/100 pop.*............ 1.0 ..........111 4.04 Tuberculosis cases/100,000 pop.* ..................... 544.0 ..........137 4.05 Business impact of HIV/AIDS ................................. 2.9 ..........137 10th pillar: Market size 4.06 HIV prevalence, % adult pop.* ............................. 11.5 ..........137 10.01 Domestic market size index, 1–7 (best)*................. 2.7 ..........100 4.07 Infant mortality, deaths/1,000 live births* .............. 92.2 ..........140 10.02 Foreign market size index, 1–7 (best)* .................... 3.4 ..........107 4.08 Life expectancy, years*......................................... 49.7 ..........139 4.09 Quality of primary education ................................... 2.3 ..........133 11th pillar: Business sophistication 4.10 Primary education enrollment, net %* .................. 89.6 ............98 11.01 Local supplier quantity ........................................... 3.8 ..........133 11.02 Local supplier quality.............................................. 3.4 ..........139 5th pillar: Higher education and training 11.03 State of cluster development.................................. 3.3 ............96 5.01 Secondary education enrollment, gross %* .......... 26.4 ..........139 11.04 Nature of competitive advantage ............................ 2.7 ..........122 5.02 Tertiary education enrollment, gross %*.................. 1.5 ..........139 11.05 Value chain breadth................................................ 2.6 ..........135 5.03 Quality of the educational system ........................... 2.9 ..........119 11.06 Control of international distribution ......................... 3.4 ..........125 5.04 Quality of math and science education .................. 2.6 ..........131 11.07 Production process sophistication.......................... 2.7 ..........127 5.05 Quality of management schools ............................. 2.9 ..........133 11.08 Extent of marketing ................................................ 3.3 ..........115 5.06 Internet access in schools ...................................... 2.7 ..........121 11.09 Willingness to delegate authority ............................ 2.9 ..........135 5.07 Availability of research and training services ........... 3.1 ..........128 5.08 Extent of staff training ............................................ 3.2 ..........119 12th pillar: Innovation 12.01 Capacity for innovation........................................... 2.3 ..........132 12.02 Quality of scientific research institutions ................. 2.9 ..........112 12.03 Company spending on R&D................................... 2.5 ..........128 12.04 University-industry collaboration in R&D ................. 3.5 ............78 12.05 Gov’t procurement of advanced tech products ...... 3.4 ............84 12.06 Availability of scientists and engineers .................... 2.8 ..........137 12.07 PCT patents, applications/million pop.* .................. 0.0 ..........119 Notes: Values are on a 1-to-7 scale unless otherwise annotated with an asterisk (*). For further details and explanation, please refer to the section “How to Read the Competitiveness Profiles� on page 109. The Africa Competitiveness Report 2013 | 175 Part 3: Competitiveness Profiles Namibia Key indicators, 2011 Population (millions) ................................................2.3 GDP (PPP) per capita (int’l $), 1990–2011 GDP (US$ billions)* ...............................................12.5 8,000 Namibia Sub-Saharan Africa GDP per capita (US$) ......................................5,862.0 GDP (PPP) as share (%) of world total ..................0.02 6,000 Sectoral value-added (% GDP), 2011 Agriculture ..............................................................7.3 4,000 Industry ................................................................19.6 Services ...............................................................73.1 2,000 Human Development Index, 2011 0 Score, (0–1) best ..................................................0.63 1991 1993 1995 1997 1999 2001 2003 2005 2007 2009 2011 Rank (out of 187 economies).................................120 Sources: IMF; UNFPA; UNDP; World Bank The Global Competitiveness Index Rank Score Stage of development (out of 144) (1–7) GCI 2012–2013 .................................................. 92 ..... 3.9 Transition Transition GCI 2011–2012 (out of 142) ........................................... 83 ...... 4.0 1 1–2 2 2–3 3 GCI 2010–2011 (out of 139) ........................................... 74 ...... 4.1 Factor Efficiency Innovation driven driven driven Basic requirements (40.0%) ......................................... 82 ...... 4.3 Institutions ...................................................................... 52 ...... 4.2 Institutions 7 Infrastructure .................................................................. 59 ...... 4.2 Innovation Infrastructure 6 Macroeconomic environment ......................................... 84 ...... 4.5 5 Health and primary education ....................................... 120 ...... 4.4 Business Macroeconomic 4 environment sophistication 3 Efficiency enhancers (50.0%) .................................... 105 ...... 3.6 2 Health and Higher education and training ....................................... 119 ...... 3.1 Market size 1 primary Goods market efficiency ................................................ 87 ...... 4.2 education Labor market efficiency .................................................. 74 ...... 4.3 Financial market development ........................................ 47 ...... 4.4 Technological Higher education readiness and training Technological readiness ................................................ 104 ...... 3.2 Market size ................................................................... 120 ...... 2.6 Financial market Goods market development ef�ciency Innovation and sophistication factors (10.0%) ......... 103 ...... 3.3 Labor market ef�ciency Business sophistication ............................................... 102 ...... 3.6 Namibia Efficiency-driven economies Innovation ..................................................................... 101 ...... 2.9 The most problematic factors for doing business Inadequately educated workforce ............................................ 15.0 Access to financing ................................................................. 11.8 Corruption ............................................................................... 10.7 Restrictive labor regulations ..................................................... 10.3 Inefficient government bureaucracy ........................................... 9.7 Poor work ethic in national labor force....................................... 8.4 Crime and theft ......................................................................... 7.1 Tax rates.................................................................................... 5.0 Inadequate supply of infrastructure ............................................ 4.7 Inflation ...................................................................................... 4.6 Insufficient capacity to innovate ................................................. 4.1 Tax regulations .......................................................................... 3.9 Poor public health ..................................................................... 1.8 Foreign currency regulations ...................................................... 1.3 Policy instability ......................................................................... 1.3 Government instability/coups .................................................... 0.4 0 5 10 15 20 25 30 Percent of responses Note: From the list of factors above, respondents were asked to select the five most problematic for doing business in their country and to rank them between 1 (most problematic) and 5. The bars in the figure show the responses weighted according to their rankings. 176 | The Africa Competitiveness Report 2013 Part 3: Competitiveness Profiles Namibia The Global Competitiveness Index in detail INDICATOR VALUE RANK/144 INDICATOR VALUE RANK/144 1st pillar: Institutions 6th pillar: Goods market efficiency 1.01 Property rights ....................................................... 5.1 ............40 6.01 Intensity of local competition .................................. 4.5 ............91 1.02 Intellectual property protection ............................... 4.3 ............43 6.02 Extent of market dominance .................................. 3.5 ............85 1.03 Diversion of public funds ........................................ 3.1 ............71 6.03 Effectiveness of anti-monopoly policy ..................... 4.1 ............63 1.04 Public trust in politicians ......................................... 3.3 ............46 6.04 Extent and effect of taxation................................... 3.7 ............51 1.05 Irregular payments and bribes ................................ 4.2 ............61 6.05 Total tax rate, % profits* ......................................... 9.8 ..............3 1.06 Judicial independence............................................ 4.6 ............44 6.06 No. procedures to start a business* ........................ 10 ..........110 1.07 Favoritism in decisions of government officials ....... 2.8 ............88 6.07 No. days to start a business* .................................. 66 ..........132 1.08 Wastefulness of government spending ................... 3.4 ............55 6.08 Agricultural policy costs.......................................... 4.3 ............37 1.09 Burden of government regulation ........................... 3.4 ............68 6.09 Prevalence of trade barriers ................................... 4.2 ............77 1.10 Efficiency of legal framework in settling disputes .... 4.4 ............38 6.10 Trade tariffs, % duty* .............................................. 6.7 ............82 1.11 Efficiency of legal framework in challenging regs. ... 4.1 ............42 6.11 Prevalence of foreign ownership............................. 5.1 ............50 1.12 Transparency of government policymaking............. 4.1 ............85 6.12 Business impact of rules on FDI ............................. 4.5 ............84 1.13 Gov’t services for improved business performance... 3.4 ............88 6.13 Burden of customs procedures .............................. 3.8 ............82 1.14 Business costs of terrorism .................................... 6.2 ............34 6.14 Imports as a percentage of GDP* ........................ 56.4 ............47 1.15 Business costs of crime and violence..................... 3.8 ..........113 6.15 Degree of customer orientation .............................. 3.7 ..........131 1.16 Organized crime ..................................................... 5.3 ............70 6.16 Buyer sophistication ............................................... 3.5 ............65 1.17 Reliability of police services .................................... 4.2 ............73 1.18 Ethical behavior of firms ......................................... 4.0 ............59 7th pillar: Labor market efficiency 1.19 Strength of auditing and reporting standards ......... 5.3 ............31 7.01 Cooperation in labor-employer relations ................. 3.8 ..........116 1.20 Efficacy of corporate boards .................................. 4.4 ............81 7.02 Flexibility of wage determination ............................. 4.6 ..........101 1.21 Protection of minority shareholders’ interests ......... 4.7 ............40 7.03 Hiring and firing practices ....................................... 3.0 ..........130 1.22 Strength of investor protection, 0–10 (best)* .......... 5.3 ............65 7.04 Redundancy costs, weeks of salary* ....................... 10 ............35 7.05 Pay and productivity............................................... 3.5 ..........107 2nd pillar: Infrastructure 7.06 Reliance on professional management ................... 4.2 ............76 2.01 Quality of overall infrastructure ............................... 5.1 ............40 7.07 Brain drain ............................................................. 3.3 ............80 2.02 Quality of roads ...................................................... 5.1 ............35 7.08 Women in labor force, ratio to men* ..................... 0.84 ............56 2.03 Quality of railroad infrastructure .............................. 3.7 ............39 2.04 Quality of port infrastructure ................................... 5.4 ............27 8th pillar: Financial market development 2.05 Quality of air transport infrastructure....................... 4.9 ............59 8.01 Availability of financial services ............................... 4.9 ............55 2.06 Available airline seat kms/week, millions* ............. 34.5 ..........105 8.02 Affordability of financial services ............................. 4.0 ............82 2.07 Quality of electricity supply ..................................... 5.4 ............52 8.03 Financing through local equity market .................... 3.4 ............72 2.08 Mobile telephone subscriptions/100 pop.* ......... 105.0 ............75 8.04 Ease of access to loans ......................................... 2.9 ............64 2.09 Fixed telephone lines/100 pop.* ............................. 6.0 ..........105 8.05 Venture capital availability ....................................... 2.4 ............82 8.06 Soundness of banks .............................................. 5.9 ............29 3rd pillar: Macroeconomic environment 8.07 Regulation of securities exchanges ........................ 4.5 ............51 3.01 Government budget balance, % GDP* ..................-7.9 ..........134 8.08 Legal rights index, 0–10 (best)* ................................. 8 ............24 3.02 Gross national savings, % GDP* .......................... 26.0 ............40 3.03 Inflation, annual % change* .................................... 5.8 ............88 9th pillar: Technological readiness 3.04 General government debt, % GDP* ..................... 21.9 ............29 9.01 Availability of latest technologies ............................ 5.2 ............61 3.05 Country credit rating, 0–100 (best)* ...................... 51.0 ............68 9.02 Firm-level technology absorption ............................ 4.8 ............65 9.03 FDI and technology transfer ................................... 4.4 ............86 4th pillar: Health and primary education 9.04 Individuals using Internet, %* ............................... 12.0 ..........113 4.01 Business impact of malaria .................................... 3.8 ..........124 9.05 Broadband Internet subscriptions/100 pop.* .......... 0.8 ..........104 4.02 Malaria cases/100,000 pop.* .......................... 3,764.2 ..........117 9.06 Int’l Internet bandwidth, kb/s per user* .................. 2.3 ..........121 4.03 Business impact of tuberculosis ............................. 3.1 ..........139 9.07 Mobile broadband subscriptions/100 pop.*............ 3.6 ............90 4.04 Tuberculosis cases/100,000 pop.* ..................... 603.0 ..........139 4.05 Business impact of HIV/AIDS ................................. 2.6 ..........142 10th pillar: Market size 4.06 HIV prevalence, % adult pop.* ............................. 13.1 ..........138 10.01 Domestic market size index, 1–7 (best)*................. 2.3 ..........121 4.07 Infant mortality, deaths/1,000 live births* .............. 29.3 ..........100 10.02 Foreign market size index, 1–7 (best)* .................... 3.2 ..........111 4.08 Life expectancy, years*......................................... 62.1 ..........115 4.09 Quality of primary education ................................... 2.8 ..........120 11th pillar: Business sophistication 4.10 Primary education enrollment, net %* .................. 85.4 ..........113 11.01 Local supplier quantity ........................................... 3.8 ..........132 11.02 Local supplier quality.............................................. 4.2 ............89 5th pillar: Higher education and training 11.03 State of cluster development.................................. 3.4 ............88 5.01 Secondary education enrollment, gross %* .......... 64.0 ..........106 11.04 Nature of competitive advantage ............................ 3.2 ............94 5.02 Tertiary education enrollment, gross %*.................. 9.0 ..........115 11.05 Value chain breadth................................................ 2.9 ..........122 5.03 Quality of the educational system ........................... 2.7 ..........126 11.06 Control of international distribution ......................... 3.6 ..........110 5.04 Quality of math and science education .................. 2.7 ..........127 11.07 Production process sophistication.......................... 3.3 ............98 5.05 Quality of management schools ............................. 3.1 ..........129 11.08 Extent of marketing ................................................ 3.7 ............94 5.06 Internet access in schools ...................................... 3.1 ..........110 11.09 Willingness to delegate authority ............................ 3.7 ............72 5.07 Availability of research and training services ........... 3.0 ..........131 5.08 Extent of staff training ............................................ 4.1 ............55 12th pillar: Innovation 12.01 Capacity for innovation........................................... 2.9 ............90 12.02 Quality of scientific research institutions ................. 3.4 ............92 12.03 Company spending on R&D................................... 2.9 ............86 12.04 University-industry collaboration in R&D ................. 3.5 ............73 12.05 Gov’t procurement of advanced tech products ...... 3.3 ............90 12.06 Availability of scientists and engineers .................... 2.8 ..........138 12.07 PCT patents, applications/million pop.* .................. 0.3 ............84 Notes: Values are on a 1-to-7 scale unless otherwise annotated with an asterisk (*). For further details and explanation, please refer to the section “How to Read the Competitiveness Profiles� on page 109. The Africa Competitiveness Report 2013 | 177 Part 3: Competitiveness Profiles Nigeria Key indicators, 2011 Population (millions) ............................................163.1 GDP (PPP) per capita (int’l $), 1990–2011 GDP (US$ billions)* .............................................244.1 2,500 Nigeria Sub-Saharan Africa GDP per capita (US$) ......................................1,522.1 GDP (PPP) as share (%) of world total ..................0.52 2000 Sectoral value-added (% GDP), 2007 Agriculture ............................................................32.7 1,500 Industry ................................................................40.7 Services ...............................................................26.6 1,000 Human Development Index, 2011 500 Score, (0–1) best ..................................................0.46 1991 1993 1995 1997 1999 2001 2003 2005 2007 2009 2011 Rank (out of 187 economies).................................156 Sources: IMF; UNFPA; UNDP; World Bank The Global Competitiveness Index Rank Score Stage of development (out of 144) (1–7) GCI 2012–2013 ................................................ 115 ..... 3.7 Transition Transition GCI 2011–2012 (out of 142) ......................................... 127 ...... 3.4 1 1–2 2 2–3 3 GCI 2010–2011 (out of 139) ......................................... 127 ...... 3.4 Factor Efficiency Innovation driven driven driven Basic requirements (60.0%) ....................................... 130 ...... 3.5 Institutions .................................................................... 117 ...... 3.3 Institutions 7 Infrastructure ................................................................ 130 ...... 2.3 Innovation Infrastructure 6 Macroeconomic environment ......................................... 39 ...... 5.2 5 Health and primary education ....................................... 142 ...... 3.2 Business Macroeconomic 4 environment sophistication 3 Efficiency enhancers (35.0%) ...................................... 78 ...... 4.0 2 Health and Higher education and training ....................................... 113 ...... 3.3 Market size 1 primary Goods market efficiency ................................................ 88 ...... 4.2 education Labor market efficiency .................................................. 55 ...... 4.5 Financial market development ........................................ 68 ...... 4.1 Technological Higher education readiness and training Technological readiness ................................................ 112 ...... 3.1 Market size ..................................................................... 33 ...... 4.6 Financial market Goods market development ef�ciency Innovation and sophistication factors (5.0%) ............. 73 ...... 3.5 Labor market ef�ciency Business sophistication ................................................. 66 ...... 4.0 Nigeria Factor-driven economies Innovation ....................................................................... 78 ...... 3.1 The most problematic factors for doing business Access to financing ................................................................. 22.7 Corruption ............................................................................... 18.1 Inadequate supply of infrastructure .......................................... 17.6 Policy instability ....................................................................... 10.9 Crime and theft ......................................................................... 6.5 Government instability/coups .................................................... 4.7 Inefficient government bureaucracy ........................................... 4.2 Inflation ...................................................................................... 4.1 Tax regulations .......................................................................... 2.3 Foreign currency regulations ...................................................... 1.8 Poor work ethic in national labor force....................................... 1.7 Inadequately educated workforce .............................................. 1.6 Poor public health ..................................................................... 1.2 Tax rates.................................................................................... 1.1 Insufficient capacity to innovate ................................................. 0.9 Restrictive labor regulations ....................................................... 0.7 0 5 10 15 20 25 30 Percent of responses Note: From the list of factors above, respondents were asked to select the five most problematic for doing business in their country and to rank them between 1 (most problematic) and 5. The bars in the figure show the responses weighted according to their rankings. 178 | The Africa Competitiveness Report 2013 Part 3: Competitiveness Profiles Nigeria The Global Competitiveness Index in detail INDICATOR VALUE RANK/144 INDICATOR VALUE RANK/144 1st pillar: Institutions 6th pillar: Goods market efficiency 1.01 Property rights ....................................................... 3.4 ..........119 6.01 Intensity of local competition .................................. 4.5 ............92 1.02 Intellectual property protection ............................... 2.9 ..........110 6.02 Extent of market dominance .................................. 4.2 ............41 1.03 Diversion of public funds ........................................ 2.2 ..........135 6.03 Effectiveness of anti-monopoly policy ..................... 4.4 ............45 1.04 Public trust in politicians ......................................... 2.2 ..........102 6.04 Extent and effect of taxation................................... 4.3 ............22 1.05 Irregular payments and bribes ................................ 2.9 ..........127 6.05 Total tax rate, % profits* ....................................... 32.7 ............46 1.06 Judicial independence............................................ 3.7 ............73 6.06 No. procedures to start a business* .......................... 8 ............87 1.07 Favoritism in decisions of government officials ....... 2.5 ..........122 6.07 No. days to start a business* .................................. 34 ..........109 1.08 Wastefulness of government spending ................... 2.6 ..........111 6.08 Agricultural policy costs.......................................... 3.4 ..........114 1.09 Burden of government regulation ........................... 3.9 ............36 6.09 Prevalence of trade barriers ................................... 3.9 ..........108 1.10 Efficiency of legal framework in settling disputes .... 4.1 ............48 6.10 Trade tariffs, % duty* ............................................ 11.3 ..........115 1.11 Efficiency of legal framework in challenging regs. ... 3.7 ............65 6.11 Prevalence of foreign ownership............................. 4.7 ............67 1.12 Transparency of government policymaking............. 4.4 ............63 6.12 Business impact of rules on FDI ............................. 4.4 ............86 1.13 Gov’t services for improved business performance... 3.2 ............96 6.13 Burden of customs procedures .............................. 3.6 ............94 1.14 Business costs of terrorism .................................... 3.7 ..........139 6.14 Imports as a percentage of GDP* ........................ 32.7 ..........110 1.15 Business costs of crime and violence..................... 3.3 ..........128 6.15 Degree of customer orientation .............................. 4.5 ............88 1.16 Organized crime ..................................................... 3.5 ..........133 6.16 Buyer sophistication ............................................... 3.2 ............90 1.17 Reliability of police services .................................... 3.2 ..........115 1.18 Ethical behavior of firms ......................................... 3.5 ..........106 7th pillar: Labor market efficiency 1.19 Strength of auditing and reporting standards ......... 3.9 ..........113 7.01 Cooperation in labor-employer relations ................. 3.9 ..........115 1.20 Efficacy of corporate boards .................................. 4.3 ............89 7.02 Flexibility of wage determination ............................. 5.0 ............74 1.21 Protection of minority shareholders’ interests ......... 3.9 ............91 7.03 Hiring and firing practices ....................................... 4.9 ............17 1.22 Strength of investor protection, 0–10 (best)* .......... 5.7 ............52 7.04 Redundancy costs, weeks of salary* ....................... 16 ............76 7.05 Pay and productivity............................................... 3.6 ..........100 2nd pillar: Infrastructure 7.06 Reliance on professional management ................... 4.4 ............58 2.01 Quality of overall infrastructure ............................... 3.2 ..........117 7.07 Brain drain ............................................................. 3.8 ............48 2.02 Quality of roads ...................................................... 2.8 ..........114 7.08 Women in labor force, ratio to men* ..................... 0.76 ............80 2.03 Quality of railroad infrastructure .............................. 1.9 ............95 2.04 Quality of port infrastructure ................................... 3.6 ..........106 8th pillar: Financial market development 2.05 Quality of air transport infrastructure....................... 4.0 ..........100 8.01 Availability of financial services ............................... 3.8 ..........106 2.06 Available airline seat kms/week, millions* ........... 308.3 ............51 8.02 Affordability of financial services ............................. 4.1 ............68 2.07 Quality of electricity supply ..................................... 1.7 ..........138 8.03 Financing through local equity market .................... 3.8 ............51 2.08 Mobile telephone subscriptions/100 pop.* ........... 58.6 ..........124 8.04 Ease of access to loans ......................................... 2.1 ..........121 2.09 Fixed telephone lines/100 pop.* ............................. 0.4 ..........135 8.05 Venture capital availability ....................................... 2.5 ............72 8.06 Soundness of banks .............................................. 3.9 ..........129 3rd pillar: Macroeconomic environment 8.07 Regulation of securities exchanges ........................ 4.3 ............59 3.01 Government budget balance, % GDP* ................... 1.1 ............23 8.08 Legal rights index, 0–10 (best)* ................................. 9 ............11 3.02 Gross national savings, % GDP* .......................... 28.4 ............30 3.03 Inflation, annual % change* .................................. 10.8 ..........127 9th pillar: Technological readiness 3.04 General government debt, % GDP* ..................... 17.9 ............23 9.01 Availability of latest technologies ............................ 4.7 ............85 3.05 Country credit rating, 0–100 (best)* ...................... 35.8 ............90 9.02 Firm-level technology absorption ............................ 4.7 ............72 9.03 FDI and technology transfer ................................... 4.3 ............90 4th pillar: Health and primary education 9.04 Individuals using Internet, %* ............................... 28.4 ............91 4.01 Business impact of malaria .................................... 3.4 ..........129 9.05 Broadband Internet subscriptions/100 pop.* .......... 0.1 ..........119 4.02 Malaria cases/100,000 pop.* ........................ 36,059.5 ..........141 9.06 Int’l Internet bandwidth, kb/s per user* .................. 0.4 ..........139 4.03 Business impact of tuberculosis ............................. 4.3 ..........118 9.07 Mobile broadband subscriptions/100 pop.*............ 2.8 ............97 4.04 Tuberculosis cases/100,000 pop.* ..................... 133.0 ..........101 4.05 Business impact of HIV/AIDS ................................. 4.3 ..........114 10th pillar: Market size 4.06 HIV prevalence, % adult pop.* ............................... 3.6 ..........130 10.01 Domestic market size index, 1–7 (best)*................. 4.4 ............32 4.07 Infant mortality, deaths/1,000 live births* .............. 88.4 ..........139 10.02 Foreign market size index, 1–7 (best)* .................... 5.2 ............35 4.08 Life expectancy, years*......................................... 51.4 ..........134 4.09 Quality of primary education ................................... 3.2 ..........102 11th pillar: Business sophistication 4.10 Primary education enrollment, net %* .................. 57.6 ..........140 11.01 Local supplier quantity ........................................... 4.6 ............84 11.02 Local supplier quality.............................................. 4.3 ............80 5th pillar: Higher education and training 11.03 State of cluster development.................................. 4.0 ............52 5.01 Secondary education enrollment, gross %* .......... 44.0 ..........120 11.04 Nature of competitive advantage ............................ 3.6 ............60 5.02 Tertiary education enrollment, gross %*................ 10.3 ..........111 11.05 Value chain breadth................................................ 3.9 ............47 5.03 Quality of the educational system ........................... 3.5 ............83 11.06 Control of international distribution ......................... 3.9 ............82 5.04 Quality of math and science education .................. 3.6 ............92 11.07 Production process sophistication.......................... 3.6 ............75 5.05 Quality of management schools ............................. 3.9 ............86 11.08 Extent of marketing ................................................ 3.7 ............95 5.06 Internet access in schools ...................................... 3.5 ............99 11.09 Willingness to delegate authority ............................ 3.9 ............51 5.07 Availability of research and training services ........... 4.2 ............68 5.08 Extent of staff training ............................................ 4.1 ............57 12th pillar: Innovation 12.01 Capacity for innovation........................................... 3.2 ............63 12.02 Quality of scientific research institutions ................. 3.2 ............97 12.03 Company spending on R&D................................... 3.1 ............68 12.04 University-industry collaboration in R&D ................. 3.5 ............72 12.05 Gov’t procurement of advanced tech products ...... 3.6 ............64 12.06 Availability of scientists and engineers .................... 4.1 ............68 12.07 PCT patents, applications/million pop.* .................. 0.0 ..........116 Notes: Values are on a 1-to-7 scale unless otherwise annotated with an asterisk (*). For further details and explanation, please refer to the section “How to Read the Competitiveness Profiles� on page 109. The Africa Competitiveness Report 2013 | 179 Part 3: Competitiveness Profiles Rwanda Key indicators, 2011 Population (millions) ..............................................11.0 GDP (PPP) per capita (int’l $), 1990–2011 GDP (US$ billions)* .................................................6.3 2,500 Rwanda Sub-Saharan Africa GDP per capita (US$) .........................................620.3 GDP (PPP) as share (%) of world total ..................0.02 2,000 Sectoral value-added (% GDP), 2010 1,500 Agriculture ............................................................32.2 1,000 Industry ................................................................15.0 Services ...............................................................52.8 500 Human Development Index, 2011 0 Score, (0–1) best ..................................................0.43 1991 1993 1995 1997 1999 2001 2003 2005 2007 2009 2011 Rank (out of 187 economies).................................166 Sources: IMF; UNFPA; UNDP; World Bank The Global Competitiveness Index Rank Score Stage of development (out of 144) (1–7) GCI 2012–2013 .................................................. 63 ..... 4.2 Transition Transition GCI 2011–2012 (out of 142) ........................................... 70 ...... 4.2 1 1–2 2 2–3 3 GCI 2010–2011 (out of 139) ........................................... 80 ...... 4.0 Factor Efficiency Innovation driven driven driven Basic requirements (60.0%) ......................................... 70 ...... 4.6 Institutions ...................................................................... 20 ...... 5.2 Institutions 7 Infrastructure .................................................................. 96 ...... 3.2 Innovation Infrastructure 6 Macroeconomic environment ......................................... 78 ...... 4.6 5 Health and primary education ....................................... 100 ...... 5.3 Business Macroeconomic 4 environment sophistication 3 Efficiency enhancers (35.0%) ...................................... 94 ...... 3.8 2 Health and Higher education and training ....................................... 117 ...... 3.2 Market size 1 primary Goods market efficiency ................................................ 39 ...... 4.5 education Labor market efficiency .................................................. 11 ...... 5.1 Financial market development ........................................ 49 ...... 4.4 Technological Higher education readiness and training Technological readiness ................................................ 113 ...... 3.0 Market size ................................................................... 128 ...... 2.3 Financial market Goods market development ef�ciency Innovation and sophistication factors (5.0%) ............. 60 ...... 3.7 Labor market ef�ciency Business sophistication ................................................. 70 ...... 3.9 Rwanda Factor-driven economies Innovation ....................................................................... 51 ...... 3.4 The most problematic factors for doing business Access to financing ................................................................. 20.2 Inadequately educated workforce ............................................ 19.6 Tax rates.................................................................................. 17.5 Inadequate supply of infrastructure .......................................... 11.4 Tax regulations .......................................................................... 7.5 Poor work ethic in national labor force....................................... 6.5 Inflation ...................................................................................... 5.9 Foreign currency regulations ...................................................... 3.7 Restrictive labor regulations ....................................................... 2.4 Policy instability ......................................................................... 2.2 Inefficient government bureaucracy ........................................... 1.8 Corruption ................................................................................. 0.4 Crime and theft ......................................................................... 0.4 Government instability/coups .................................................... 0.4 Poor public health ..................................................................... 0.4 0 5 10 15 20 25 30 Percent of responses Note: From the list of factors above, respondents were asked to select the five most problematic for doing business in their country and to rank them between 1 (most problematic) and 5. The bars in the figure show the responses weighted according to their rankings. 180 | The Africa Competitiveness Report 2013 Part 3: Competitiveness Profiles Rwanda The Global Competitiveness Index in detail INDICATOR VALUE RANK/144 INDICATOR VALUE RANK/144 1st pillar: Institutions 6th pillar: Goods market efficiency 1.01 Property rights ....................................................... 5.2 ............34 6.01 Intensity of local competition .................................. 4.4 ............98 1.02 Intellectual property protection ............................... 4.8 ............32 6.02 Extent of market dominance .................................. 3.8 ............63 1.03 Diversion of public funds ........................................ 4.5 ............37 6.03 Effectiveness of anti-monopoly policy ..................... 4.4 ............44 1.04 Public trust in politicians ......................................... 5.6 ..............6 6.04 Extent and effect of taxation................................... 4.4 ............20 1.05 Irregular payments and bribes ................................ 5.8 ............21 6.05 Total tax rate, % profits* ....................................... 31.3 ............39 1.06 Judicial independence............................................ 5.3 ............25 6.06 No. procedures to start a business* .......................... 2 ..............3 1.07 Favoritism in decisions of government officials ....... 5.1 ..............5 6.07 No. days to start a business* .................................... 3 ..............4 1.08 Wastefulness of government spending ................... 5.5 ..............4 6.08 Agricultural policy costs.......................................... 5.5 ..............2 1.09 Burden of government regulation ........................... 5.3 ..............2 6.09 Prevalence of trade barriers ................................... 4.5 ............60 1.10 Efficiency of legal framework in settling disputes .... 5.1 ............15 6.10 Trade tariffs, % duty* .............................................. 8.8 ............98 1.11 Efficiency of legal framework in challenging regs. ... 4.8 ............17 6.11 Prevalence of foreign ownership............................. 4.6 ............77 1.12 Transparency of government policymaking............. 5.5 ..............7 6.12 Business impact of rules on FDI ............................. 5.3 ............18 1.13 Gov’t services for improved business performance... n/a ...........n/a 6.13 Burden of customs procedures .............................. 5.6 ..............6 1.14 Business costs of terrorism .................................... 5.6 ............66 6.14 Imports as a percentage of GDP* ........................ 33.6 ..........103 1.15 Business costs of crime and violence..................... 5.6 ............30 6.15 Degree of customer orientation .............................. 4.5 ............85 1.16 Organized crime ..................................................... 5.8 ............40 6.16 Buyer sophistication ............................................... 3.0 ..........101 1.17 Reliability of police services .................................... 5.9 ............19 1.18 Ethical behavior of firms ......................................... 5.0 ............28 7th pillar: Labor market efficiency 1.19 Strength of auditing and reporting standards ......... 4.6 ............69 7.01 Cooperation in labor-employer relations ................. 4.7 ............40 1.20 Efficacy of corporate boards .................................. 4.8 ............46 7.02 Flexibility of wage determination ............................. 5.2 ............58 1.21 Protection of minority shareholders’ interests ......... 4.8 ............30 7.03 Hiring and firing practices ....................................... 4.1 ............59 1.22 Strength of investor protection, 0–10 (best)* .......... 6.3 ............29 7.04 Redundancy costs, weeks of salary* ....................... 13 ............54 7.05 Pay and productivity............................................... 4.2 ............47 2nd pillar: Infrastructure 7.06 Reliance on professional management ................... 4.7 ............42 2.01 Quality of overall infrastructure ............................... 4.9 ............48 7.07 Brain drain ............................................................. 4.8 ............19 2.02 Quality of roads ...................................................... 5.0 ............40 7.08 Women in labor force, ratio to men* ..................... 1.02 ..............4 2.03 Quality of railroad infrastructure ........................ n/appl. ...........n/a 2.04 Quality of port infrastructure ................................... 3.5 ..........109 8th pillar: Financial market development 2.05 Quality of air transport infrastructure....................... 4.3 ............84 8.01 Availability of financial services ............................... 4.9 ............51 2.06 Available airline seat kms/week, millions* ............. 13.2 ..........128 8.02 Affordability of financial services ............................. 4.0 ............76 2.07 Quality of electricity supply ..................................... 4.2 ............87 8.03 Financing through local equity market .................... 3.7 ............56 2.08 Mobile telephone subscriptions/100 pop.* ........... 40.6 ..........137 8.04 Ease of access to loans ......................................... 3.4 ............32 2.09 Fixed telephone lines/100 pop.* ............................. 0.4 ..........138 8.05 Venture capital availability ....................................... 3.4 ............27 8.06 Soundness of banks .............................................. 4.9 ............84 3rd pillar: Macroeconomic environment 8.07 Regulation of securities exchanges ........................ 4.2 ............61 3.01 Government budget balance, % GDP* ..................-1.9 ............50 8.08 Legal rights index, 0–10 (best)* ................................. 8 ............24 3.02 Gross national savings, % GDP* .......................... 14.9 ............97 3.03 Inflation, annual % change* .................................... 5.7 ............85 9th pillar: Technological readiness 3.04 General government debt, % GDP* ..................... 23.4 ............32 9.01 Availability of latest technologies ............................ 4.7 ............87 3.05 Country credit rating, 0–100 (best)* ...................... 23.4 ..........120 9.02 Firm-level technology absorption ............................ 4.6 ............84 9.03 FDI and technology transfer ................................... 4.8 ............55 4th pillar: Health and primary education 9.04 Individuals using Internet, %* ................................. 7.0 ..........124 4.01 Business impact of malaria .................................... 4.2 ..........115 9.05 Broadband Internet subscriptions/100 pop.* .......... 0.0 ..........130 4.02 Malaria cases/100,000 pop.* .......................... 5,408.5 ..........120 9.06 Int’l Internet bandwidth, kb/s per user* .................. 4.4 ..........111 4.03 Business impact of tuberculosis ............................. 4.4 ..........114 9.07 Mobile broadband subscriptions/100 pop.*............ 6.4 ............77 4.04 Tuberculosis cases/100,000 pop.* ..................... 106.0 ............93 4.05 Business impact of HIV/AIDS ................................. 4.0 ..........122 10th pillar: Market size 4.06 HIV prevalence, % adult pop.* ............................... 2.9 ..........125 10.01 Domestic market size index, 1–7 (best)*................. 2.3 ..........124 4.07 Infant mortality, deaths/1,000 live births* .............. 59.1 ..........124 10.02 Foreign market size index, 1–7 (best)* .................... 2.1 ..........138 4.08 Life expectancy, years*......................................... 55.1 ..........126 4.09 Quality of primary education ................................... 3.9 ............64 11th pillar: Business sophistication 4.10 Primary education enrollment, net %* .................. 98.7 ............18 11.01 Local supplier quantity ........................................... 4.2 ..........119 11.02 Local supplier quality.............................................. 4.2 ............88 5th pillar: Higher education and training 11.03 State of cluster development.................................. 3.7 ............69 5.01 Secondary education enrollment, gross %* .......... 35.8 ..........128 11.04 Nature of competitive advantage ............................ 3.8 ............45 5.02 Tertiary education enrollment, gross %*.................. 5.5 ..........123 11.05 Value chain breadth................................................ 3.4 ............85 5.03 Quality of the educational system ........................... 4.1 ............50 11.06 Control of international distribution ......................... 3.7 ..........102 5.04 Quality of math and science education .................. 4.1 ............62 11.07 Production process sophistication.......................... 3.6 ............70 5.05 Quality of management schools ............................. 4.2 ............73 11.08 Extent of marketing ................................................ 3.9 ............76 5.06 Internet access in schools ...................................... 4.3 ............66 11.09 Willingness to delegate authority ............................ 4.2 ............37 5.07 Availability of research and training services ........... 3.5 ..........110 5.08 Extent of staff training ............................................ 3.9 ............69 12th pillar: Innovation 12.01 Capacity for innovation........................................... 3.3 ............55 12.02 Quality of scientific research institutions ................. 3.6 ............69 12.03 Company spending on R&D................................... 3.1 ............70 12.04 University-industry collaboration in R&D ................. 3.8 ............52 12.05 Gov’t procurement of advanced tech products ...... 4.5 ............10 12.06 Availability of scientists and engineers .................... 3.8 ............85 12.07 PCT patents, applications/million pop.* .................. 0.0 ..........119 Notes: Values are on a 1-to-7 scale unless otherwise annotated with an asterisk (*). For further details and explanation, please refer to the section “How to Read the Competitiveness Profiles� on page 109. The Africa Competitiveness Report 2013 | 181 Part 3: Competitiveness Profiles Senegal Key indicators, 2011 Population (millions) ..............................................12.8 GDP (PPP) per capita (int’l $), 1990–2011 GDP (US$ billions)* ...............................................14.5 2,500 Senegal Sub-Saharan Africa GDP per capita (US$) ......................................1,132.7 GDP (PPP) as share (%) of world total ..................0.03 2,000 Sectoral value-added (% GDP), 2011 Agriculture ............................................................17.8 1,500 Industry ................................................................23.7 Services ...............................................................58.4 1,000 Human Development Index, 2011 500 Score, (0–1) best ..................................................0.46 1991 1993 1995 1997 1999 2001 2003 2005 2007 2009 2011 Rank (out of 187 economies).................................155 Sources: IMF; UNFPA; UNDP; World Bank The Global Competitiveness Index Rank Score Stage of development (out of 144) (1–7) GCI 2012–2013 ................................................ 117 ..... 3.7 Transition Transition GCI 2011–2012 (out of 142) ......................................... 111 ...... 3.7 1 1–2 2 2–3 3 GCI 2010–2011 (out of 139) ......................................... 104 ...... 3.7 Factor Efficiency Innovation driven driven driven Basic requirements (60.0%) ....................................... 120 ...... 3.7 Institutions ...................................................................... 90 ...... 3.6 Institutions 7 Infrastructure ................................................................ 124 ...... 2.5 Innovation Infrastructure 6 Macroeconomic environment ......................................... 92 ...... 4.4 5 Health and primary education ....................................... 125 ...... 4.2 Business Macroeconomic 4 environment sophistication 3 Efficiency enhancers (35.0%) .................................... 106 ...... 3.6 2 Health and Higher education and training ....................................... 116 ...... 3.2 Market size 1 primary Goods market efficiency ................................................ 77 ...... 4.2 education Labor market efficiency .................................................. 80 ...... 4.3 Financial market development ........................................ 84 ...... 3.9 Technological Higher education readiness and training Technological readiness .................................................. 95 ...... 3.4 Market size ................................................................... 105 ...... 2.8 Financial market Goods market development ef�ciency Innovation and sophistication factors (5.0%) ............. 65 ...... 3.6 Labor market ef�ciency Business sophistication ................................................. 72 ...... 3.9 Senegal Factor-driven economies Innovation ....................................................................... 62 ...... 3.3 The most problematic factors for doing business Access to financing ................................................................. 22.9 Tax rates.................................................................................. 12.7 Tax regulations ........................................................................ 11.2 Corruption ................................................................................. 9.8 Insufficient capacity to innovate ................................................. 8.1 Restrictive labor regulations ....................................................... 6.8 Inadequate supply of infrastructure ............................................ 5.9 Poor work ethic in national labor force....................................... 4.0 Inflation ...................................................................................... 3.7 Foreign currency regulations ...................................................... 3.5 Inefficient government bureaucracy ........................................... 3.5 Policy instability ......................................................................... 3.1 Inadequately educated workforce .............................................. 2.9 Poor public health ..................................................................... 1.0 Crime and theft ......................................................................... 0.5 Government instability/coups .................................................... 0.4 0 5 10 15 20 25 30 Percent of responses Note: From the list of factors above, respondents were asked to select the five most problematic for doing business in their country and to rank them between 1 (most problematic) and 5. The bars in the figure show the responses weighted according to their rankings. 182 | The Africa Competitiveness Report 2013 Part 3: Competitiveness Profiles Senegal The Global Competitiveness Index in detail INDICATOR VALUE RANK/144 INDICATOR VALUE RANK/144 1st pillar: Institutions 6th pillar: Goods market efficiency 1.01 Property rights ....................................................... 4.1 ............78 6.01 Intensity of local competition .................................. 5.1 ............52 1.02 Intellectual property protection ............................... 3.1 ............95 6.02 Extent of market dominance .................................. 3.7 ............67 1.03 Diversion of public funds ........................................ 2.5 ..........122 6.03 Effectiveness of anti-monopoly policy ..................... 4.2 ............59 1.04 Public trust in politicians ......................................... 2.0 ..........123 6.04 Extent and effect of taxation................................... 2.8 ..........129 1.05 Irregular payments and bribes ................................ 3.5 ............94 6.05 Total tax rate, % profits* ....................................... 46.0 ............99 1.06 Judicial independence............................................ 2.6 ..........118 6.06 No. procedures to start a business* .......................... 3 ..............8 1.07 Favoritism in decisions of government officials ....... 2.7 ............98 6.07 No. days to start a business* .................................... 5 ............10 1.08 Wastefulness of government spending ................... 2.5 ..........115 6.08 Agricultural policy costs.......................................... 3.8 ............83 1.09 Burden of government regulation ........................... 3.1 ............91 6.09 Prevalence of trade barriers ................................... 3.8 ..........112 1.10 Efficiency of legal framework in settling disputes .... 3.7 ............71 6.10 Trade tariffs, % duty* ............................................ 11.4 ..........119 1.11 Efficiency of legal framework in challenging regs. ... 3.4 ............84 6.11 Prevalence of foreign ownership............................. 5.2 ............41 1.12 Transparency of government policymaking............. 4.1 ............84 6.12 Business impact of rules on FDI ............................. 4.6 ............68 1.13 Gov’t services for improved business performance... 3.4 ............86 6.13 Burden of customs procedures .............................. 4.8 ............34 1.14 Business costs of terrorism .................................... 5.4 ............83 6.14 Imports as a percentage of GDP* ........................ 45.5 ............71 1.15 Business costs of crime and violence..................... 5.4 ............40 6.15 Degree of customer orientation .............................. 4.8 ............51 1.16 Organized crime ..................................................... 5.3 ............66 6.16 Buyer sophistication ............................................... 2.5 ..........128 1.17 Reliability of police services .................................... 4.4 ............62 1.18 Ethical behavior of firms ......................................... 3.7 ............86 7th pillar: Labor market efficiency 1.19 Strength of auditing and reporting standards ......... 4.4 ............80 7.01 Cooperation in labor-employer relations ................. 4.3 ............71 1.20 Efficacy of corporate boards .................................. 4.7 ............49 7.02 Flexibility of wage determination ............................. 4.6 ..........103 1.21 Protection of minority shareholders’ interests ......... 4.2 ............69 7.03 Hiring and firing practices ....................................... 3.9 ............76 1.22 Strength of investor protection, 0–10 (best)* .......... 3.0 ..........130 7.04 Redundancy costs, weeks of salary* ....................... 14 ............63 7.05 Pay and productivity............................................... 3.7 ............85 2nd pillar: Infrastructure 7.06 Reliance on professional management ................... 3.9 ............95 2.01 Quality of overall infrastructure ............................... 3.4 ..........109 7.07 Brain drain ............................................................. 3.4 ............74 2.02 Quality of roads ...................................................... 3.2 ............97 7.08 Women in labor force, ratio to men* ..................... 0.75 ............86 2.03 Quality of railroad infrastructure .............................. 1.7 ..........105 2.04 Quality of port infrastructure ................................... 4.5 ............58 8th pillar: Financial market development 2.05 Quality of air transport infrastructure....................... 4.4 ............77 8.01 Availability of financial services ............................... 4.3 ............83 2.06 Available airline seat kms/week, millions* ............. 86.9 ............80 8.02 Affordability of financial services ............................. 3.9 ............84 2.07 Quality of electricity supply ..................................... 1.8 ..........134 8.03 Financing through local equity market .................... 3.0 ..........101 2.08 Mobile telephone subscriptions/100 pop.* ........... 73.3 ..........113 8.04 Ease of access to loans ......................................... 2.2 ..........117 2.09 Fixed telephone lines/100 pop.* ............................. 2.7 ..........117 8.05 Venture capital availability ....................................... 2.1 ..........114 8.06 Soundness of banks .............................................. 5.4 ............59 3rd pillar: Macroeconomic environment 8.07 Regulation of securities exchanges ........................ 4.0 ............77 3.01 Government budget balance, % GDP* ..................-6.1 ..........122 8.08 Legal rights index, 0–10 (best)* ................................. 6 ............65 3.02 Gross national savings, % GDP* .......................... 20.9 ............69 3.03 Inflation, annual % change* .................................... 3.4 ............40 9th pillar: Technological readiness 3.04 General government debt, % GDP* ..................... 40.6 ............73 9.01 Availability of latest technologies ............................ 5.3 ............49 3.05 Country credit rating, 0–100 (best)* ...................... 35.2 ............92 9.02 Firm-level technology absorption ............................ 5.5 ............36 9.03 FDI and technology transfer ................................... 4.7 ............63 4th pillar: Health and primary education 9.04 Individuals using Internet, %* ............................... 17.5 ..........102 4.01 Business impact of malaria .................................... 4.1 ..........120 9.05 Broadband Internet subscriptions/100 pop.* .......... 0.7 ..........106 4.02 Malaria cases/100,000 pop.* ........................ 29,332.2 ..........135 9.06 Int’l Internet bandwidth, kb/s per user* .................. 2.9 ..........118 4.03 Business impact of tuberculosis ............................. 4.5 ..........108 9.07 Mobile broadband subscriptions/100 pop.*............ 1.5 ..........107 4.04 Tuberculosis cases/100,000 pop.* ..................... 288.0 ..........128 4.05 Business impact of HIV/AIDS ................................. 4.8 ............95 10th pillar: Market size 4.06 HIV prevalence, % adult pop.* ............................... 0.9 ..........102 10.01 Domestic market size index, 1–7 (best)*................. 2.7 ............99 4.07 Infant mortality, deaths/1,000 live births* .............. 49.8 ..........113 10.02 Foreign market size index, 1–7 (best)* .................... 3.1 ..........117 4.08 Life expectancy, years*......................................... 59.0 ..........118 4.09 Quality of primary education ................................... 3.3 ............96 11th pillar: Business sophistication 4.10 Primary education enrollment, net %* .................. 75.5 ..........129 11.01 Local supplier quantity ........................................... 5.2 ............27 11.02 Local supplier quality.............................................. 4.9 ............42 5th pillar: Higher education and training 11.03 State of cluster development.................................. 3.4 ............90 5.01 Secondary education enrollment, gross %* .......... 37.4 ..........126 11.04 Nature of competitive advantage ............................ 3.1 ............98 5.02 Tertiary education enrollment, gross %*.................. 7.9 ..........117 11.05 Value chain breadth................................................ 4.1 ............39 5.03 Quality of the educational system ........................... 3.6 ............73 11.06 Control of international distribution ......................... 3.8 ............95 5.04 Quality of math and science education .................. 3.8 ............79 11.07 Production process sophistication.......................... 3.4 ............91 5.05 Quality of management schools ............................. 4.7 ............41 11.08 Extent of marketing ................................................ 4.1 ............69 5.06 Internet access in schools ...................................... 3.8 ............84 11.09 Willingness to delegate authority ............................ 3.1 ..........122 5.07 Availability of research and training services ........... 4.7 ............38 5.08 Extent of staff training ............................................ 3.0 ..........135 12th pillar: Innovation 12.01 Capacity for innovation........................................... 3.2 ............69 12.02 Quality of scientific research institutions ................. 3.9 ............55 12.03 Company spending on R&D................................... 3.3 ............49 12.04 University-industry collaboration in R&D ................. 3.4 ............86 12.05 Gov’t procurement of advanced tech products ...... 3.8 ............51 12.06 Availability of scientists and engineers .................... 4.6 ............35 12.07 PCT patents, applications/million pop.* .................. 0.0 ..........108 Notes: Values are on a 1-to-7 scale unless otherwise annotated with an asterisk (*). For further details and explanation, please refer to the section “How to Read the Competitiveness Profiles� on page 109. The Africa Competitiveness Report 2013 | 183 Part 3: Competitiveness Profiles Seychelles Key indicators, 2011 Population (millions) ................................................0.1 GDP (PPP) per capita (int’l $), 1990–2011 GDP (US$ billions)* .................................................1.0 25,000 Seychelles Sub-Saharan Africa GDP per capita (US$) ....................................11,204.1 GDP (PPP) as share (%) of world total ..................0.00 20,000 Sectoral value-added (% GDP), 2009 15,000 Agriculture ..............................................................1.8 10,000 Industry ................................................................17.9 Services ...............................................................80.3 5,000 Human Development Index, 2011 0 Score, (0–1) best ..................................................0.77 1991 1993 1995 1997 1999 2001 2003 2005 2007 2009 2011 Rank (out of 187 economies)...................................52 Sources: IMF; UNFPA; UNDP; World Bank The Global Competitiveness Index Rank Score Stage of development (out of 144) (1–7) GCI 2012–2013 .................................................. 76 ..... 4.1 Transition Transition GCI 2011–2012 (out of 142) .......................................... n/a ...... n/a 1 1–2 2 2–3 3 GCI 2010–2011 (out of 139) .......................................... n/a ...... n/a Factor Efficiency Innovation driven driven driven Basic requirements (34.6%) ......................................... 46 ...... 4.9 Institutions ...................................................................... 47 ...... 4.2 Institutions 7 Infrastructure .................................................................. 42 ...... 4.7 Innovation Infrastructure 6 Macroeconomic environment ......................................... 79 ...... 4.6 5 Health and primary education ......................................... 47 ...... 5.9 Business Macroeconomic 4 environment sophistication 3 Efficiency enhancers (50.0%) ...................................... 91 ...... 3.8 2 Health and Higher education and training ......................................... 31 ...... 5.0 Market size 1 primary Goods market efficiency ................................................ 70 ...... 4.3 education Labor market efficiency .................................................. 48 ...... 4.5 Financial market development ........................................ 94 ...... 3.8 Technological Higher education readiness and training Technological readiness .................................................. 66 ...... 3.9 Market size ................................................................... 142 ...... 1.4 Financial market Goods market development ef�ciency Innovation and sophistication factors (15.4%) ........... 87 ...... 3.4 Labor market ef�ciency Business sophistication ................................................. 87 ...... 3.7 Seychelles Economies in transition from 2 to 3 Innovation ....................................................................... 93 ...... 3.0 The most problematic factors for doing business Access to financing ................................................................. 17.2 Poor work ethic in national labor force..................................... 10.5 Inadequate supply of infrastructure ............................................ 9.7 Tax rates.................................................................................... 8.7 Inefficient government bureaucracy ........................................... 7.9 Restrictive labor regulations ....................................................... 7.7 Inadequately educated workforce .............................................. 7.4 Inflation ...................................................................................... 6.4 Crime and theft ......................................................................... 5.1 Insufficient capacity to innovate ................................................. 4.9 Corruption ................................................................................. 4.6 Tax regulations .......................................................................... 4.6 Policy instability ......................................................................... 4.4 Foreign currency regulations ...................................................... 0.8 Government instability/coups .................................................... 0.0 Poor public health ..................................................................... 0.0 0 5 10 15 20 25 30 Percent of responses Note: From the list of factors above, respondents were asked to select the five most problematic for doing business in their country and to rank them between 1 (most problematic) and 5. The bars in the figure show the responses weighted according to their rankings. 184 | The Africa Competitiveness Report 2013 Part 3: Competitiveness Profiles Seychelles The Global Competitiveness Index in detail INDICATOR VALUE RANK/144 INDICATOR VALUE RANK/144 1st pillar: Institutions 6th pillar: Goods market efficiency 1.01 Property rights ....................................................... 4.7 ............50 6.01 Intensity of local competition .................................. 4.5 ............90 1.02 Intellectual property protection ............................... 3.9 ............52 6.02 Extent of market dominance .................................. 3.5 ............87 1.03 Diversion of public funds ........................................ 3.9 ............46 6.03 Effectiveness of anti-monopoly policy ..................... 3.9 ............81 1.04 Public trust in politicians ......................................... 3.6 ............38 6.04 Extent and effect of taxation................................... 3.4 ............82 1.05 Irregular payments and bribes ................................ 4.3 ............57 6.05 Total tax rate, % profits* ....................................... 32.2 ............44 1.06 Judicial independence............................................ 4.0 ............62 6.06 No. procedures to start a business* ........................ 10 ..........110 1.07 Favoritism in decisions of government officials ....... 3.5 ............47 6.07 No. days to start a business* .................................. 39 ..........117 1.08 Wastefulness of government spending ................... 4.0 ............25 6.08 Agricultural policy costs.......................................... 3.9 ............63 1.09 Burden of government regulation ........................... 4.2 ............18 6.09 Prevalence of trade barriers ................................... 4.5 ............59 1.10 Efficiency of legal framework in settling disputes .... 4.0 ............55 6.10 Trade tariffs, % duty* .............................................. 0.2 ..............5 1.11 Efficiency of legal framework in challenging regs. ... 4.2 ............35 6.11 Prevalence of foreign ownership............................. 5.0 ............57 1.12 Transparency of government policymaking............. 4.8 ............37 6.12 Business impact of rules on FDI ............................. 4.9 ............47 1.13 Gov’t services for improved business performance... 4.4 ............24 6.13 Burden of customs procedures .............................. 4.4 ............50 1.14 Business costs of terrorism .................................... 4.9 ..........112 6.14 Imports as a percentage of GDP* ...................... 112.5 ..............5 1.15 Business costs of crime and violence..................... 4.2 ..........102 6.15 Degree of customer orientation .............................. 4.2 ..........109 1.16 Organized crime ..................................................... 5.8 ............45 6.16 Buyer sophistication ............................................... 3.2 ............91 1.17 Reliability of police services .................................... 3.7 ............97 1.18 Ethical behavior of firms ......................................... 4.2 ............51 7th pillar: Labor market efficiency 1.19 Strength of auditing and reporting standards ......... 4.7 ............59 7.01 Cooperation in labor-employer relations ................. 4.8 ............36 1.20 Efficacy of corporate boards .................................. 4.5 ............70 7.02 Flexibility of wage determination ............................. 5.1 ............67 1.21 Protection of minority shareholders’ interests ......... 4.5 ............45 7.03 Hiring and firing practices ....................................... 3.8 ............82 1.22 Strength of investor protection, 0–10 (best)* .......... 5.7 ............52 7.04 Redundancy costs, weeks of salary* ....................... 13 ............61 7.05 Pay and productivity............................................... 3.8 ............76 2nd pillar: Infrastructure 7.06 Reliance on professional management ................... 4.1 ............78 2.01 Quality of overall infrastructure ............................... 4.7 ............54 7.07 Brain drain ............................................................. 3.3 ............85 2.02 Quality of roads ...................................................... 4.3 ............60 7.08 Women in labor force, ratio to men* ..................... 0.86 ............43 2.03 Quality of railroad infrastructure ........................ n/appl. ...........n/a 2.04 Quality of port infrastructure ................................... 5.0 ............43 8th pillar: Financial market development 2.05 Quality of air transport infrastructure....................... 5.0 ............55 8.01 Availability of financial services ............................... 4.3 ............86 2.06 Available airline seat kms/week, millions* ............. 23.6 ..........116 8.02 Affordability of financial services ............................. 4.0 ............83 2.07 Quality of electricity supply ..................................... 5.3 ............55 8.03 Financing through local equity market .................... 2.7 ..........116 2.08 Mobile telephone subscriptions/100 pop.* ......... 145.7 ............17 8.04 Ease of access to loans ......................................... 3.4 ............36 2.09 Fixed telephone lines/100 pop.* ........................... 32.1 ............37 8.05 Venture capital availability ....................................... 2.4 ............81 8.06 Soundness of banks .............................................. 5.2 ............69 3rd pillar: Macroeconomic environment 8.07 Regulation of securities exchanges ........................ 4.1 ............67 3.01 Government budget balance, % GDP* ................... 2.6 ............16 8.08 Legal rights index, 0–10 (best)* ................................. 4 ............99 3.02 Gross national savings, % GDP* .......................... 13.8 ..........105 3.03 Inflation, annual % change* .................................... 2.6 ..............1 9th pillar: Technological readiness 3.04 General government debt, % GDP* ..................... 83.0 ..........128 9.01 Availability of latest technologies ............................ 5.0 ............67 3.05 Country credit rating, 0–100 (best)* ...................... 19.5 ..........131 9.02 Firm-level technology absorption ............................ 5.1 ............51 9.03 FDI and technology transfer ................................... 4.3 ............92 4th pillar: Health and primary education 9.04 Individuals using Internet, %* ............................... 43.2 ............65 4.01 Business impact of malaria .............................. n/appl. ..............1 9.05 Broadband Internet subscriptions/100 pop.* .......... 8.9 ............59 4.02 Malaria cases/100,000 pop.* ................................(NE) ..............1 9.06 Int’l Internet bandwidth, kb/s per user* .................. 5.9 ..........101 4.03 Business impact of tuberculosis ............................. 4.3 ..........117 9.07 Mobile broadband subscriptions/100 pop.*............ 4.7 ............81 4.04 Tuberculosis cases/100,000 pop.* ....................... 31.0 ............58 4.05 Business impact of HIV/AIDS ................................. 3.6 ..........128 10th pillar: Market size 4.06 HIV prevalence, % adult pop.* ............................... 3.0 ..........126 10.01 Domestic market size index, 1–7 (best)*................. 1.0 ..........144 4.07 Infant mortality, deaths/1,000 live births* .............. 11.7 ............60 10.02 Foreign market size index, 1–7 (best)* .................... 2.5 ..........134 4.08 Life expectancy, years*......................................... 73.0 ............80 4.09 Quality of primary education ................................... 4.5 ............40 11th pillar: Business sophistication 4.10 Primary education enrollment, net %* .................. 95.1 ............52 11.01 Local supplier quantity ........................................... 4.2 ..........118 11.02 Local supplier quality.............................................. 3.8 ..........120 5th pillar: Higher education and training 11.03 State of cluster development.................................. 3.5 ............81 5.01 Secondary education enrollment, gross %* ........ 119.2 ..............5 11.04 Nature of competitive advantage ............................ 4.5 ............27 5.02 Tertiary education enrollment, gross %*.................. n/a ...........n/a 11.05 Value chain breadth................................................ 3.3 ............98 5.03 Quality of the educational system ........................... 4.1 ............48 11.06 Control of international distribution ......................... 3.6 ..........107 5.04 Quality of math and science education .................. 4.0 ............72 11.07 Production process sophistication.......................... 3.2 ..........101 5.05 Quality of management schools ............................. 4.0 ............84 11.08 Extent of marketing ................................................ 3.5 ..........106 5.06 Internet access in schools ...................................... 4.6 ............52 11.09 Willingness to delegate authority ............................ 3.7 ............71 5.07 Availability of research and training services ........... 3.5 ..........111 5.08 Extent of staff training ............................................ 4.0 ............62 12th pillar: Innovation 12.01 Capacity for innovation........................................... 3.0 ............84 12.02 Quality of scientific research institutions ................. 3.3 ............95 12.03 Company spending on R&D................................... 2.7 ..........108 12.04 University-industry collaboration in R&D ................. 3.0 ..........121 12.05 Gov’t procurement of advanced tech products ...... 3.9 ............38 12.06 Availability of scientists and engineers .................... 3.2 ..........129 12.07 PCT patents, applications/million pop.* .................. 5.8 ............41 Notes: Values are on a 1-to-7 scale unless otherwise annotated with an asterisk (*). For further details and explanation, please refer to the section “How to Read the Competitiveness Profiles� on page 109. The Africa Competitiveness Report 2013 | 185 Part 3: Competitiveness Profiles Sierra Leone Key indicators, 2011 Population (millions) ................................................6.0 GDP (PPP) per capita (int’l $), 1990–2011 GDP (US$ billions)* .................................................2.9 2,500 Sierra Leone Sub-Saharan Africa GDP per capita (US$) .........................................485.8 GDP (PPP) as share (%) of world total ..................0.01 2,000 Sectoral value-added (% GDP), 2011 1,500 Agriculture ............................................................44.4 1,000 Industry ................................................................18.2 Services ...............................................................37.4 500 Human Development Index, 2011 0 Score, (0–1) best ..................................................0.34 1991 1993 1995 1997 1999 2001 2003 2005 2007 2009 2011 Rank (out of 187 economies).................................180 Sources: IMF; UNFPA; UNDP; World Bank The Global Competitiveness Index Rank Score Stage of development (out of 144) (1–7) GCI 2012–2013 ................................................ 143 ..... 2.8 Transition Transition GCI 2011–2012 (out of 142) .......................................... n/a ...... n/a 1 1–2 2 2–3 3 GCI 2010–2011 (out of 139) .......................................... n/a ...... n/a Factor Efficiency Innovation driven driven driven Basic requirements (60.0%) ....................................... 144 ...... 2.8 Institutions ...................................................................... 95 ...... 3.6 Institutions 7 Infrastructure ................................................................ 138 ...... 2.1 Innovation Infrastructure 6 Macroeconomic environment ....................................... 143 ...... 2.5 5 Health and primary education ....................................... 143 ...... 3.0 Business Macroeconomic 4 environment sophistication 3 Efficiency enhancers (35.0%) .................................... 140 ...... 2.9 2 Health and Higher education and training ....................................... 141 ...... 2.3 Market size 1 primary Goods market efficiency .............................................. 116 ...... 3.8 education Labor market efficiency ................................................ 114 ...... 3.9 Financial market development ...................................... 125 ...... 3.3 Technological Higher education readiness and training Technological readiness ................................................ 141 ...... 2.5 Market size ................................................................... 138 ...... 1.8 Financial market Goods market development ef�ciency Innovation and sophistication factors (5.0%) ........... 138 ...... 2.7 Labor market ef�ciency Business sophistication ............................................... 136 ...... 3.1 Sierra Leone Factor-driven economies Innovation ..................................................................... 139 ...... 2.3 The most problematic factors for doing business Access to financing ................................................................. 16.4 Inadequate supply of infrastructure .......................................... 14.2 Corruption ............................................................................... 11.7 Inadequately educated workforce ............................................ 10.3 Inflation ...................................................................................... 8.8 Inefficient government bureaucracy ........................................... 6.8 Poor work ethic in national labor force....................................... 6.6 Tax rates.................................................................................... 6.5 Foreign currency regulations ...................................................... 5.3 Crime and theft ......................................................................... 3.3 Tax regulations .......................................................................... 2.6 Insufficient capacity to innovate ................................................. 2.5 Poor public health ..................................................................... 2.2 Restrictive labor regulations ....................................................... 1.6 Policy instability ......................................................................... 1.1 Government instability/coups .................................................... 0.1 0 5 10 15 20 25 30 Percent of responses Note: From the list of factors above, respondents were asked to select the five most problematic for doing business in their country and to rank them between 1 (most problematic) and 5. The bars in the figure show the responses weighted according to their rankings. 186 | The Africa Competitiveness Report 2013 Part 3: Competitiveness Profiles Sierra Leone The Global Competitiveness Index in detail INDICATOR VALUE RANK/144 INDICATOR VALUE RANK/144 1st pillar: Institutions 6th pillar: Goods market efficiency 1.01 Property rights ....................................................... 3.6 ..........111 6.01 Intensity of local competition .................................. 3.7 ..........136 1.02 Intellectual property protection ............................... 3.1 ..........102 6.02 Extent of market dominance .................................. 3.0 ..........131 1.03 Diversion of public funds ........................................ 2.8 ............96 6.03 Effectiveness of anti-monopoly policy ..................... 3.5 ..........104 1.04 Public trust in politicians ......................................... 2.6 ............74 6.04 Extent and effect of taxation................................... 3.8 ............48 1.05 Irregular payments and bribes ................................ 3.1 ..........117 6.05 Total tax rate, % profits* ....................................... 32.1 ............43 1.06 Judicial independence............................................ 2.8 ..........107 6.06 No. procedures to start a business* .......................... 6 ............47 1.07 Favoritism in decisions of government officials ....... 2.8 ............94 6.07 No. days to start a business* .................................. 12 ............53 1.08 Wastefulness of government spending ................... 3.3 ............65 6.08 Agricultural policy costs.......................................... 4.0 ............57 1.09 Burden of government regulation ........................... 3.9 ............35 6.09 Prevalence of trade barriers ................................... 4.3 ............70 1.10 Efficiency of legal framework in settling disputes .... 3.8 ............64 6.10 Trade tariffs, % duty* .............................................. n/a ...........n/a 1.11 Efficiency of legal framework in challenging regs. ... 3.0 ..........110 6.11 Prevalence of foreign ownership............................. 5.0 ............52 1.12 Transparency of government policymaking............. 3.8 ..........114 6.12 Business impact of rules on FDI ............................. 4.5 ............80 1.13 Gov’t services for improved business performance... 3.3 ............92 6.13 Burden of customs procedures .............................. 3.0 ..........133 1.14 Business costs of terrorism .................................... 6.0 ............44 6.14 Imports as a percentage of GDP* ........................ 47.4 ............65 1.15 Business costs of crime and violence..................... 4.6 ............83 6.15 Degree of customer orientation .............................. 3.9 ..........121 1.16 Organized crime ..................................................... 5.1 ............79 6.16 Buyer sophistication ............................................... 2.3 ..........134 1.17 Reliability of police services .................................... 3.6 ..........104 1.18 Ethical behavior of firms ......................................... 3.6 ............92 7th pillar: Labor market efficiency 1.19 Strength of auditing and reporting standards ......... 3.7 ..........126 7.01 Cooperation in labor-employer relations ................. 4.4 ............59 1.20 Efficacy of corporate boards .................................. 4.0 ..........112 7.02 Flexibility of wage determination ............................. 4.8 ............89 1.21 Protection of minority shareholders’ interests ......... 3.6 ..........112 7.03 Hiring and firing practices ....................................... 4.7 ............25 1.22 Strength of investor protection, 0–10 (best)* .......... 6.3 ............29 7.04 Redundancy costs, weeks of salary* ....................... 43 ..........134 7.05 Pay and productivity............................................... 3.3 ..........121 2nd pillar: Infrastructure 7.06 Reliance on professional management ................... 4.1 ............83 2.01 Quality of overall infrastructure ............................... 2.9 ..........127 7.07 Brain drain ............................................................. 2.3 ..........130 2.02 Quality of roads ...................................................... 2.8 ..........116 7.08 Women in labor force, ratio to men* ..................... 0.97 ..............6 2.03 Quality of railroad infrastructure .............................. 1.3 ..........114 2.04 Quality of port infrastructure ................................... 3.3 ..........118 8th pillar: Financial market development 2.05 Quality of air transport infrastructure....................... 2.7 ..........140 8.01 Availability of financial services ............................... 3.3 ..........134 2.06 Available airline seat kms/week, millions* ............... 6.7 ..........137 8.02 Affordability of financial services ............................. 3.1 ..........135 2.07 Quality of electricity supply ..................................... 2.6 ..........121 8.03 Financing through local equity market .................... 2.1 ..........137 2.08 Mobile telephone subscriptions/100 pop.* ........... 35.6 ..........139 8.04 Ease of access to loans ......................................... 2.0 ..........129 2.09 Fixed telephone lines/100 pop.* ............................. 0.2 ..........142 8.05 Venture capital availability ....................................... 1.6 ..........141 8.06 Soundness of banks .............................................. 4.6 ..........101 3rd pillar: Macroeconomic environment 8.07 Regulation of securities exchanges ........................ 3.0 ..........128 3.01 Government budget balance, % GDP* ..................-5.7 ..........120 8.08 Legal rights index, 0–10 (best)* ................................. 7 ............43 3.02 Gross national savings, % GDP* ............................ 0.7 ..........139 3.03 Inflation, annual % change* .................................. 18.5 ..........140 9th pillar: Technological readiness 3.04 General government debt, % GDP* ..................... 60.0 ..........106 9.01 Availability of latest technologies ............................ 3.5 ..........140 3.05 Country credit rating, 0–100 (best)* ...................... 16.6 ..........136 9.02 Firm-level technology absorption ............................ 3.9 ..........131 9.03 FDI and technology transfer ................................... 4.3 ............89 4th pillar: Health and primary education 9.04 Individuals using Internet, %* ................................. 0.3 ..........144 4.01 Business impact of malaria .................................... 2.0 ..........144 9.05 Broadband Internet subscriptions/100 pop.* .......... 0.0 ..........143 4.02 Malaria cases/100,000 pop.* ........................ 32,096.4 ..........139 9.06 Int’l Internet bandwidth, kb/s per user* .................. 0.1 ..........144 4.03 Business impact of tuberculosis ............................. 4.1 ..........124 9.07 Mobile broadband subscriptions/100 pop.*............ 0.3 ..........122 4.04 Tuberculosis cases/100,000 pop.* ..................... 682.0 ..........142 4.05 Business impact of HIV/AIDS ................................. 4.3 ..........116 10th pillar: Market size 4.06 HIV prevalence, % adult pop.* ............................... 1.6 ..........119 10.01 Domestic market size index, 1–7 (best)*................. 1.7 ..........139 4.07 Infant mortality, deaths/1,000 live births* ............ 113.7 ..........144 10.02 Foreign market size index, 1–7 (best)* .................... 2.1 ..........139 4.08 Life expectancy, years*......................................... 47.4 ..........143 4.09 Quality of primary education ................................... 2.9 ..........116 11th pillar: Business sophistication 4.10 Primary education enrollment, net %* .................... n/a ...........n/a 11.01 Local supplier quantity ........................................... 4.2 ..........107 11.02 Local supplier quality.............................................. 3.8 ..........116 5th pillar: Higher education and training 11.03 State of cluster development.................................. 3.0 ..........117 5.01 Secondary education enrollment, gross %* .......... 27.6 ..........136 11.04 Nature of competitive advantage ............................ 3.0 ..........105 5.02 Tertiary education enrollment, gross %*.................. 2.1 ..........138 11.05 Value chain breadth................................................ 2.5 ..........138 5.03 Quality of the educational system ........................... 2.8 ..........125 11.06 Control of international distribution ......................... 3.0 ..........136 5.04 Quality of math and science education .................. 2.5 ..........134 11.07 Production process sophistication.......................... 2.3 ..........140 5.05 Quality of management schools ............................. 3.2 ..........126 11.08 Extent of marketing ................................................ 2.5 ..........139 5.06 Internet access in schools ...................................... 1.9 ..........136 11.09 Willingness to delegate authority ............................ 3.1 ..........121 5.07 Availability of research and training services ........... 2.8 ..........134 5.08 Extent of staff training ............................................ 3.1 ..........125 12th pillar: Innovation 12.01 Capacity for innovation........................................... 2.3 ..........136 12.02 Quality of scientific research institutions ................. 2.1 ..........139 12.03 Company spending on R&D................................... 1.9 ..........142 12.04 University-industry collaboration in R&D ................. 2.3 ..........137 12.05 Gov’t procurement of advanced tech products ...... 3.2 ..........103 12.06 Availability of scientists and engineers .................... 2.6 ..........141 12.07 PCT patents, applications/million pop.* .................. 0.0 ..........105 Notes: Values are on a 1-to-7 scale unless otherwise annotated with an asterisk (*). For further details and explanation, please refer to the section “How to Read the Competitiveness Profiles� on page 109. The Africa Competitiveness Report 2013 | 187 Part 3: Competitiveness Profiles South Africa Key indicators, 2011 Population (millions) ..............................................50.8 GDP (PPP) per capita (int’l $), 1990–2011 GDP (US$ billions)* .............................................408.7 12,000 South Africa Sub-Saharan Africa GDP per capita (US$) ......................................8,078.5 10,000 GDP (PPP) as share (%) of world total ..................0.70 8,000 Sectoral value-added (% GDP), 2011 Agriculture ..............................................................2.4 6,000 Industry ................................................................30.6 4,000 Services ...............................................................67.0 2,000 Human Development Index, 2011 0 Score, (0–1) best ..................................................0.62 1991 1993 1995 1997 1999 2001 2003 2005 2007 2009 2011 Rank (out of 187 economies).................................123 Sources: IMF; UNFPA; UNDP; World Bank The Global Competitiveness Index Rank Score Stage of development (out of 144) (1–7) GCI 2012–2013 .................................................. 52 ..... 4.4 Transition Transition GCI 2011–2012 (out of 142) ........................................... 50 ...... 4.3 1 1–2 2 2–3 3 GCI 2010–2011 (out of 139) ........................................... 54 ...... 4.3 Factor Efficiency Innovation driven driven driven Basic requirements (40.0%) ......................................... 84 ...... 4.3 Institutions ...................................................................... 43 ...... 4.4 Institutions 7 Infrastructure .................................................................. 63 ...... 4.1 Innovation Infrastructure 6 Macroeconomic environment ......................................... 69 ...... 4.6 5 Health and primary education ....................................... 132 ...... 3.9 Business Macroeconomic 4 environment sophistication 3 Efficiency enhancers (50.0%) ...................................... 37 ...... 4.5 2 Health and Higher education and training ......................................... 84 ...... 4.0 Market size 1 primary Goods market efficiency ................................................ 32 ...... 4.7 education Labor market efficiency ................................................ 113 ...... 3.9 Financial market development .......................................... 3 ...... 5.7 Technological Higher education readiness and training Technological readiness .................................................. 62 ...... 4.0 Market size ..................................................................... 25 ...... 4.8 Financial market Goods market development ef�ciency Innovation and sophistication factors (10.0%) ........... 42 ...... 3.9 Labor market ef�ciency Business sophistication ................................................. 38 ...... 4.3 South Africa Efficiency-driven economies Innovation ....................................................................... 42 ...... 3.5 The most problematic factors for doing business Inadequately educated workforce ............................................ 19.7 Restrictive labor regulations ..................................................... 18.5 Inefficient government bureaucracy ......................................... 16.4 Inadequate supply of infrastructure .......................................... 10.8 Corruption ................................................................................. 9.0 Policy instability ......................................................................... 6.1 Access to financing ................................................................... 4.4 Crime and theft ......................................................................... 4.1 Poor work ethic in national labor force....................................... 3.7 Insufficient capacity to innovate ................................................. 3.4 Foreign currency regulations ...................................................... 1.3 Tax rates.................................................................................... 0.7 Tax regulations .......................................................................... 0.7 Inflation ...................................................................................... 0.6 Poor public health ..................................................................... 0.3 Government instability/coups .................................................... 0.0 0 5 10 15 20 25 30 Percent of responses Note: From the list of factors above, respondents were asked to select the five most problematic for doing business in their country and to rank them between 1 (most problematic) and 5. The bars in the figure show the responses weighted according to their rankings. 188 | The Africa Competitiveness Report 2013 Part 3: Competitiveness Profiles South Africa The Global Competitiveness Index in detail INDICATOR VALUE RANK/144 INDICATOR VALUE RANK/144 1st pillar: Institutions 6th pillar: Goods market efficiency 1.01 Property rights ....................................................... 5.4 ............26 6.01 Intensity of local competition .................................. 5.1 ............51 1.02 Intellectual property protection ............................... 5.3 ............20 6.02 Extent of market dominance .................................. 4.2 ............39 1.03 Diversion of public funds ........................................ 3.0 ............84 6.03 Effectiveness of anti-monopoly policy ..................... 5.3 ..............6 1.04 Public trust in politicians ......................................... 2.4 ............88 6.04 Extent and effect of taxation................................... 4.0 ............31 1.05 Irregular payments and bribes ................................ 4.6 ............47 6.05 Total tax rate, % profits* ....................................... 33.1 ............48 1.06 Judicial independence............................................ 5.3 ............27 6.06 No. procedures to start a business* .......................... 5 ............29 1.07 Favoritism in decisions of government officials ....... 2.6 ..........110 6.07 No. days to start a business* .................................. 19 ............80 1.08 Wastefulness of government spending ................... 3.4 ............62 6.08 Agricultural policy costs.......................................... 4.2 ............47 1.09 Burden of government regulation ........................... 2.7 ..........123 6.09 Prevalence of trade barriers ................................... 4.7 ............39 1.10 Efficiency of legal framework in settling disputes .... 5.0 ............17 6.10 Trade tariffs, % duty* .............................................. 6.5 ............79 1.11 Efficiency of legal framework in challenging regs. ... 4.8 ............16 6.11 Prevalence of foreign ownership............................. 5.3 ............31 1.12 Transparency of government policymaking............. 4.8 ............35 6.12 Business impact of rules on FDI ............................. 4.7 ............61 1.13 Gov’t services for improved business performance... 3.1 ..........106 6.13 Burden of customs procedures .............................. 4.3 ............56 1.14 Business costs of terrorism .................................... 6.2 ............29 6.14 Imports as a percentage of GDP* ........................ 34.8 ............99 1.15 Business costs of crime and violence..................... 2.9 ..........134 6.15 Degree of customer orientation .............................. 4.7 ............61 1.16 Organized crime ..................................................... 4.3 ..........111 6.16 Buyer sophistication ............................................... 4.1 ............32 1.17 Reliability of police services .................................... 3.8 ............90 1.18 Ethical behavior of firms ......................................... 4.3 ............48 7th pillar: Labor market efficiency 1.19 Strength of auditing and reporting standards ......... 6.6 ..............1 7.01 Cooperation in labor-employer relations ................. 2.9 ..........144 1.20 Efficacy of corporate boards .................................. 5.8 ..............1 7.02 Flexibility of wage determination ............................. 2.8 ..........140 1.21 Protection of minority shareholders’ interests ......... 6.0 ..............2 7.03 Hiring and firing practices ....................................... 2.2 ..........143 1.22 Strength of investor protection, 0–10 (best)* .......... 8.0 ............10 7.04 Redundancy costs, weeks of salary* ......................... 9 ............33 7.05 Pay and productivity............................................... 2.9 ..........134 2nd pillar: Infrastructure 7.06 Reliance on professional management ................... 5.6 ............13 2.01 Quality of overall infrastructure ............................... 4.5 ............58 7.07 Brain drain ............................................................. 3.8 ............47 2.02 Quality of roads ...................................................... 4.9 ............42 7.08 Women in labor force, ratio to men* ..................... 0.75 ............85 2.03 Quality of railroad infrastructure .............................. 3.4 ............46 2.04 Quality of port infrastructure ................................... 4.7 ............52 8th pillar: Financial market development 2.05 Quality of air transport infrastructure....................... 6.1 ............15 8.01 Availability of financial services ............................... 6.4 ..............2 2.06 Available airline seat kms/week, millions* ........ 1,146.3 ............24 8.02 Affordability of financial services ............................. 5.2 ............22 2.07 Quality of electricity supply ..................................... 3.9 ............94 8.03 Financing through local equity market .................... 5.4 ..............3 2.08 Mobile telephone subscriptions/100 pop.* ......... 126.8 ............35 8.04 Ease of access to loans ......................................... 3.5 ............30 2.09 Fixed telephone lines/100 pop.* ............................. 8.2 ............99 8.05 Venture capital availability ....................................... 3.1 ............37 8.06 Soundness of banks .............................................. 6.7 ..............2 3rd pillar: Macroeconomic environment 8.07 Regulation of securities exchanges ........................ 6.5 ..............1 3.01 Government budget balance, % GDP* ..................-4.6 ..........105 8.08 Legal rights index, 0–10 (best)* ............................... 10 ..............1 3.02 Gross national savings, % GDP* .......................... 16.5 ............87 3.03 Inflation, annual % change* .................................... 5.0 ............76 9th pillar: Technological readiness 3.04 General government debt, % GDP* ..................... 38.8 ............68 9.01 Availability of latest technologies ............................ 5.7 ............39 3.05 Country credit rating, 0–100 (best)* ...................... 61.4 ............48 9.02 Firm-level technology absorption ............................ 5.4 ............38 9.03 FDI and technology transfer ................................... 5.0 ............38 4th pillar: Health and primary education 9.04 Individuals using Internet, %* ............................... 21.0 ............95 4.01 Business impact of malaria .................................... 5.1 ..........100 9.05 Broadband Internet subscriptions/100 pop.* .......... 1.8 ............95 4.02 Malaria cases/100,000 pop.* ............................... 31.8 ............89 9.06 Int’l Internet bandwidth, kb/s per user* ................ 18.9 ............63 4.03 Business impact of tuberculosis ............................. 3.5 ..........132 9.07 Mobile broadband subscriptions/100 pop.*.......... 19.8 ............49 4.04 Tuberculosis cases/100,000 pop.* ..................... 981.0 ..........143 4.05 Business impact of HIV/AIDS ................................. 3.0 ..........135 10th pillar: Market size 4.06 HIV prevalence, % adult pop.* ............................. 17.8 ..........141 10.01 Domestic market size index, 1–7 (best)*................. 4.8 ............24 4.07 Infant mortality, deaths/1,000 live births* .............. 40.7 ..........107 10.02 Foreign market size index, 1–7 (best)* .................... 5.1 ............39 4.08 Life expectancy, years*......................................... 52.1 ..........133 4.09 Quality of primary education ................................... 2.3 ..........132 11th pillar: Business sophistication 4.10 Primary education enrollment, net %* .................. 85.1 ..........115 11.01 Local supplier quantity ........................................... 5.0 ............43 11.02 Local supplier quality.............................................. 5.1 ............34 5th pillar: Higher education and training 11.03 State of cluster development.................................. 4.0 ............47 5.01 Secondary education enrollment, gross %* .......... 93.8 ............53 11.04 Nature of competitive advantage ............................ 3.0 ..........107 5.02 Tertiary education enrollment, gross %*................ 15.4 ..........101 11.05 Value chain breadth................................................ 3.2 ..........106 5.03 Quality of the educational system ........................... 2.2 ..........140 11.06 Control of international distribution ......................... 4.5 ............26 5.04 Quality of math and science education .................. 2.0 ..........143 11.07 Production process sophistication.......................... 4.2 ............43 5.05 Quality of management schools ............................. 5.3 ............15 11.08 Extent of marketing ................................................ 5.1 ............29 5.06 Internet access in schools ...................................... 3.1 ..........111 11.09 Willingness to delegate authority ............................ 4.3 ............33 5.07 Availability of research and training services ........... 4.4 ............51 5.08 Extent of staff training ............................................ 4.6 ............26 12th pillar: Innovation 12.01 Capacity for innovation........................................... 3.5 ............41 12.02 Quality of scientific research institutions ................. 4.6 ............34 12.03 Company spending on R&D................................... 3.5 ............39 12.04 University-industry collaboration in R&D ................. 4.5 ............30 12.05 Gov’t procurement of advanced tech products ...... 3.1 ..........105 12.06 Availability of scientists and engineers .................... 3.4 ..........122 12.07 PCT patents, applications/million pop.* .................. 6.8 ............37 Notes: Values are on a 1-to-7 scale unless otherwise annotated with an asterisk (*). For further details and explanation, please refer to the section “How to Read the Competitiveness Profiles� on page 109. The Africa Competitiveness Report 2013 | 189 Part 3: Competitiveness Profiles Swaziland Key indicators, 2011 Population (millions) ................................................1.2 GDP (PPP) per capita (int’l $), 1990–2011 GDP (US$ billions)* .................................................4.0 6,000 Swaziland Sub-Saharan Africa GDP per capita (US$) ......................................3,383.5 GDP (PPP) as share (%) of world total ..................0.01 5,000 Sectoral value-added (% GDP), 2011 4,000 Agriculture ..............................................................7.9 3,000 Industry ................................................................45.8 Services ...............................................................46.3 2000 Human Development Index, 2011 1,000 Score, (0–1) best ..................................................0.52 1991 1993 1995 1997 1999 2001 2003 2005 2007 2009 2011 Rank (out of 187 economies).................................140 Sources: IMF; UNFPA; UNDP; World Bank The Global Competitiveness Index Rank Score Stage of development (out of 144) (1–7) GCI 2012–2013 ................................................ 135 ..... 3.3 Transition Transition GCI 2011–2012 (out of 142) ......................................... 134 ...... 3.3 1 1–2 2 2–3 3 GCI 2010–2011 (out of 139) ......................................... 126 ...... 3.4 Factor Efficiency Innovation driven driven driven Basic requirements (40.0%) ....................................... 131 ...... 3.5 Institutions ...................................................................... 88 ...... 3.6 Institutions 7 Infrastructure .................................................................. 99 ...... 3.2 Innovation Infrastructure 6 Macroeconomic environment ....................................... 128 ...... 3.6 5 Health and primary education ....................................... 135 ...... 3.6 Business Macroeconomic 4 environment sophistication 3 Efficiency enhancers (50.0%) .................................... 130 ...... 3.2 2 Health and Higher education and training ....................................... 125 ...... 2.9 Market size 1 primary Goods market efficiency .............................................. 107 ...... 3.9 education Labor market efficiency ................................................ 119 ...... 3.9 Financial market development ........................................ 89 ...... 3.8 Technological Higher education readiness and training Technological readiness ................................................ 128 ...... 2.7 Market size ................................................................... 133 ...... 2.0 Financial market Goods market development ef�ciency Innovation and sophistication factors (10.0%) ......... 134 ...... 2.8 Labor market ef�ciency Business sophistication ............................................... 124 ...... 3.3 Swaziland Efficiency-driven economies Innovation ..................................................................... 137 ...... 2.3 The most problematic factors for doing business Inefficient government bureaucracy ......................................... 20.4 Corruption ............................................................................... 16.6 Access to financing ................................................................... 9.7 Insufficient capacity to innovate ................................................. 7.0 Inadequate supply of infrastructure ............................................ 6.3 Tax rates.................................................................................... 5.9 Restrictive labor regulations ....................................................... 5.5 Government instability/coups .................................................... 5.2 Policy instability ......................................................................... 5.0 Tax regulations .......................................................................... 4.7 Inflation ...................................................................................... 4.1 Poor work ethic in national labor force....................................... 3.9 Inadequately educated workforce .............................................. 2.1 Poor public health ..................................................................... 1.4 Crime and theft ......................................................................... 1.1 Foreign currency regulations ...................................................... 1.1 0 5 10 15 20 25 30 Percent of responses Note: From the list of factors above, respondents were asked to select the five most problematic for doing business in their country and to rank them between 1 (most problematic) and 5. The bars in the figure show the responses weighted according to their rankings. 190 | The Africa Competitiveness Report 2013 Part 3: Competitiveness Profiles Swaziland The Global Competitiveness Index in detail INDICATOR VALUE RANK/144 INDICATOR VALUE RANK/144 1st pillar: Institutions 6th pillar: Goods market efficiency 1.01 Property rights ....................................................... 4.0 ............83 6.01 Intensity of local competition .................................. 4.2 ..........111 1.02 Intellectual property protection ............................... 3.6 ............69 6.02 Extent of market dominance .................................. 3.2 ..........110 1.03 Diversion of public funds ........................................ 2.6 ..........114 6.03 Effectiveness of anti-monopoly policy ..................... 3.3 ..........126 1.04 Public trust in politicians ......................................... 2.4 ............93 6.04 Extent and effect of taxation................................... 3.2 ..........100 1.05 Irregular payments and bribes ................................ 3.7 ............83 6.05 Total tax rate, % profits* ....................................... 36.8 ............66 1.06 Judicial independence............................................ 3.3 ............90 6.06 No. procedures to start a business* ........................ 12 ..........121 1.07 Favoritism in decisions of government officials ....... 2.6 ..........111 6.07 No. days to start a business* .................................. 56 ..........127 1.08 Wastefulness of government spending ................... 2.2 ..........129 6.08 Agricultural policy costs.......................................... 3.9 ............70 1.09 Burden of government regulation ........................... 3.0 ............99 6.09 Prevalence of trade barriers ................................... 4.0 ............97 1.10 Efficiency of legal framework in settling disputes .... 3.5 ............81 6.10 Trade tariffs, % duty* .............................................. 6.7 ............83 1.11 Efficiency of legal framework in challenging regs. ... 3.0 ..........108 6.11 Prevalence of foreign ownership............................. 5.3 ............36 1.12 Transparency of government policymaking............. 3.5 ..........132 6.12 Business impact of rules on FDI ............................. 4.3 ............98 1.13 Gov’t services for improved business performance... 2.9 ..........121 6.13 Burden of customs procedures .............................. 3.0 ..........135 1.14 Business costs of terrorism .................................... 5.5 ............79 6.14 Imports as a percentage of GDP* ........................ 71.7 ............31 1.15 Business costs of crime and violence..................... 4.3 ..........100 6.15 Degree of customer orientation .............................. 4.4 ............94 1.16 Organized crime ..................................................... 5.1 ............77 6.16 Buyer sophistication ............................................... 3.1 ..........100 1.17 Reliability of police services .................................... 4.2 ............75 1.18 Ethical behavior of firms ......................................... 3.6 ............99 7th pillar: Labor market efficiency 1.19 Strength of auditing and reporting standards ......... 5.1 ............40 7.01 Cooperation in labor-employer relations ................. 4.0 ..........102 1.20 Efficacy of corporate boards .................................. 4.4 ............87 7.02 Flexibility of wage determination ............................. 4.7 ............96 1.21 Protection of minority shareholders’ interests ......... 4.2 ............67 7.03 Hiring and firing practices ....................................... 3.3 ..........117 1.22 Strength of investor protection, 0–10 (best)* .......... 4.3 ..........101 7.04 Redundancy costs, weeks of salary* ....................... 15 ............67 7.05 Pay and productivity............................................... 3.3 ..........116 2nd pillar: Infrastructure 7.06 Reliance on professional management ................... 4.2 ............72 2.01 Quality of overall infrastructure ............................... 4.2 ............73 7.07 Brain drain ............................................................. 2.4 ..........127 2.02 Quality of roads ...................................................... 4.6 ............47 7.08 Women in labor force, ratio to men* ..................... 0.63 ..........111 2.03 Quality of railroad infrastructure .............................. 3.2 ............48 2.04 Quality of port infrastructure ................................... 4.2 ............68 8th pillar: Financial market development 2.05 Quality of air transport infrastructure....................... 3.5 ..........116 8.01 Availability of financial services ............................... 4.2 ............87 2.06 Available airline seat kms/week, millions* ............... 0.3 ..........143 8.02 Affordability of financial services ............................. 3.8 ............91 2.07 Quality of electricity supply ..................................... 3.9 ............92 8.03 Financing through local equity market .................... 2.6 ..........118 2.08 Mobile telephone subscriptions/100 pop.* ........... 63.7 ..........121 8.04 Ease of access to loans ......................................... 2.4 ..........102 2.09 Fixed telephone lines/100 pop.* ............................. 4.4 ..........109 8.05 Venture capital availability ....................................... 2.1 ..........120 8.06 Soundness of banks .............................................. 5.6 ............46 3rd pillar: Macroeconomic environment 8.07 Regulation of securities exchanges ........................ 3.7 ..........102 3.01 Government budget balance, % GDP* ..................-6.8 ..........129 8.08 Legal rights index, 0–10 (best)* ................................. 6 ............65 3.02 Gross national savings, % GDP* ...........................-1.5 ..........141 3.03 Inflation, annual % change* .................................... 6.1 ............91 9th pillar: Technological readiness 3.04 General government debt, % GDP* ..................... 17.5 ............22 9.01 Availability of latest technologies ............................ 3.8 ..........131 3.05 Country credit rating, 0–100 (best)* ...................... 21.4 ..........123 9.02 Firm-level technology absorption ............................ 4.0 ..........124 9.03 FDI and technology transfer ................................... 3.9 ..........118 4th pillar: Health and primary education 9.04 Individuals using Internet, %* ............................... 18.1 ............99 4.01 Business impact of malaria .................................... 4.1 ..........117 9.05 Broadband Internet subscriptions/100 pop.* .......... 0.2 ..........116 4.02 Malaria cases/100,000 pop.* ............................... 88.8 ............98 9.06 Int’l Internet bandwidth, kb/s per user* .................. 2.3 ..........122 4.03 Business impact of tuberculosis ............................. 2.3 ..........144 9.07 Mobile broadband subscriptions/100 pop.*............ 0.7 ..........113 4.04 Tuberculosis cases/100,000 pop.* .................. 1,287.0 ..........144 4.05 Business impact of HIV/AIDS ................................. 2.1 ..........144 10th pillar: Market size 4.06 HIV prevalence, % adult pop.* ............................. 25.9 ..........144 10.01 Domestic market size index, 1–7 (best)*................. 1.7 ..........134 4.07 Infant mortality, deaths/1,000 live births* .............. 55.1 ..........118 10.02 Foreign market size index, 1–7 (best)* .................... 2.8 ..........128 4.08 Life expectancy, years*......................................... 48.3 ..........142 4.09 Quality of primary education ................................... 3.3 ............99 11th pillar: Business sophistication 4.10 Primary education enrollment, net %* .................. 85.5 ..........111 11.01 Local supplier quantity ........................................... 3.7 ..........136 11.02 Local supplier quality.............................................. 3.8 ..........119 5th pillar: Higher education and training 11.03 State of cluster development.................................. 3.2 ..........100 5.01 Secondary education enrollment, gross %* .......... 58.1 ..........111 11.04 Nature of competitive advantage ............................ 2.7 ..........120 5.02 Tertiary education enrollment, gross %*.................. 4.4 ..........126 11.05 Value chain breadth................................................ 2.7 ..........130 5.03 Quality of the educational system ........................... 3.1 ..........110 11.06 Control of international distribution ......................... 3.5 ..........117 5.04 Quality of math and science education .................. 3.2 ..........110 11.07 Production process sophistication.......................... 2.9 ..........120 5.05 Quality of management schools ............................. 2.8 ..........135 11.08 Extent of marketing ................................................ 3.0 ..........126 5.06 Internet access in schools ...................................... 2.5 ..........126 11.09 Willingness to delegate authority ............................ 3.2 ..........115 5.07 Availability of research and training services ........... 3.0 ..........132 5.08 Extent of staff training ............................................ 3.8 ............87 12th pillar: Innovation 12.01 Capacity for innovation........................................... 2.4 ..........130 12.02 Quality of scientific research institutions ................. 2.3 ..........133 12.03 Company spending on R&D................................... 2.3 ..........131 12.04 University-industry collaboration in R&D ................. 2.6 ..........130 12.05 Gov’t procurement of advanced tech products ...... 2.5 ..........137 12.06 Availability of scientists and engineers .................... 2.6 ..........144 12.07 PCT patents, applications/million pop.* .................. 0.2 ............90 Notes: Values are on a 1-to-7 scale unless otherwise annotated with an asterisk (*). For further details and explanation, please refer to the section “How to Read the Competitiveness Profiles� on page 109. The Africa Competitiveness Report 2013 | 191 Part 3: Competitiveness Profiles Tanzania Key indicators, 2011 Population (millions) ..............................................46.4 GDP (PPP) per capita (int’l $), 1990–2011 GDP (US$ billions)* ...............................................23.9 2,500 Tanzania Sub-Saharan Africa GDP per capita (US$) .........................................565.5 GDP (PPP) as share (%) of world total ..................0.09 2,000 Sectoral value-added (% GDP), 2011 Agriculture ............................................................27.1 1,500 Industry ................................................................26.5 Services ...............................................................46.4 1,000 Human Development Index, 2011 500 Score, (0–1) best ..................................................0.47 1991 1993 1995 1997 1999 2001 2003 2005 2007 2009 2011 Rank (out of 187 economies).................................152 Sources: IMF; UNFPA; UNDP; World Bank The Global Competitiveness Index Rank Score Stage of development (out of 144) (1–7) GCI 2012–2013 ................................................ 120 ..... 3.6 Transition Transition GCI 2011–2012 (out of 142) ......................................... 120 ...... 3.6 1 1–2 2 2–3 3 GCI 2010–2011 (out of 139) ......................................... 113 ...... 3.6 Factor Efficiency Innovation driven driven driven Basic requirements (60.0%) ....................................... 122 ...... 3.7 Institutions ...................................................................... 86 ...... 3.6 Institutions 7 Infrastructure ................................................................ 132 ...... 2.3 Innovation Infrastructure 6 Macroeconomic environment ....................................... 107 ...... 4.1 5 Health and primary education ....................................... 113 ...... 4.6 Business Macroeconomic 4 environment sophistication 3 Efficiency enhancers (35.0%) .................................... 113 ...... 3.6 2 Health and Higher education and training ....................................... 132 ...... 2.7 Market size 1 primary Goods market efficiency .............................................. 110 ...... 3.9 education Labor market efficiency .................................................. 47 ...... 4.6 Financial market development ........................................ 85 ...... 3.9 Technological Higher education readiness and training Technological readiness ................................................ 122 ...... 2.8 Market size ..................................................................... 77 ...... 3.5 Financial market Goods market development ef�ciency Innovation and sophistication factors (5.0%) ............. 92 ...... 3.3 Labor market ef�ciency Business sophistication ............................................... 106 ...... 3.5 Tanzania Factor-driven economies Innovation ....................................................................... 75 ...... 3.1 The most problematic factors for doing business Corruption ............................................................................... 16.3 Access to financing ................................................................. 15.6 Inadequate supply of infrastructure .......................................... 10.8 Inflation .................................................................................... 10.7 Inefficient government bureaucracy ........................................... 8.0 Tax rates.................................................................................... 7.2 Inadequately educated workforce .............................................. 6.7 Poor work ethic in national labor force....................................... 4.5 Tax regulations .......................................................................... 4.4 Foreign currency regulations ...................................................... 3.3 Poor public health ..................................................................... 2.6 Crime and theft ......................................................................... 2.5 Restrictive labor regulations ....................................................... 2.1 Policy instability ......................................................................... 1.9 Insufficient capacity to innovate ................................................. 1.8 Government instability/coups .................................................... 1.5 0 5 10 15 20 25 30 Percent of responses Note: From the list of factors above, respondents were asked to select the five most problematic for doing business in their country and to rank them between 1 (most problematic) and 5. The bars in the figure show the responses weighted according to their rankings. 192 | The Africa Competitiveness Report 2013 Part 3: Competitiveness Profiles Tanzania The Global Competitiveness Index in detail INDICATOR VALUE RANK/144 INDICATOR VALUE RANK/144 1st pillar: Institutions 6th pillar: Goods market efficiency 1.01 Property rights ....................................................... 3.6 ..........106 6.01 Intensity of local competition .................................. 4.2 ..........109 1.02 Intellectual property protection ............................... 3.1 ............97 6.02 Extent of market dominance .................................. 3.3 ..........104 1.03 Diversion of public funds ........................................ 3.0 ............78 6.03 Effectiveness of anti-monopoly policy ..................... 4.1 ............62 1.04 Public trust in politicians ......................................... 2.8 ............66 6.04 Extent and effect of taxation................................... 3.3 ............94 1.05 Irregular payments and bribes ................................ 3.1 ..........116 6.05 Total tax rate, % profits* ....................................... 45.5 ............97 1.06 Judicial independence............................................ 3.5 ............77 6.06 No. procedures to start a business* ........................ 12 ..........121 1.07 Favoritism in decisions of government officials ....... 3.3 ............56 6.07 No. days to start a business* .................................. 29 ............99 1.08 Wastefulness of government spending ................... 3.1 ............82 6.08 Agricultural policy costs.......................................... 3.8 ............82 1.09 Burden of government regulation ........................... 3.5 ............58 6.09 Prevalence of trade barriers ................................... 3.7 ..........122 1.10 Efficiency of legal framework in settling disputes .... 3.7 ............68 6.10 Trade tariffs, % duty* .............................................. 9.6 ..........103 1.11 Efficiency of legal framework in challenging regs. ... 3.6 ............70 6.11 Prevalence of foreign ownership............................. 4.3 ............96 1.12 Transparency of government policymaking............. 4.0 ............93 6.12 Business impact of rules on FDI ............................. 4.8 ............50 1.13 Gov’t services for improved business performance... 3.6 ............72 6.13 Burden of customs procedures .............................. 3.4 ..........113 1.14 Business costs of terrorism .................................... 4.6 ..........120 6.14 Imports as a percentage of GDP* ........................ 54.8 ............53 1.15 Business costs of crime and violence..................... 4.5 ............87 6.15 Degree of customer orientation .............................. 4.4 ............97 1.16 Organized crime ..................................................... 4.8 ............93 6.16 Buyer sophistication ............................................... 2.8 ..........118 1.17 Reliability of police services .................................... 3.6 ..........102 1.18 Ethical behavior of firms ......................................... 3.5 ..........109 7th pillar: Labor market efficiency 1.19 Strength of auditing and reporting standards ......... 3.9 ..........114 7.01 Cooperation in labor-employer relations ................. 4.0 ..........101 1.20 Efficacy of corporate boards .................................. 4.4 ............78 7.02 Flexibility of wage determination ............................. 4.4 ..........109 1.21 Protection of minority shareholders’ interests ......... 3.9 ............94 7.03 Hiring and firing practices ....................................... 4.0 ............70 1.22 Strength of investor protection, 0–10 (best)* .......... 5.0 ............80 7.04 Redundancy costs, weeks of salary* ......................... 9 ............33 7.05 Pay and productivity............................................... 3.6 ..........103 2nd pillar: Infrastructure 7.06 Reliance on professional management ................... 4.1 ............77 2.01 Quality of overall infrastructure ............................... 3.1 ..........124 7.07 Brain drain ............................................................. 3.1 ............94 2.02 Quality of roads ...................................................... 3.2 ............94 7.08 Women in labor force, ratio to men* ..................... 0.99 ..............5 2.03 Quality of railroad infrastructure .............................. 2.3 ............82 2.04 Quality of port infrastructure ................................... 3.3 ..........117 8th pillar: Financial market development 2.05 Quality of air transport infrastructure....................... 3.5 ..........117 8.01 Availability of financial services ............................... 3.9 ..........102 2.06 Available airline seat kms/week, millions* ............. 80.2 ............83 8.02 Affordability of financial services ............................. 3.6 ..........106 2.07 Quality of electricity supply ..................................... 1.9 ..........132 8.03 Financing through local equity market .................... 3.4 ............74 2.08 Mobile telephone subscriptions/100 pop.* ........... 55.5 ..........126 8.04 Ease of access to loans ......................................... 2.4 ..........100 2.09 Fixed telephone lines/100 pop.* ............................. 0.3 ..........139 8.05 Venture capital availability ....................................... 2.4 ............80 8.06 Soundness of banks .............................................. 4.4 ..........114 3rd pillar: Macroeconomic environment 8.07 Regulation of securities exchanges ........................ 3.6 ..........107 3.01 Government budget balance, % GDP* ..................-6.0 ..........121 8.08 Legal rights index, 0–10 (best)* ................................. 8 ............24 3.02 Gross national savings, % GDP* .......................... 23.0 ............57 3.03 Inflation, annual % change* .................................... 7.0 ..........100 9th pillar: Technological readiness 3.04 General government debt, % GDP* ..................... 44.4 ............84 9.01 Availability of latest technologies ............................ 4.1 ..........122 3.05 Country credit rating, 0–100 (best)* ...................... 30.3 ..........104 9.02 Firm-level technology absorption ............................ 3.9 ..........129 9.03 FDI and technology transfer ................................... 4.7 ............66 4th pillar: Health and primary education 9.04 Individuals using Internet, %* ............................... 12.0 ..........113 4.01 Business impact of malaria .................................... 2.5 ..........140 9.05 Broadband Internet subscriptions/100 pop.* .......... 0.0 ..........137 4.02 Malaria cases/100,000 pop.* ........................ 26,132.8 ..........128 9.06 Int’l Internet bandwidth, kb/s per user* .................. 0.9 ..........133 4.03 Business impact of tuberculosis ............................. 3.5 ..........133 9.07 Mobile broadband subscriptions/100 pop.*............ 1.2 ..........109 4.04 Tuberculosis cases/100,000 pop.* ..................... 177.0 ..........110 4.05 Business impact of HIV/AIDS ................................. 3.2 ..........131 10th pillar: Market size 4.06 HIV prevalence, % adult pop.* ............................... 5.6 ..........133 10.01 Domestic market size index, 1–7 (best)*................. 3.4 ............73 4.07 Infant mortality, deaths/1,000 live births* .............. 60.2 ..........125 10.02 Foreign market size index, 1–7 (best)* .................... 3.9 ............83 4.08 Life expectancy, years*......................................... 57.4 ..........122 4.09 Quality of primary education ................................... 3.0 ..........114 11th pillar: Business sophistication 4.10 Primary education enrollment, net %* .................. 98.0 ............27 11.01 Local supplier quantity ........................................... 4.2 ..........114 11.02 Local supplier quality.............................................. 3.7 ..........125 5th pillar: Higher education and training 11.03 State of cluster development.................................. 3.3 ............95 5.01 Secondary education enrollment, gross %* .......... 27.4 ..........137 11.04 Nature of competitive advantage ............................ 3.1 ..........103 5.02 Tertiary education enrollment, gross %*.................. 2.1 ..........137 11.05 Value chain breadth................................................ 3.4 ............89 5.03 Quality of the educational system ........................... 3.5 ............80 11.06 Control of international distribution ......................... 3.8 ............92 5.04 Quality of math and science education .................. 2.8 ..........122 11.07 Production process sophistication.......................... 3.0 ..........117 5.05 Quality of management schools ............................. 3.4 ..........118 11.08 Extent of marketing ................................................ 3.1 ..........122 5.06 Internet access in schools ...................................... 2.8 ..........120 11.09 Willingness to delegate authority ............................ 3.7 ............67 5.07 Availability of research and training services ........... 3.6 ..........103 5.08 Extent of staff training ............................................ 3.8 ............77 12th pillar: Innovation 12.01 Capacity for innovation........................................... 3.1 ............71 12.02 Quality of scientific research institutions ................. 3.6 ............71 12.03 Company spending on R&D................................... 3.3 ............55 12.04 University-industry collaboration in R&D ................. 3.8 ............56 12.05 Gov’t procurement of advanced tech products ...... 3.5 ............73 12.06 Availability of scientists and engineers .................... 3.6 ..........105 12.07 PCT patents, applications/million pop.* .................. 0.0 ..........117 Notes: Values are on a 1-to-7 scale unless otherwise annotated with an asterisk (*). For further details and explanation, please refer to the section “How to Read the Competitiveness Profiles� on page 109. The Africa Competitiveness Report 2013 | 193 Part 3: Competitiveness Profiles Uganda Key indicators, 2011 Population (millions) ..............................................34.6 GDP (PPP) per capita (int’l $), 1990–2011 GDP (US$ billions)* ...............................................17.4 2,500 Uganda Sub-Saharan Africa GDP per capita (US$) .........................................504.9 GDP (PPP) as share (%) of world total ..................0.06 2,000 Sectoral value-added (% GDP), 2011 1,500 Agriculture ............................................................23.4 1,000 Industry ................................................................25.4 Services ...............................................................51.1 500 Human Development Index, 2011 0 Score, (0–1) best ..................................................0.45 1991 1993 1995 1997 1999 2001 2003 2005 2007 2009 2011 Rank (out of 187 economies).................................161 Sources: IMF; UNFPA; UNDP; World Bank The Global Competitiveness Index Rank Score Stage of development (out of 144) (1–7) GCI 2012–2013 ................................................ 123 ..... 3.5 Transition Transition GCI 2011–2012 (out of 142) ......................................... 121 ...... 3.6 1 1–2 2 2–3 3 GCI 2010–2011 (out of 139) ......................................... 118 ...... 3.5 Factor Efficiency Innovation driven driven driven Basic requirements (60.0%) ....................................... 132 ...... 3.5 Institutions .................................................................... 102 ...... 3.5 Institutions 7 Infrastructure ................................................................ 133 ...... 2.3 Innovation Infrastructure 6 Macroeconomic environment ....................................... 119 ...... 3.8 5 Health and primary education ....................................... 123 ...... 4.4 Business Macroeconomic 4 environment sophistication 3 Efficiency enhancers (35.0%) .................................... 104 ...... 3.7 2 Health and Higher education and training ....................................... 127 ...... 2.9 Market size 1 primary Goods market efficiency .............................................. 103 ...... 4.0 education Labor market efficiency .................................................. 23 ...... 4.8 Financial market development ........................................ 62 ...... 4.1 Technological Higher education readiness and training Technological readiness ................................................ 117 ...... 2.9 Market size ..................................................................... 85 ...... 3.2 Financial market Goods market development ef�ciency Innovation and sophistication factors (5.0%) ........... 101 ...... 3.3 Labor market ef�ciency Business sophistication ............................................... 105 ...... 3.5 Uganda Factor-driven economies Innovation ....................................................................... 82 ...... 3.0 The most problematic factors for doing business Corruption ............................................................................... 18.4 Access to financing ................................................................. 16.7 Inflation .................................................................................... 16.3 Inadequate supply of infrastructure .......................................... 12.8 Tax rates.................................................................................... 9.6 Insufficient capacity to innovate ................................................. 4.5 Poor work ethic in national labor force....................................... 4.2 Inefficient government bureaucracy ........................................... 4.2 Inadequately educated workforce .............................................. 3.3 Crime and theft ......................................................................... 2.6 Foreign currency regulations ...................................................... 2.2 Policy instability ......................................................................... 1.6 Poor public health ..................................................................... 1.2 Government instability/coups .................................................... 1.1 Tax regulations .......................................................................... 1.1 Restrictive labor regulations ....................................................... 0.4 0 5 10 15 20 25 30 Percent of responses Note: From the list of factors above, respondents were asked to select the five most problematic for doing business in their country and to rank them between 1 (most problematic) and 5. The bars in the figure show the responses weighted according to their rankings. 194 | The Africa Competitiveness Report 2013 Part 3: Competitiveness Profiles Uganda The Global Competitiveness Index in detail INDICATOR VALUE RANK/144 INDICATOR VALUE RANK/144 1st pillar: Institutions 6th pillar: Goods market efficiency 1.01 Property rights ....................................................... 4.1 ............80 6.01 Intensity of local competition .................................. 4.7 ............77 1.02 Intellectual property protection ............................... 3.3 ............84 6.02 Extent of market dominance .................................. 3.2 ..........115 1.03 Diversion of public funds ........................................ 2.0 ..........139 6.03 Effectiveness of anti-monopoly policy ..................... 4.3 ............46 1.04 Public trust in politicians ......................................... 2.5 ............83 6.04 Extent and effect of taxation................................... 3.2 ..........102 1.05 Irregular payments and bribes ................................ 3.0 ..........124 6.05 Total tax rate, % profits* ....................................... 35.7 ............63 1.06 Judicial independence............................................ 3.5 ............80 6.06 No. procedures to start a business* ........................ 16 ..........140 1.07 Favoritism in decisions of government officials ....... 2.5 ..........113 6.07 No. days to start a business* .................................. 34 ..........109 1.08 Wastefulness of government spending ................... 2.4 ..........120 6.08 Agricultural policy costs.......................................... 4.0 ............58 1.09 Burden of government regulation ........................... 3.8 ............40 6.09 Prevalence of trade barriers ................................... 4.0 ............93 1.10 Efficiency of legal framework in settling disputes .... 4.1 ............49 6.10 Trade tariffs, % duty* .............................................. 9.0 ..........101 1.11 Efficiency of legal framework in challenging regs. ... 3.9 ............59 6.11 Prevalence of foreign ownership............................. 5.3 ............32 1.12 Transparency of government policymaking............. 4.4 ............59 6.12 Business impact of rules on FDI ............................. 5.1 ............31 1.13 Gov’t services for improved business performance... 3.8 ............63 6.13 Burden of customs procedures .............................. 4.2 ............64 1.14 Business costs of terrorism .................................... 3.7 ..........138 6.14 Imports as a percentage of GDP* ........................ 45.0 ............72 1.15 Business costs of crime and violence..................... 3.4 ..........126 6.15 Degree of customer orientation .............................. 4.6 ............73 1.16 Organized crime ..................................................... 4.2 ..........112 6.16 Buyer sophistication ............................................... 2.5 ..........127 1.17 Reliability of police services .................................... 3.9 ............87 1.18 Ethical behavior of firms ......................................... 3.6 ............89 7th pillar: Labor market efficiency 1.19 Strength of auditing and reporting standards ......... 4.1 ..........105 7.01 Cooperation in labor-employer relations ................. 4.2 ............86 1.20 Efficacy of corporate boards .................................. 4.7 ............48 7.02 Flexibility of wage determination ............................. 6.3 ..............1 1.21 Protection of minority shareholders’ interests ......... 3.9 ............97 7.03 Hiring and firing practices ....................................... 5.2 ..............7 1.22 Strength of investor protection, 0–10 (best)* .......... 4.0 ..........110 7.04 Redundancy costs, weeks of salary* ......................... 9 ............25 7.05 Pay and productivity............................................... 3.4 ..........113 2nd pillar: Infrastructure 7.06 Reliance on professional management ................... 3.9 ............94 2.01 Quality of overall infrastructure ............................... 3.4 ..........110 7.07 Brain drain ............................................................. 3.1 ............97 2.02 Quality of roads ...................................................... 2.9 ..........110 7.08 Women in labor force, ratio to men* ..................... 0.96 ..............7 2.03 Quality of railroad infrastructure .............................. 1.4 ..........111 2.04 Quality of port infrastructure ................................... 3.8 ............90 8th pillar: Financial market development 2.05 Quality of air transport infrastructure....................... 3.8 ..........107 8.01 Availability of financial services ............................... 4.5 ............73 2.06 Available airline seat kms/week, millions* ............. 43.3 ..........102 8.02 Affordability of financial services ............................. 4.0 ............80 2.07 Quality of electricity supply ..................................... 2.2 ..........129 8.03 Financing through local equity market .................... 3.5 ............68 2.08 Mobile telephone subscriptions/100 pop.* ........... 48.4 ..........130 8.04 Ease of access to loans ......................................... 3.0 ............60 2.09 Fixed telephone lines/100 pop.* ............................. 1.3 ..........123 8.05 Venture capital availability ....................................... 2.5 ............74 8.06 Soundness of banks .............................................. 5.2 ............68 3rd pillar: Macroeconomic environment 8.07 Regulation of securities exchanges ........................ 4.0 ............72 3.01 Government budget balance, % GDP* ..................-7.2 ..........132 8.08 Legal rights index, 0–10 (best)* ................................. 7 ............43 3.02 Gross national savings, % GDP* .......................... 13.6 ..........108 3.03 Inflation, annual % change* .................................... 6.5 ............94 9th pillar: Technological readiness 3.04 General government debt, % GDP* ..................... 29.2 ............40 9.01 Availability of latest technologies ............................ 4.5 ..........104 3.05 Country credit rating, 0–100 (best)* ...................... 35.0 ............93 9.02 Firm-level technology absorption ............................ 4.3 ..........103 9.03 FDI and technology transfer ................................... 4.8 ............60 4th pillar: Health and primary education 9.04 Individuals using Internet, %* ............................... 13.0 ..........112 4.01 Business impact of malaria .................................... 2.8 ..........136 9.05 Broadband Internet subscriptions/100 pop.* .......... 0.3 ..........114 4.02 Malaria cases/100,000 pop.* ........................ 28,037.4 ..........133 9.06 Int’l Internet bandwidth, kb/s per user* .................. 1.8 ..........125 4.03 Business impact of tuberculosis ............................. 4.0 ..........125 9.07 Mobile broadband subscriptions/100 pop.*............ 2.8 ............96 4.04 Tuberculosis cases/100,000 pop.* ..................... 209.0 ..........117 4.05 Business impact of HIV/AIDS ................................. 3.1 ..........132 10th pillar: Market size 4.06 HIV prevalence, % adult pop.* ............................... 6.5 ..........135 10.01 Domestic market size index, 1–7 (best)*................. 3.2 ............80 4.07 Infant mortality, deaths/1,000 live births* .............. 63.0 ..........126 10.02 Foreign market size index, 1–7 (best)* .................... 3.4 ..........105 4.08 Life expectancy, years*......................................... 53.6 ..........130 4.09 Quality of primary education ................................... 3.3 ..........100 11th pillar: Business sophistication 4.10 Primary education enrollment, net %* .................. 90.9 ............89 11.01 Local supplier quantity ........................................... 5.0 ............41 11.02 Local supplier quality.............................................. 4.0 ..........108 5th pillar: Higher education and training 11.03 State of cluster development.................................. 3.1 ..........112 5.01 Secondary education enrollment, gross %* .......... 28.1 ..........135 11.04 Nature of competitive advantage ............................ 3.1 ............95 5.02 Tertiary education enrollment, gross %*.................. 4.2 ..........128 11.05 Value chain breadth................................................ 3.2 ..........103 5.03 Quality of the educational system ........................... 3.7 ............69 11.06 Control of international distribution ......................... 4.0 ............74 5.04 Quality of math and science education .................. 3.4 ..........109 11.07 Production process sophistication.......................... 2.8 ..........122 5.05 Quality of management schools ............................. 3.9 ............89 11.08 Extent of marketing ................................................ 2.9 ..........130 5.06 Internet access in schools ...................................... 2.9 ..........118 11.09 Willingness to delegate authority ............................ 3.5 ............92 5.07 Availability of research and training services ........... 3.8 ............91 5.08 Extent of staff training ............................................ 3.6 ..........100 12th pillar: Innovation 12.01 Capacity for innovation........................................... 2.8 ..........102 12.02 Quality of scientific research institutions ................. 3.4 ............86 12.03 Company spending on R&D................................... 2.9 ............89 12.04 University-industry collaboration in R&D ................. 3.6 ............68 12.05 Gov’t procurement of advanced tech products ...... 3.6 ............68 12.06 Availability of scientists and engineers .................... 3.8 ............89 12.07 PCT patents, applications/million pop.* .................. 0.0 ..........118 Notes: Values are on a 1-to-7 scale unless otherwise annotated with an asterisk (*). For further details and explanation, please refer to the section “How to Read the Competitiveness Profiles� on page 109. The Africa Competitiveness Report 2013 | 195 Part 3: Competitiveness Profiles Zambia Key indicators, 2011 Population (millions) ..............................................13.5 GDP (PPP) per capita (int’l $), 1990–2011 GDP (US$ billions)* ...............................................19.2 2,500 Zambia Sub-Saharan Africa GDP per capita (US$) ......................................1,413.8 GDP (PPP) as share (%) of world total ..................0.03 2,000 Sectoral value-added (% GDP), 2011 Agriculture ............................................................20.7 1,500 Industry ................................................................37.7 Services ...............................................................41.5 1,000 Human Development Index, 2011 500 Score, (0–1) best ..................................................0.43 1991 1993 1995 1997 1999 2001 2003 2005 2007 2009 2011 Rank (out of 187 economies).................................164 Sources: IMF; UNFPA; UNDP; World Bank The Global Competitiveness Index Rank Score Stage of development (out of 144) (1–7) GCI 2012–2013 ................................................ 102 ..... 3.8 Transition Transition GCI 2011–2012 (out of 142) ......................................... 113 ...... 3.7 1 1–2 2 2–3 3 GCI 2010–2011 (out of 139) ......................................... 115 ...... 3.5 Factor Efficiency Innovation driven driven driven Basic requirements (60.0%) ....................................... 108 ...... 3.9 Institutions ...................................................................... 56 ...... 4.1 Institutions 7 Infrastructure ................................................................ 111 ...... 2.9 Innovation Infrastructure 6 Macroeconomic environment ......................................... 67 ...... 4.6 5 Health and primary education ....................................... 129 ...... 4.1 Business Macroeconomic 4 environment sophistication 3 Efficiency enhancers (35.0%) .................................... 108 ...... 3.6 2 Health and Higher education and training ....................................... 121 ...... 3.1 Market size 1 primary Goods market efficiency ................................................ 42 ...... 4.5 education Labor market efficiency ................................................ 111 ...... 4.0 Financial market development ........................................ 50 ...... 4.4 Technological Higher education readiness and training Technological readiness ................................................ 115 ...... 3.0 Market size ................................................................... 111 ...... 2.7 Financial market Goods market development ef�ciency Innovation and sophistication factors (5.0%) ............. 67 ...... 3.6 Labor market ef�ciency Business sophistication ................................................. 75 ...... 3.8 Zambia Factor-driven economies Innovation ....................................................................... 61 ...... 3.3 The most problematic factors for doing business Access to financing ................................................................. 24.5 Corruption ............................................................................... 15.0 Tax rates.................................................................................... 9.5 Inadequate supply of infrastructure ............................................ 7.7 Poor work ethic in national labor force....................................... 6.1 Foreign currency regulations ...................................................... 5.0 Insufficient capacity to innovate ................................................. 4.2 Policy instability ......................................................................... 4.0 Inflation ...................................................................................... 3.9 Inadequately educated workforce .............................................. 3.8 Inefficient government bureaucracy ........................................... 3.7 Tax regulations .......................................................................... 3.4 Poor public health ..................................................................... 3.1 Restrictive labor regulations ....................................................... 2.7 Crime and theft ......................................................................... 2.1 Government instability/coups .................................................... 1.3 0 5 10 15 20 25 30 Percent of responses Note: From the list of factors above, respondents were asked to select the five most problematic for doing business in their country and to rank them between 1 (most problematic) and 5. The bars in the figure show the responses weighted according to their rankings. 196 | The Africa Competitiveness Report 2013 Part 3: Competitiveness Profiles Zambia The Global Competitiveness Index in detail INDICATOR VALUE RANK/144 INDICATOR VALUE RANK/144 1st pillar: Institutions 6th pillar: Goods market efficiency 1.01 Property rights ....................................................... 4.5 ............58 6.01 Intensity of local competition .................................. 5.0 ............61 1.02 Intellectual property protection ............................... 3.8 ............59 6.02 Extent of market dominance .................................. 4.0 ............50 1.03 Diversion of public funds ........................................ 3.0 ............75 6.03 Effectiveness of anti-monopoly policy ..................... 4.6 ............35 1.04 Public trust in politicians ......................................... 3.2 ............51 6.04 Extent and effect of taxation................................... 3.5 ............64 1.05 Irregular payments and bribes ................................ 3.5 ............93 6.05 Total tax rate, % profits* ....................................... 14.5 ..............6 1.06 Judicial independence............................................ 3.5 ............79 6.06 No. procedures to start a business* .......................... 6 ............47 1.07 Favoritism in decisions of government officials ....... 3.0 ............68 6.07 No. days to start a business* .................................. 18 ............76 1.08 Wastefulness of government spending ................... 3.4 ............57 6.08 Agricultural policy costs.......................................... 4.4 ............25 1.09 Burden of government regulation ........................... 4.2 ............21 6.09 Prevalence of trade barriers ................................... 4.4 ............67 1.10 Efficiency of legal framework in settling disputes .... 4.4 ............39 6.10 Trade tariffs, % duty* ............................................ 11.1 ..........113 1.11 Efficiency of legal framework in challenging regs. ... 3.9 ............55 6.11 Prevalence of foreign ownership............................. 5.5 ............25 1.12 Transparency of government policymaking............. 4.6 ............46 6.12 Business impact of rules on FDI ............................. 5.0 ............37 1.13 Gov’t services for improved business performance... 4.1 ............41 6.13 Burden of customs procedures .............................. 4.3 ............62 1.14 Business costs of terrorism .................................... 6.2 ............28 6.14 Imports as a percentage of GDP* ........................ 42.7 ............79 1.15 Business costs of crime and violence..................... 4.7 ............79 6.15 Degree of customer orientation .............................. 4.6 ............71 1.16 Organized crime ..................................................... 5.8 ............37 6.16 Buyer sophistication ............................................... 3.4 ............72 1.17 Reliability of police services .................................... 4.4 ............63 1.18 Ethical behavior of firms ......................................... 4.0 ............63 7th pillar: Labor market efficiency 1.19 Strength of auditing and reporting standards ......... 4.6 ............67 7.01 Cooperation in labor-employer relations ................. 4.1 ............88 1.20 Efficacy of corporate boards .................................. 4.7 ............53 7.02 Flexibility of wage determination ............................. 4.9 ............82 1.21 Protection of minority shareholders’ interests ......... 4.5 ............46 7.03 Hiring and firing practices ....................................... 4.5 ............31 1.22 Strength of investor protection, 0–10 (best)* .......... 5.3 ............65 7.04 Redundancy costs, weeks of salary* ....................... 51 ..........136 7.05 Pay and productivity............................................... 3.6 ............99 2nd pillar: Infrastructure 7.06 Reliance on professional management ................... 4.4 ............57 2.01 Quality of overall infrastructure ............................... 3.9 ............84 7.07 Brain drain ............................................................. 3.4 ............69 2.02 Quality of roads ...................................................... 3.2 ............96 7.08 Women in labor force, ratio to men* ..................... 0.85 ............51 2.03 Quality of railroad infrastructure .............................. 2.3 ............80 2.04 Quality of port infrastructure ................................... 4.1 ............70 8th pillar: Financial market development 2.05 Quality of air transport infrastructure....................... 3.9 ..........102 8.01 Availability of financial services ............................... 4.5 ............75 2.06 Available airline seat kms/week, millions* ............. 31.0 ..........108 8.02 Affordability of financial services ............................. 4.1 ............74 2.07 Quality of electricity supply ..................................... 3.5 ..........107 8.03 Financing through local equity market .................... 3.8 ............50 2.08 Mobile telephone subscriptions/100 pop.* ........... 60.6 ..........123 8.04 Ease of access to loans ......................................... 2.6 ............80 2.09 Fixed telephone lines/100 pop.* ............................. 0.6 ..........133 8.05 Venture capital availability ....................................... 2.5 ............78 8.06 Soundness of banks .............................................. 5.3 ............64 3rd pillar: Macroeconomic environment 8.07 Regulation of securities exchanges ........................ 4.3 ............57 3.01 Government budget balance, % GDP* ..................-3.4 ............79 8.08 Legal rights index, 0–10 (best)* ................................. 9 ............11 3.02 Gross national savings, % GDP* .......................... 26.2 ............39 3.03 Inflation, annual % change* .................................... 8.7 ..........117 9th pillar: Technological readiness 3.04 General government debt, % GDP* ..................... 26.1 ............36 9.01 Availability of latest technologies ............................ 4.6 ............92 3.05 Country credit rating, 0–100 (best)* ...................... 33.3 ............96 9.02 Firm-level technology absorption ............................ 4.5 ............88 9.03 FDI and technology transfer ................................... 4.7 ............69 4th pillar: Health and primary education 9.04 Individuals using Internet, %* ............................... 11.5 ..........116 4.01 Business impact of malaria .................................... 2.7 ..........137 9.05 Broadband Internet subscriptions/100 pop.* .......... 0.1 ..........126 4.02 Malaria cases/100,000 pop.* ........................ 22,100.5 ..........127 9.06 Int’l Internet bandwidth, kb/s per user* .................. 0.5 ..........138 4.03 Business impact of tuberculosis ............................. 3.3 ..........136 9.07 Mobile broadband subscriptions/100 pop.*............ 0.4 ..........117 4.04 Tuberculosis cases/100,000 pop.* ..................... 462.0 ..........134 4.05 Business impact of HIV/AIDS ................................. 2.8 ..........139 10th pillar: Market size 4.06 HIV prevalence, % adult pop.* ............................. 13.5 ..........139 10.01 Domestic market size index, 1–7 (best)*................. 2.5 ..........115 4.07 Infant mortality, deaths/1,000 live births* .............. 68.9 ..........129 10.02 Foreign market size index, 1–7 (best)* .................... 3.5 ..........100 4.08 Life expectancy, years*......................................... 48.5 ..........141 4.09 Quality of primary education ................................... 3.4 ............88 11th pillar: Business sophistication 4.10 Primary education enrollment, net %* .................. 91.4 ............87 11.01 Local supplier quantity ........................................... 4.8 ............62 11.02 Local supplier quality.............................................. 4.2 ............92 5th pillar: Higher education and training 11.03 State of cluster development.................................. 4.1 ............42 5.01 Secondary education enrollment, gross %* .......... 30.4 ..........134 11.04 Nature of competitive advantage ............................ 3.2 ............88 5.02 Tertiary education enrollment, gross %*.................. 2.4 ..........135 11.05 Value chain breadth................................................ 3.4 ............82 5.03 Quality of the educational system ........................... 4.2 ............39 11.06 Control of international distribution ......................... 3.7 ..........103 5.04 Quality of math and science education .................. 3.9 ............77 11.07 Production process sophistication.......................... 3.3 ............96 5.05 Quality of management schools ............................. 4.1 ............75 11.08 Extent of marketing ................................................ 3.6 ..........102 5.06 Internet access in schools ...................................... 3.2 ..........107 11.09 Willingness to delegate authority ............................ 3.9 ............48 5.07 Availability of research and training services ........... 4.3 ............61 5.08 Extent of staff training ............................................ 3.5 ..........108 12th pillar: Innovation 12.01 Capacity for innovation........................................... 3.1 ............76 12.02 Quality of scientific research institutions ................. 3.5 ............81 12.03 Company spending on R&D................................... 3.5 ............38 12.04 University-industry collaboration in R&D ................. 3.8 ............55 12.05 Gov’t procurement of advanced tech products ...... 3.9 ............41 12.06 Availability of scientists and engineers .................... 4.1 ............64 12.07 PCT patents, applications/million pop.* .................. 0.0 ..........103 Notes: Values are on a 1-to-7 scale unless otherwise annotated with an asterisk (*). For further details and explanation, please refer to the section “How to Read the Competitiveness Profiles� on page 109. The Africa Competitiveness Report 2013 | 197 Part 3: Competitiveness Profiles Zimbabwe Key indicators, 2011 Population (millions) ..............................................12.8 GDP (PPP) per capita (int’l $), 1990–2011 GDP (US$ billions)* .................................................9.5 2,500 Zimbabwe Sub-Saharan Africa GDP per capita (US$) .........................................752.1 GDP (PPP) as share (%) of world total ..................0.01 2,000 Sectoral value-added (% GDP), 2011 1,500 Agriculture ............................................................12.8 1,000 Industry ................................................................22.9 Services ...............................................................64.3 500 Human Development Index, 2011 0 Score, (0–1) best ..................................................0.38 1991 1993 1995 1997 1999 2001 2003 2005 2007 2009 2011 Rank (out of 187 economies).................................173 Sources: IMF; UNFPA; UNDP; World Bank The Global Competitiveness Index Rank Score Stage of development (out of 144) (1–7) GCI 2012–2013 ................................................ 132 ..... 3.3 Transition Transition GCI 2011–2012 (out of 142) ......................................... 132 ...... 3.3 1 1–2 2 2–3 3 GCI 2010–2011 (out of 139) ......................................... 136 ...... 3.0 Factor Efficiency Innovation driven driven driven Basic requirements (60.0%) ....................................... 127 ...... 3.5 Institutions .................................................................... 101 ...... 3.5 Institutions 7 Infrastructure ................................................................ 128 ...... 2.4 Innovation Infrastructure 6 Macroeconomic environment ....................................... 122 ...... 3.8 5 Health and primary education ....................................... 119 ...... 4.5 Business Macroeconomic 4 environment sophistication 3 Efficiency enhancers (35.0%) .................................... 135 ...... 3.1 2 Health and Higher education and training ....................................... 118 ...... 3.1 Market size 1 primary Goods market efficiency .............................................. 133 ...... 3.6 education Labor market efficiency ................................................ 139 ...... 3.4 Financial market development ...................................... 109 ...... 3.6 Technological Higher education readiness and training Technological readiness ................................................ 120 ...... 2.8 Market size ................................................................... 135 ...... 1.9 Financial market Goods market development ef�ciency Innovation and sophistication factors (5.0%) ........... 128 ...... 2.9 Labor market ef�ciency Business sophistication ............................................... 128 ...... 3.2 Zimbabwe Factor-driven economies Innovation ..................................................................... 127 ...... 2.6 The most problematic factors for doing business Access to financing ................................................................. 27.3 Policy instability ....................................................................... 18.7 Inadequate supply of infrastructure .......................................... 16.3 Inefficient government bureaucracy ........................................... 9.9 Corruption ................................................................................. 7.6 Restrictive labor regulations ....................................................... 7.3 Government instability/coups .................................................... 4.9 Tax rates.................................................................................... 2.6 Foreign currency regulations ...................................................... 1.4 Insufficient capacity to innovate ................................................. 1.2 Poor work ethic in national labor force....................................... 1.2 Crime and theft ......................................................................... 0.5 Tax regulations .......................................................................... 0.5 Poor public health ..................................................................... 0.4 Inadequately educated workforce .............................................. 0.2 Inflation ...................................................................................... 0.0 0 5 10 15 20 25 30 Percent of responses Note: From the list of factors above, respondents were asked to select the five most problematic for doing business in their country and to rank them between 1 (most problematic) and 5. The bars in the figure show the responses weighted according to their rankings. 198 | The Africa Competitiveness Report 2013 Part 3: Competitiveness Profiles Zimbabwe The Global Competitiveness Index in detail INDICATOR VALUE RANK/144 INDICATOR VALUE RANK/144 1st pillar: Institutions 6th pillar: Goods market efficiency 1.01 Property rights ....................................................... 2.6 ..........137 6.01 Intensity of local competition .................................. 4.4 ............94 1.02 Intellectual property protection ............................... 3.1 ............94 6.02 Extent of market dominance .................................. 3.6 ............80 1.03 Diversion of public funds ........................................ 2.8 ............92 6.03 Effectiveness of anti-monopoly policy ..................... 3.9 ............79 1.04 Public trust in politicians ......................................... 1.8 ..........130 6.04 Extent and effect of taxation................................... 3.3 ............97 1.05 Irregular payments and bribes ................................ 3.9 ............69 6.05 Total tax rate, % profits* ....................................... 35.6 ............61 1.06 Judicial independence............................................ 2.7 ..........113 6.06 No. procedures to start a business* .......................... 9 ............97 1.07 Favoritism in decisions of government officials ....... 2.5 ..........117 6.07 No. days to start a business* .................................. 90 ..........135 1.08 Wastefulness of government spending ................... 2.9 ............99 6.08 Agricultural policy costs.......................................... 3.1 ..........131 1.09 Burden of government regulation ........................... 3.0 ..........107 6.09 Prevalence of trade barriers ................................... 4.6 ............45 1.10 Efficiency of legal framework in settling disputes .... 3.5 ............82 6.10 Trade tariffs, % duty* ............................................ 20.5 ..........138 1.11 Efficiency of legal framework in challenging regs. ... 2.6 ..........134 6.11 Prevalence of foreign ownership............................. 4.3 ............95 1.12 Transparency of government policymaking............. 4.3 ............72 6.12 Business impact of rules on FDI ............................. 2.4 ..........143 1.13 Gov’t services for improved business performance... 2.6 ..........131 6.13 Burden of customs procedures .............................. 3.4 ..........111 1.14 Business costs of terrorism .................................... 6.1 ............38 6.14 Imports as a percentage of GDP* ........................ 47.2 ............66 1.15 Business costs of crime and violence..................... 4.8 ............73 6.15 Degree of customer orientation .............................. 3.8 ..........128 1.16 Organized crime ..................................................... 5.8 ............36 6.16 Buyer sophistication ............................................... 3.2 ............93 1.17 Reliability of police services .................................... 3.0 ..........124 1.18 Ethical behavior of firms ......................................... 3.9 ............72 7th pillar: Labor market efficiency 1.19 Strength of auditing and reporting standards ......... 5.2 ............35 7.01 Cooperation in labor-employer relations ................. 3.8 ..........122 1.20 Efficacy of corporate boards .................................. 4.8 ............41 7.02 Flexibility of wage determination ............................. 2.5 ..........143 1.21 Protection of minority shareholders’ interests ......... 4.6 ............43 7.03 Hiring and firing practices ....................................... 2.6 ..........140 1.22 Strength of investor protection, 0–10 (best)* .......... 4.3 ..........101 7.04 Redundancy costs, weeks of salary* ....................... 82 ..........139 7.05 Pay and productivity............................................... 2.8 ..........139 2nd pillar: Infrastructure 7.06 Reliance on professional management ................... 5.3 ............24 2.01 Quality of overall infrastructure ............................... 3.2 ..........123 7.07 Brain drain ............................................................. 3.0 ..........103 2.02 Quality of roads ...................................................... 3.2 ............95 7.08 Women in labor force, ratio to men* ..................... 0.93 ............18 2.03 Quality of railroad infrastructure .............................. 2.4 ............76 2.04 Quality of port infrastructure ................................... 4.4 ............61 8th pillar: Financial market development 2.05 Quality of air transport infrastructure....................... 3.4 ..........122 8.01 Availability of financial services ............................... 3.7 ..........120 2.06 Available airline seat kms/week, millions* ............. 15.4 ..........126 8.02 Affordability of financial services ............................. 3.3 ..........127 2.07 Quality of electricity supply ..................................... 1.7 ..........137 8.03 Financing through local equity market .................... 3.4 ............69 2.08 Mobile telephone subscriptions/100 pop.* ........... 72.1 ..........115 8.04 Ease of access to loans ......................................... 2.2 ..........119 2.09 Fixed telephone lines/100 pop.* ............................. 2.8 ..........114 8.05 Venture capital availability ....................................... 1.8 ..........137 8.06 Soundness of banks .............................................. 3.7 ..........135 3rd pillar: Macroeconomic environment 8.07 Regulation of securities exchanges ........................ 4.0 ............75 3.01 Government budget balance, % GDP* ..................-2.1 ............56 8.08 Legal rights index, 0–10 (best)* ................................. 7 ............43 3.02 Gross national savings, % GDP* .........................-10.0 ..........142 3.03 Inflation, annual % change* .................................... 3.5 ............46 9th pillar: Technological readiness 3.04 General government debt, % GDP* ..................... 70.3 ..........115 9.01 Availability of latest technologies ............................ 4.1 ..........119 3.05 Country credit rating, 0–100 (best)* ........................ 5.3 ..........142 9.02 Firm-level technology absorption ............................ 4.4 ............99 9.03 FDI and technology transfer ................................... 3.5 ..........139 4th pillar: Health and primary education 9.04 Individuals using Internet, %* ............................... 15.7 ..........105 4.01 Business impact of malaria .................................... 4.3 ..........114 9.05 Broadband Internet subscriptions/100 pop.* .......... 0.3 ..........113 4.02 Malaria cases/100,000 pop.* ........................ 11,645.7 ..........123 9.06 Int’l Internet bandwidth, kb/s per user* .................. 1.7 ..........126 4.03 Business impact of tuberculosis ............................. 3.6 ..........131 9.07 Mobile broadband subscriptions/100 pop.*.......... 14.9 ............56 4.04 Tuberculosis cases/100,000 pop.* ..................... 633.0 ..........140 4.05 Business impact of HIV/AIDS ................................. 3.1 ..........133 10th pillar: Market size 4.06 HIV prevalence, % adult pop.* ............................. 14.3 ..........140 10.01 Domestic market size index, 1–7 (best)*................. 1.7 ..........137 4.07 Infant mortality, deaths/1,000 live births* .............. 50.9 ..........115 10.02 Foreign market size index, 1–7 (best)* .................... 2.5 ..........135 4.08 Life expectancy, years*......................................... 49.9 ..........138 4.09 Quality of primary education ................................... 4.0 ............63 11th pillar: Business sophistication 4.10 Primary education enrollment, net %* .................. 90.0 ............93 11.01 Local supplier quantity ........................................... 4.0 ..........125 11.02 Local supplier quality.............................................. 3.7 ..........129 5th pillar: Higher education and training 11.03 State of cluster development.................................. 2.8 ..........129 5.01 Secondary education enrollment, gross %* .......... 38.0 ..........125 11.04 Nature of competitive advantage ............................ 2.4 ..........142 5.02 Tertiary education enrollment, gross %*.................. 6.2 ..........120 11.05 Value chain breadth................................................ 2.3 ..........141 5.03 Quality of the educational system ........................... 4.5 ............30 11.06 Control of international distribution ......................... 3.3 ..........127 5.04 Quality of math and science education .................. 4.3 ............50 11.07 Production process sophistication.......................... 2.5 ..........135 5.05 Quality of management schools ............................. 4.1 ............78 11.08 Extent of marketing ................................................ 3.1 ..........121 5.06 Internet access in schools ...................................... 2.6 ..........123 11.09 Willingness to delegate authority ............................ 3.8 ............66 5.07 Availability of research and training services ........... 3.6 ..........104 5.08 Extent of staff training ............................................ 3.8 ............82 12th pillar: Innovation 12.01 Capacity for innovation........................................... 2.4 ..........129 12.02 Quality of scientific research institutions ................. 2.9 ..........115 12.03 Company spending on R&D................................... 2.5 ..........124 12.04 University-industry collaboration in R&D ................. 3.1 ..........112 12.05 Gov’t procurement of advanced tech products ...... 2.6 ..........135 12.06 Availability of scientists and engineers .................... 3.4 ..........121 12.07 PCT patents, applications/million pop.* .................. 0.1 ............98 Notes: Values are on a 1-to-7 scale unless otherwise annotated with an asterisk (*). For further details and explanation, please refer to the section “How to Read the Competitiveness Profiles� on page 109. The Africa Competitiveness Report 2013 | 199 About the Authors Jennifer Blanke Caroline Ko Jennifer Blanke is Chief Economist and Head of the Global Caroline Ko is a Junior Economist with the Global Competitiveness and Benchmarking Network team at the Competitiveness and Benchmarking Network at the World Economic Forum. Since joining the team in 2002, World Economic Forum. Her responsibilities include the she has written and lectured extensively on issues related computation of various indexes, and she researches and to national competitiveness and has edited a number of writes for numerous projects and studies. She is co- competitiveness reports, with a particular regional focus author of The Europe 2020 Competitiveness Report and on Western Europe and sub-Saharan Africa. From 1998 the Rebuilding Europe’s Competitiveness Report, and has to 2002, she was Senior Programme Manager responsible been involved in conceptualizing the B20 employment for developing the business, management, and technology recommendations. More recently, she has taken the project sections of the World Economic Forum’s Annual Meeting lead on The Africa Competitiveness Report. Prior to joining in Davos. Before joining the Forum, Dr Blanke worked the Forum, she worked for an economic policy consultancy for a number of years as a management consultant for in the United Kingdom, where she analyzed economic Eurogroup, Mazars Group in Paris, France, where she and �nancial policies in Central and Eastern Europe specialized in banking and �nancial market organizations. and Central Asia. She also worked for the Directorate- Dr Blanke obtained a Master of International Affairs from General for Economic and Financial Affairs of the European Columbia University (United States) and an MA and a PhD Commission, where she assessed �nancial development in International Economics from the Graduate Institute of in the 2004 accession Member States. She holds an International Studies (Geneva). undergraduate degree in Economics from the University of Groningen and an MSc in Economics and Finance from the Margareta Drzeniek Hanouz University of Tilburg, both in the Netherlands. Margareta Drzeniek Hanouz is Lead Economist and Head of Competitiveness Research with the Global Competitiveness Marjo Koivisto and Benchmarking Network at the World Economic Marjo Koivisto is a Political Economist at the World Forum, where she researches and writes on issues of Bank’s Africa Region’s Finance and Private Sector national competitiveness, especially those related to the Development department. She has worked on private- Arab world, Eastern Europe, and international trade. She sector development, competition, and innovation policy in is lead author or editor of a number of regional and topical countries in the Middle East, Africa, and Europe. Prior to reports and papers, including The Global Enabling Trade joining the World Bank, Dr Koivisto was Assistant Professor Report. Previously she oversaw the economic modeling for in International Relations at University of Exeter (United some of the Forum’s scenario projects and was charged Kingdom), a post-doctoral scholar at Harvard University with developing the economics section of the program for (United States), and was awarded her PhD from the London the World Economic Forum’s Annual Meeting in Davos. School of Economics (United Kingdom). Before joining the Forum, Dr Drzeniek Hanouz worked for several years with the International Trade Centre in Geneva, Jennifer Mbabazi Moyo where she was in charge of relations with Central and Jennifer Mbabazi Moyo is Senior Research Economist Eastern European countries. Dr Drzeniek Hanouz received in the Development Research Department of the African a Diploma in Economics from the University of Münster and Development Bank, having joined the Bank in March 2012 holds a PhD in International Economics from the University as part of the Additionality and Development Outcomes of Bochum, both in Germany. (ADOA) team. She has more than 10 years of experience as an Economist, having previously worked at the International Monetary Fund (IMF) in Washington, DC, in the Monetary and Capital Markets Department and the Middle East and Central Asia Department. More recently, she has undertaken consultancy assignments on �nancial markets, training and other capacity-building issues for the IMF, the African Development Bank, and Deutsche Gesellschaft für Internationale Zusammenarbeit (GIZ, formerly GTZ). She has also taught at Makerere University in Uganda. She holds a PhD in Economics from the University of Nottingham in the United Kingdom. Her research interests include �nancial market issues, trade, poverty, income inequality, and growth, areas in which she has published widely. The Africa Competitiveness Report 2013 | 201 About the Authors Peter Ondiege Peter Ondiege is Chief Research Economist at the Development Research Department (EDRE) of the African Development Bank. He holds Master and PhD degrees in Economics from the University of Tsukuba, Japan. He coordinates the Investment Climate Assessment and Africa Competitiveness Reports jointly undertaken with the World Bank and World Economic Forum. He was in the Planning and Budgeting Department of the African Development Bank, where he served as the Annual Report Coordinator from 2004 to 2007. Prior to joining the Bank in 2004, he was an Associate Professor and a Director of the Housing and Building Research Institute at the University of Nairobi, Kenya; he also held a position at the Ministry of Planning and National Development in Kenya. He has conducted and led a number of study teams, mainly in the areas of macroeconomic and sectoral reforms and enterprise development, especially in the small- and medium-sized enterprises (SMEs) sector. Dr Ondiege has published widely in the �eld of urban and regional economics and the private sector, focusing on SME development. He has also worked as a consultant to a number of regional and international organizations and agencies. John Speakman John Speakman leads the World Bank’s Africa Competitive Industries and Public-Private Partnership practices. He has worked at the World Bank for 17 years, serving in most of the Bank‘s regions on various private-sector development activities. He has worked on a broad range of countries, ranging from resource-rich economies to fragile states. Prior to joining the World Bank, he was a Partner in Deloitte New Zealand, where he worked on private-sector aspects of international development. He is quali�ed in Law, Accounting, and Economics. Audrey Verdier-Chouchane Audrey Verdier-Chouchane is Chief Research Economist in the Research Division of the Development Research Department of the African Development Bank. Prior to joining the Bank in 2004, Dr Verdier-Chouchane taught Macroeconomics and Development Economics at the University of Nice, France, where she obtained a PhD in Economics and a Master in Macro-dynamics and International Finance. Apart from her previous publications on �nancial development and growth, her research interest includes the analysis and measurement of poverty and inequalities in Africa. She has coordinated and contributed to many flagship publications within the African Development Bank, such as the African Economic Outlook, the African Development Report, and The Africa Competitiveness Report in collaboration with sister institutions. 202 | The Africa Competitiveness Report 2013 The publication of this year’s Africa Competitiveness Report comes at a time of growing international attention on Africa as an investment destination and increasing talk of an African economic renaissance. This greater optimism is being spurred on by a decade of strong growth, with many countries relatively unscathed by the global economic crisis. However, growth remains unevenly spread across the region, and its relatively short time period has not yet led to a convergence in living standards with those observed in other rapidly growing developing regions. Indeed, Africa is at a crossroads, and decisions and actions today will have a strong bearing on whether it places itself on a path similar to that of other regions such as developing Asia, allowing it to transition from resource- driven to higher-value-added growth. Regional integration in this context can play a critical role going forward, offering a yet-untapped potential to get closer to this goal. The aim of this Report is to provide a better understanding of the benefits of regional integration for higher-value-added growth and to discuss current constraints as well as the policy environment required to develop the necessary infrastructure for connecting Africa’s markets in a sustainable way. Much has been done in recent years to improve the business environment in Africa. Continued policy and institutional reforms are central to ensuring that African countries remain on a higher growth trajectory. This year’s Report places a particular focus on connecting Africa’s markets in a sustainable way by fostering trade facilitation, upgrading infrastructure in a way that strengthens backward and forward linkages from such projects, and piloting growth pole projects—multi-sector and multi-year investments with the aim of accelerating export industries and supporting infrastructure around particular natural resources or agglomeration economies. This is the fourth Report on the region’s business environment to leverage the knowledge and expertise within the African Development Bank, the World Bank, and the World Economic Forum. It presents a unified vision that maps out the policy challenges that must be met to boost Africa’s competitiveness by connecting Africa’s markets through increased regional integration. Also included are detailed competitiveness profiles for 38 African countries, providing a comprehensive summary of their competitive strengths and weaknesses. The Africa Competitiveness Report 2013 is an invaluable tool for policymakers, business strategists, and other key stakeholders, as well as essential reading for all those with an interest in the region. World Economic Forum 91-93 route de la Capite CH-1223 Cologny/Geneva Switzerland Tel +41 (0) 22 869 1212 Fax +41 (0) 22 ISBN-13: 786 2744 978-92-95044-97-5 contact@weforum.org www.weforum.org