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Contents Preface v Part 2: Transforming Africa’s Economies 35 by Angel Gurría (Organisation for Economic Co-Operation and Development), 2.1 Transforming Africa’s Agriculture 37 Donald Kaberuka (African Development Bank to Improve Competitiveness Group), Jim Yong Kim (World Bank Group), and by Jennifer Mbabazi Moyo, El-hadj M. Bah, Klaus Schwab (World Economic Forum) and Audrey Verdier-Chouchane (African Development Bank) Acknowledgments vii 2.2 Valuing Trade in Services in Africa 53 Contributors ix by Sebastian Sáez, Miles McKenna, and Barak Hoffman (World Bank Group) Partner Institutes of the World Economic Forum xi 2.3 Tapping the Potential of Global 71 Value Chains for Africa Overview xiii by Carlos Conde, Philipp Heinrigs, and Anthony O’Sullivan (Organisation for Economic Co-operation and Development) Part 1: Assessing Africa’s Competitiveness 1 1.1 Assessing Africa’s Competitiveness: 3 Part 3: Competitiveness Profiles 87 Opportunities and Challenges to How to Read the Competitiveness Profiles.............................89 Transforming Africa’s Economies Technical Notes and Sources..................................................91 by El-hadj M. Bah, Jennifer Mbabazi Moyo, and List of Countries...................................................................101 Audrey Verdier-Chouchane (African Development Competitiveness Profiles.......................................................102 Bank); Carlos Conde, Philipp Heinrigs, and Anthony O’Sullivan (Organisation for Economic Co-Operation and Development); Barak Hoffman and John About the Authors 183 Speakman (World Bank); and Attilio Di Battista, Margareta Drzeniek, and Caroline Galvan (World Economic Forum) The Africa Competitiveness Report 2015 | iii Preface ANGEL GURRÍA, Secretary-General, Organisation for Economic Co-operation and Development DONALD KABERUKA, President, African Development Bank Group JIM YONG KIM, President, World Bank Group KLAUS SCHWAB, Executive Chairman, World Economic Forum The Africa Competitiveness Report 2015 comes out at We hope that this year’s Report will stimulate an auspicious moment for the continent. Africa’s solid discussion among government, business, and average growth rate of more than 5 percent over the development partners and community leaders about past 15 years bears witness to the region’s impressive what we can all do, individually and collectively, to economic potential. A growing labor force and a large support Africa’s journey toward sustained growth and and emerging consumer market hold the promise of shared prosperity. Investments in physical and human significant further growth opportunities. Yet myriad capital will be key factors that need to be robustly challenges need to be addressed in order to reap these supported by a sound institutional framework and potential gains. Africa’s growth path could be more an enabling business environment. Businesses can equitable and broad based. Economies need to shift advocate for reforms that enhance competitiveness toward higher value added activities that will provide and can engage in a dialogue with policymakers quality employment opportunities for their growing about the type of reforms required for firms to prosper. populations and lay the foundations for sustained Governments can ensure sustained investments in growth. Africa has all the ingredients to make this infrastructure, health, and education; provide the happen, and decisions and actions taken today will legal and regulatory framework for a sound business determine whether Africa will succeed in achieving higher environment; and, most importantly, ensure that policies levels of prosperity. and their implementation are consistent across time and Published on a biennial basis, The Africa national boundaries. Competitiveness Report highlights areas that require Africa’s recent achievements suggest a brighter policy action and investment to ensure Africa’s future is already in the making. We hope that by sustained growth. The Report, which is the result of a providing this analysis, we can contribute to seizing this long-standing collaboration, leverages the knowledge opportunity for Africa’s current and future generations. and expertise of the African Development Bank, the Organisation for Economic Co-operation and Development (OECD), the World Bank Group, and the World Economic Forum to present a joint vision to inform policies that can help Africa transform its economies. Through a comprehensive analysis of Africa’s most pressing competitiveness challenges, the Report discusses the barriers and difficulties that have been preventing Africa’s economies from reaching their full potential. It examines the role and potential of the agriculture sector, which provides employment for a large share of the working population; it also considers the service sector, looking at how to reap the full benefits of this increasingly prominent sector as well as its implications for structural transformation. The Report also explores the potential for regional and global value chains to help Africa’s economies develop and expand new activities and build dynamic and competitive agricultural and service sectors. In doing so, it further informs an ongoing debate on the role of the manufacturing sector in Africa’s development. Finally, this work provides competitiveness profiles for 40 African countries, along with a comprehensive summary of the drivers of productivity and competitiveness in the continent. The Africa Competitiveness Report 2015 | v Acknowledgments The Africa Competitiveness Report 2015 was prepared enthusiastic support of the World Bank’s participation by a joint team comprised of Margareta Drzeniek in The Africa Competitiveness Report. We also thank Hanouz, Ciara Browne, Caroline Galvan, and Attilio our peer reviewers: César Calderón, Melise Jaud, and Di Battista, from the World Economic Forum; John William Maloney for their extremely helpful guidance. Speakman, Barak Hoffman, Sebastian Sáez, and Miles We similarly appreciate the inputs and suggestions we McKenna from the World Bank; Issa Faye, Jennifer received from Ejaz Ghani, Claire Hollweg, and Anand Mbabazi Moyo, El-hadj Mamadou Bah, and Audrey Rajaram. We would like to express our gratitude to Verdier-Chouchane from the African Development Maria Alyanak and Veronique Gorce for their invaluable Bank; and Anthony O’Sullivan, Carlos Conde, and administrative support. Laura Juliana Higuera Ardila, Philipp Heinrigs from the Organisation for Economic Esteban Rojas P., and Annoula Rysova provided Co-operation and Development (OECD). The work excellent research assistance. From the World Economic was carried out under the general direction of Richard Forum, we thank Francesca Bianchi, Oliver Cann, Benjii Samans, Managing Director at the World Economic Coetzee, Gemma Corrigan, Reuben Coulter, Roberto Forum; Marcos Bonturi, Director, Global Relations Crotti, Lisa Dreier, Gaëlle Dreyer, Lorin Fries, Thierry Secretariat, OECD; Anabel Gonzales, Senior Director of Geiger, Tania Gutknecht, Elsie Kanza, Kristin Keveloh, Global Trade and Competitiveness Practice; Shantayana Vanessa Moungar, Patrick McGee, Anu Paasiaro, Pedro Devarajan, Chief Economist for the Middle East and Rodrigues De Almeida; Cecilia Serin, Huguette Umutoni, North Africa Region, and Francisco Ferreira, Chief and Saadia Zahidi. Economist for the Africa Region at the World Bank; and Steve Kayizzi-Mugerwa, Acting Chief Economist and Vice President, Economics Complex at 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, we thank Issa Faye, Steve Kayizzi-Mugerwa, and Abebe Shimeles from the African Development Bank for their invaluable guidance; Charlotte Karagueuzian (Consultant) and Anna von Wachenfelt (Consultant) for their excellent research assistance; and Zuzana Brixiova (peer reviewer). We would like to acknowlege the contribution of the Agriculture and Agro-Industry Department of the African Development Bank, particularly Chiji Ojukwu (Director for Agriculture and Agro-Industry), Xavier Boulenger, Joseph Coompson, Ken Johm, Benedict Kanu, and Damian Onyema, who provided comments on the chapter; administrative assistance was also provided by Rhoda Bangurah, Nana Cobbina, and Abiana Nelson. From the OECD, we thank Carole Biau, Karim Dahou, Przemyslaw Kowalski, Iza Lejarraga, Javier Lopez Gonzalez, Idil Mohamed, and Henri-Bernard Solignac-Lecomte. From the World Bank, we thank Paul Brenton, Shantayana Devarajan, Francisco Ferreira, and Anabel Gonzalez for their The Africa Competitiveness Report 2015 | vii Contributors The Africa Competitiveness Report 2015 is the result of collaboration between the World Economic Forum, the World Bank, the African Development Bank, and the Organisation for Economic Co-operation and Development. AT THE WORLD ECONOMIC FORUM AT THE AFRICAN DEVELOPMENT BANK Professor Klaus Schwab Donald Kaberuka Executive Chairman President Richard Samans Steve Kayizzi-Mugerwa Managing Director, Centre for the Global Agenda Acting Chief Economist and Vice President, Economics Jennifer Blanke Complex Chief Economist Abebe Shimeles Margareta Drzeniek Hanouz Acting Director, Development Research Department Head of Global Competitiveness and Risks Issa Faye Ciara Browne Manager, Research Division, Development Research Director, Global Competitiveness and Risks Team Department Attilio Di Battista Jennifer Mbabazi Moyo Junior Quantitative Economist, Global Competitiveness Principal Research Economist, Research Division, and Risks Team Development Research Department Caroline Galvan El-hadj Mamadou Bah Economist, Global Competitiveness and Risks Team Principal Research Economist, Research Division, Development Research Department Elsie Kanza Senior Director, Head of Africa Audrey Verdier-Chouchane Chief Research Economist, Research Division, Development Research Department AT THE WORLD BANK GROUP Jim Yong Kim AT THE ORGANISATION FOR ECONOMIC President CO-OPERATION AND DEVELOPMENT Anabel Gonzalez Angel Gurría Senior Director, Trade and Competitiveness Global Secretary-General Practice Marcos Bonturi Shantayana Devarajan Director, Global Relations Secretariat Chief Economist, Middle East and North Africa Region Anthony O’Sullivan Francisco H. G. Ferreira Deputy Director, Global Relations Secretariat Chief Economist, Africa Region Carlos Conde William Maloney Head of Division, Middle East and Africa Division, Global Chief Trade and Competitiveness Economist, Trade and Relations Secretariat Competitiveness Global Practice Philipp Heinrigs John Speakman Senior Policy Analyst, Middle East and Africa Division, Practice Manager, Trade and Competitiveness Global Global Relations Secretariat Practice Sebastian Sáez Senior Trade Economist, Trade and Competitiveness Global Practice Barak Hoffman Public Sector Specialist, Governance Global Practice Miles McKenna Consultant, Trade and Competitiveness Global Practice The Africa Competitiveness Report 2015 | ix Partner Institutes The World Economic Forum’s Global Competitiveness and Risks Team is pleased to acknowledge and thank the following organizations as its valued Partner Institutes, without which the realization of The Africa Competitiveness Report 2015 would not have been feasible: Angola Egypt InAngol The Egyptian Center for Economic Studies (ECES) Luis Verdeja, Chief Executive Officer Iman Al-Ayouty, Senior Economist Tarek El-Ghamrawy, Economist Botswana Omneia Helmy, Director of Research Botswana National Productivity Centre Letsogile Batsetswe, Research Consultant and Statistician Ethiopia Baeti Molake, Executive Director African Institute of Management, Development Phumzile Thobokwe, Manager, Information and Research and Governance Services Department Zebenay Kifle, General Manager Tegenge Teka, Senior Expert Benin CAPOD—Conception et Analyse de Politiques de Gabon Développement Confédération Patronale Gabonaise Epiphane Adjovi, Director Regis Loussou Kiki, General Secretary Sosthene Gnansounou, Lead Economist Gina Eyama Ondo, Assistant General Secretary Henri Claude Oyima, President Burkina Faso lnstitut Supérieure des Sciences de la Population (ISSP) Gambia, The Bonayi Hubert Dabire, Deputy Director Gambia Economic and Social Development Jean François Kobiane, Director Research Institute (GESDRI) Justin Zoma, Student Makaireh A. Njie, Director Burundi Ghana University Research Centre for Economic and Social Association of Ghana Industries (AGI) Development (CURDES), National University of Burundi Patricia Addy, Projects Officer Dieudonné Gahungu, Director James Asare-Adjei, President Charles Kabwigiri, Dean Seth Twum-Akwaboah, Executive Director Gilbert Niyongabo, Head of Department, Faculty Guinea of Economics and Management Confédération Patronale des Entreprises de Guinée Cameroon Mohamed Bénogo Conde, Secretary-General Comité de Compétitivité (Competitiveness Committee) Kenya Jean-Jacques Ngouang, Operations Director Institute for Development Studies, University of Nairobi Lucien Sanzouango, General Manager Paul Kamau, Senior Research Fellow Cape Verde Dorothy McCormick, Research Professor INOVE RESEARCH—Investigação e Desenvolvimento, Lda. Winnie Mitullah, Director and Associate Research Professor Emanuel Carvalho, Project Manager Lesotho Júlio Delgado, Partner and Senior Researcher Private Sector Foundation of Lesotho José Mendes, Chief Executive Officer Nthati Mapitsi, Researcher Chad Thabo Qhesi, Chief Executive Officer Groupe de Recherches Alternatives et de Monitoring du Projet Kutloano Sello, President, Researcher Pétrole-Tchad-Cameroun (GRAMP-TC) Libya Antoine Doudjidingao, Researcher Libya Development Policy Center Gilbert Maoundonodji, Director Mohamed Hammuda, Project Coordinator Celine Nénodji Mbaipeur, Programme Officer Mohamed A. Wefati, Managing Director Côte d’Ivoire Madagascar Chambre de Commerce et d’Industrie de Côte d’Ivoire Centre of Economic Studies, University of Antananarivo Anzoumane Diabakate, Head of Communications Ravelomanana Mamy Raoul, Director Jean Rock Kouadio-Kirine, Head of Regional Razato Rarijaona Simon, Executive Secretary Economic Information Marie-Gabrielle Varlet-Boka, Director General The Africa Competitiveness Report 2015 | xi Partner Institutes Malawi South Africa Malawi Confederation of Chambers of Commerce and Business Leadership South Africa Industry Friede Dowie, General Manager Hope Chavula, Manager, Public Private Dialogue Thero Setiloane, Chief Executive Officer Chancellor L. Kaferapanjira, Chief Executive Officer Business Unity South Africa Mali Nomaxabiso Majokweni, Chief Executive Officer Groupe de Recherche en Economie Appliquée Kgatlaki Ngoasheng, Executive Director, Economic Policy et Théorique (GREAT) Swaziland Massa Coulibaly, Executive Director Federation of Swaziland Employers and Chamber Mauritania of Commerce Bicom-Service Commercial Mduduzi Lokotfwako, Coordinator, Trade & Commerce Guèye Ibrahima, Administrative Financial Director and Analyst Nyakwesi Motsa, Administration & Finance Manager Ousmane Samb, Technical and Marketing Director and Tanzania Analyst Research for Policy Development (REPOA) Habib Sy, Director Général Cornel Jahari, Assistant Researcher Mauritius Blandina Kilama, Researcher Board of Investment, Mauritius Donald Mmari, Director of Research on Growth Manaesha Fowdar, Investment Executive, Competitiveness and Development Khoudijah Maudarbocus-Boodoo, Director Uganda Ken Poonoosamy, Managing Director Kabano Research and Development Centre Joint Economic Council Robert Apunyo, Program Manager Raj Makoond, Director Delius Asiimwe, Executive Director Anna Namboonze, Research Associate Morocco Confédération Générale des Entreprises du Maroc (CGEM) Zambia Meriem Bensalah Cheqroun, President Institute of Economic and Social Research (INESOR), Si Mohamed Elkhatib, Project Head, Commission Climat des University of Zambia Affaires et Partenariat Public Privé Patricia Funjika, Research Fellow Ahmed Rahhou, President, Commission Climat des Affaires Jolly Kamwanga, Senior Research Fellow and et Partenariat Public Privé Project Coordinator Mubiana Macwan’gi, Director and Professor Mozambique EconPolicy Research Group, Lda. Zimbabwe Peter Coughlin, Director Graduate School of Management, University of Zimbabwe Mwikali Kieti, Project Coordinator A. M. Hawkins, Professor Namibia Liberia and Sierra Leone Institute for Public Policy Research (IPPR) FJP Development and Management Consultants Graham Hopwood, Executive Director Omodele R. N. Jones, Chief Executive Officer Leon Kufa, Research Associate Lizaan van Wyk, Research Associate Nigeria Nigerian Economic Summit Group (NESG) Frank Nweke II, Director General Olajiire Onatade-Abati, Research Analyst Sope Williams-Elegbe, Associate Director & Head of Research Rwanda Private Sector Federation (PSF) Hannington Namara, Chief Executive Officer Andrew R. Othieno, Head of Research and Policy Rwanda Development Board (RDB) Daniel Nkubito, Strategy and Competitiveness Division Valentine Rugwabiza, Chief Executive Officer Senegal Centre de Recherches Economiques Appliquées (CREA), University of Dakar Youssou Camara, Administrative Staff Fatou Gueye, Teacher Gisèle Tendeng, Accountant Seychelles Plutus Auditing & Accounting Services Nicolas Boulle, Partner Marco L. Francis, Partner xii | The Africa Competitiveness Report 2015 Overview The Africa Competitiveness Report 2015 comes out meeting the imperative of job creation becomes even at a promising time for the continent: for 15 years more crucial. Africa’s transformation therefore entails growth rates have averaged over 5 percent,1 and rapid the double challenge of productivity growth and population growth holds the promise of a large emerging massive job creation. What is more, demographic consumer market as well as an unprecedented labor developments will require important and urgent public force that—if leveraged—can provide significant growth investments in economic centers and secondary cities: opportunities.2 Moreover, the expansion of innovative despite the continent’s high population growth and business models, such as mobile technology services, rapid urbanization, Africans living in the countryside will is indicative of the continent’s growth potential. However, remain the majority until the 2030s, and their number Africa continues to be largely agrarian, with an economy will continue to grow well after 2050.6 This development, that is underpinned by resource-driven growth and a which is somewhat unusual compared with other large and expanding informal sector.3 Indeed, more than regions, will also require policies that bridge the urban- a decade of consistently high growth rates have not rural divide while managing Africa’s transformation. yet trickled down to significant parts of the population: Earlier editions of this biennial Africa nearly one out of two Africans continue to live in Competitiveness Report have addressed distinct but extreme poverty,4 and income inequality in the region related themes in considering the most effective ways remains among the highest in the world. What is more, to boost the continent’s competitiveness. The 2011 across sectors—from agriculture to manufacturing Report examined Africa’s human resources and services and services—productivity levels remain low. It will be industries and looked at the efforts required to improve necessary to raise productivity across all sectors of the higher education, strengthen women’s entrepreneurship, economy to achieve higher growth and create quality and capitalize on the emerging Travel & Tourism industry. employment, and turn this progress into sustainable and The 2013 Report focused on the potential of regional inclusive growth. integration as a stepping stone for building economies The optimal path of development, however, of scale, increasing competition, and fostering economic remains uncertain. For decades, the typical path out diversification. It also discussed constraints and the of poverty was increased agricultural productivity policy environment required to develop the necessary followed by growth in manufacturing. Yet data explored infrastructure for connecting Africa’s markets in a in Chapter 1.1, Assessing Africa’s Competitiveness, sustainable way. This year’s Report leverages the suggest that Africa’s structural transformation—defined expertise and research that has been carried out by as the reallocation of economic activity away from its partner organizations—the African Development the least-productive sectors of the economy to more- Bank, the Organisation for Economic Co-operation productive ones—is proceeding along a very different and Development, the World Bank, and the World trajectory. Across the region, agriculture’s share of GDP Economic Forum—to explore how best to transform is declining and manufacturing is stagnating, while the Africa’s economies. It is based on the assumption that service sector, in contrast, is increasing as a share of increased competitiveness—by definition—is a critical total employment and GDP, providing critical inputs to driver for structural transformation and broad-based boost other economic activities. To inform this debate, growth. By competitiveness we mean all of the factors, this year’s Report looks at structural transformation in institutions, and policies that determine a country’s level Africa and the region’s challenges and opportunities for of productivity. Productivity, in turn, sets the sustainable unlocking new and more-productive activities. level and path of prosperity that a country can achieve. This evolution in Africa’s economic structure is Against this backdrop, the Report begins with an happening in parallel with Africa’s unique and evolving overview of the region’s current economic structure and demographic dynamics: 450 million workers are moves on to outline the competitiveness challenges it projected to join the workforce between 2010 and now faces. 2035.5 This presents an unprecedented opportunity in terms of a “demographic dividend,” but at the same time it presents challenges because successfully The Africa Competitiveness Report 2015 | xiii Overview ASSESSING THE COMPETITIVENESS OF AFRICAN do particularly well in the areas of financial, goods, and COUNTRIES labor market efficiency. Middle-income economies, Chapter 1.1 of the Report analyzes competitiveness while generally faring better, face many of the same across the continent and looks at a broad range of competitiveness challenges as their peers, such as an factors that affect productivity in African countries. infrastructure deficit and low levels of education. The The Global Competitiveness Index (GCI) identifies the chapter also looks at “Africa Then and Now.” In the last majority of African countries as being among the least decade, middle-income economies and oil-exporting competitive in the world and indicates that, despite 15 economies overall register a mixed picture when it years of strong growth, Africa’s overall competitiveness comes to improvements in competitiveness, while the has remained stagnant. majority of fragile and low-income economies register In many respects, Africa’s competitiveness slight improvements. Among all economies, Mauritius challenges are the same ones that this Report has been has made the biggest strides, superseding South Africa highlighting since it was first published in 1998: these for the first time in 2013. are weak institutions, a persistent infrastructure deficit (as explored in detail in the 2013 Report), and low levels TRANSFORMING AFRICA’S ECONOMIES of health and education that risk leaving the continent’s Although past experiences in other regions have vast human potential untapped. This sense of déjà vu is emphasized industrialization as the driving force of of concern because the majority of African economies economic development—as seen, for example, in East find themselves in a development stage where these and Southeast Asia since the 1960s—data for Africa basic requirements will be necessary to establish a solid tell us a different story: agriculture continues to employ basis for higher-value-added sources of growth. And over half of the continent’s population, but its share despite Africa’s mobile revolution, the region as a whole of value-added has been falling over the past four is not keeping up with the rapid pace of technological decades, dropping from 34 percent in 1965 to just over advancements elsewhere. Only one-fifth of the region’s 20 percent in 2010. Rather than being replaced by an population is using the Internet, compared with 30 expanding manufacturing sector, as the experiences percent in Southeast Asia, 40 percent in Latin America in other regions would predict, this decline has largely and the Caribbean, and 80 percent in Organisation been offset by an expanding service sector, accounting for Economic Co-operation and Development (OECD) for over 50 percent of GDP—a figure that is close to economies. Even in instances where the Internet is the share seen in the Association of Southeast Asian being used, its potential is not being fully harnessed. Nations. This shift took place largely in the market At the same time, however, much progress has been service sector—most notably in retail, distribution, and made and the region is showing a more solid record other trade services—employing 25 percent of the of macroeconomic performance than it did a decade working-age population.8 However, labor productivity ago. Despite prevailing governance challenges, it is in both the agriculture sector and the trade service more stable and better governed now than it has been sector—where most agriculture employment has at any other time since independence, and it classifies shifted—remains low and should be enhanced. Greater as the world’s most rapidly reforming region when it productivity in agriculture and trade services would not comes to its business environment.7 In spite of these only boost economic growth but also support structural positive trends, Chapter 1.1 shows wide regional transformation by allowing factors of production to move disparities in competitiveness across the continent, as away from the agricultural to the service sector. captured in findings such as the placement of Mauritius The dichotomy of a largely agrarian society at 39th while Guinea, at 144th, is the lowest-ranked underperforming in the basic drivers of competitiveness country out of all assessed. The regional divergence is on one hand, alongside the rapidly growing role of the particularly pronounced in the areas of infrastructure and service sector coupled with a rapidly reforming business health and primary education as well as financial and environment on the other, raises a question about the macroeconomic performance. sustainability of Africa’s path of development, particularly Recognizing the continent’s heterogeneity, whether development toward a rising service sector that the chapter explores in greater detail the main bypasses manufacturing is viable. A fast-growing but competitiveness challenges by classifying Africa’s generally low-productivity service sector does not offer economies into oil and gas exporters, middle-income strong prospects for increased competitiveness. economies, non-fragile low-income economies, and fragile economies. The data show that oil- and gas- INCREASING AGRICULTURAL COMPETITIVENESS exporting economies perform as poorly as fragile Chapter 2.1, Transforming Africa’s Agriculture to Improve economies in 8 out of the 12 competitiveness pillars, Competitiveness, begins the discussion of Africa’s calling into question whether these countries’ high transformation by looking at the agriculture sector. In economic growth rates are sustainable. The chapter spite of its vast expanse of arable land, Africa has the further observes that non-fragile low-income economies highest incidence of undernourishment of its population xiv | The Africa Competitiveness Report 2015 Overview worldwide, and the continent imports a large quantity of food staples. The agriculture sector’s low productivity, Box 1: Global value chains: A definition and largely characterized by small-scale subsistence method of measurement production, has not benefited from the green revolution Global value chains (GVCs) are the interconnected that aided much of the rest of the developing world.9 production process that goods and services undergo from The poor performance of the agriculture sector poses conception and design through production, marketing, a major impediment to Africa’s economic development and distribution.1 The primary measures of a country’s and structural transformation by preventing labor participation in GVC trade are backward integration, which occurs when a country sources foreign inputs for its export from moving out of that sector into manufacturing production; and forward integration, which occurs when and services. Chapter 2.1, therefore, looks at possible a country provides inputs for a foreign country’s export ways to unlock the sector’s enormous potential and production. Combining backward and forward integration make it more competitive to support the continent’s gives a measure of a country’s total GVC participation. structural transformation process as well as to decrease Note food insecurity and meaningfully contribute to poverty 1 Gereffi and Fernandez-Stark 2011. reduction. The chapter argues that—on a higher level— urgent attention should be given to the development of agricultural value chains integration in order to boost African farmers’ benefits and create an agribusiness industry. Value chains would support the recent growth previously thought. Services contribute to exports in large commercial agribusinesses (see also Box 1; see through two channels: as direct service exports and as Chapter 2.3 for a discussion of global value chains, or inputs into exports from other sectors. By disaggregating GVCs). At the same time, to ensure inclusiveness of the value-added data, the importance of services as sector, links to small-scale farmers—including through inputs into other export activities becomes much more outgrower schemes where smallholder farmers supply evident, especially their contribution as inputs into products for a larger firm under pre-agreed conditions— exports of primary goods and manufacturing. Services, should be encouraged. Small-scale farmers, linked for example, account for 83 percent of the final price to large-scale agribusinesses or organized in groups, of Ethiopian roses in the Netherlands. Distribution and would diversify their production into higher-value crops, trade services (including hotels and restaurants) and adopt better production processes, and earn higher other business services (including ICT and professional output prices. In this way regional value chains can be services), in particular, tend to have stronger links to used as a stepping stone for African farmers to improve other export sectors when measured in value-added. their production, enhance marketing processes, and Typically viewed as an area of comparative advantage ultimately meet the quality standards of world markets. for more-advanced economies, these trends give the In addition, a sound regulatory and institutional system, service sector a more prominent role in the development financial instruments suited to the agricultural production agenda of Africa. A growing service sector can also cycle, and increased spending in research are vital to help improve gender equity in Africa, because the encouraging the development and adoption of high- barriers to female employment are lower for services yield crops, including genetically modified ones. All than for manufacturing. Yet service exports from Africa these elements are particularly vital at the national remain a small portion of overall exports and numerous level, as much more effort is needed to meet the 10 impediments to trade in services exist. To maximize percent of national spending on agriculture that was potential gains, countries in Africa need to reduce direct agreed under the terms of the Comprehensive Africa barriers to trade in services as well as indirect ones Agriculture Development Programme established by the that result from poor regulation. As countries continue New Partnership for Africa’s Development. Furthermore, to seize opportunities in the sector, policymakers land reform will be particularly crucial for increasing and economists need to question old assumptions access to land, including by women, which is necessary and consider new implications. The role of services to decrease inequality in the distribution of land and to in structural transformation must be reexamined, and ensure security of tenure. the link between a growing service sector and poverty reduction in Africa—and whether this a viable export THE ROLE OF SERVICES sector for Africa—must be determined. The increasingly important role of services in economies across Africa is challenging the conventional TAPPING THE POTENTIAL OF GLOBAL VALUE understanding of the path of structural transformation. CHAINS (GVCS) Chapter 2.2, Valuing Trade in Services in Africa, looks Although not new, cross-border value chains have at new trade statistics for countries in Africa that take gained a global dimension through their expansion into account value-added data and show that service toward emerging and developing countries (see Box 1). exports are much more significant for Africa than Firms increasingly operate in a context of internationally The Africa Competitiveness Report 2015 | xv Overview fragmented production chains. Through GVCs, trade is vary with economic sector and structural factors such facilitated by flows of goods, services, investment, and as the country’s level of development and market size. knowledge necessary to produce products in multiple Furthermore, additional data and empirical studies will locations—giving rise to what has been called the trade- be needed to fully assess the extent of GVC integration investment-service-intellectual property (IP) nexus.10 in Africa and its links to development outcomes such as The importance of this nexus for international trade employment. and development has motivated new research efforts As the number of consumers in Africa grows, that, notably, assess its influence on the links between nontraditional crops—such as fruits, vegetables, and trade, competitiveness, and development. Recent data fish—that are buyer-driven value chains and where suggest that participation in GVCs is associated with upgrading can occur as retailers seek “ready-to-sell” economic benefits particularly for developing economies, products that are already packaged for the final market where value-added trade contributes 28 percent to are a particularly promising GVC for Africa.13 Regional countries’ GDP on average—considerably higher than value chains can also provide an important step and the contribution of 18 percent in developed economies. learning experience for integrating into global agricultural Moreover, economies with the fastest-growing GVC GVCs, so smallholder farmers especially can learn to participation have GDP per capita growth rates some 2 meet the high-quality standards for the world market, as percent above the average.11 For Africa, GVCs offer the noted above. opportunity to link into a specific part of the production chain based on a country’s or sector’s comparative COMPREHENSIVE POLICY MIX NEEDED advantage rather than providing the fully fledged As each of the chapters explores ways, opportunities, production chain itself. and barriers to transforming Africa’s economies, it has In view of the economic opportunities associated become clear that the policy space to unleash the with GVCs, Chapter 2.3, Tapping the Potential of Global continent’s tremendous potential is often overlapping. On Value Chains for Africa, explores ways Africa could tap a higher level, these are efforts to close the infrastructure the potential of GVCs in the form of gains associated deficit and leverage the region’s human resource with enhanced productivity, skills development, and potential. At the same time, identifying and implementing export diversification. As discussed in the 2013 Africa a strong regulatory framework within and across sectors Competitiveness Report, Africa’s share of global trade as well as reducing barriers to trade will be important. remains very small, at around 2 percent of world Jointly, the following levers will be the most critical to trade, and exports overall remain highly focused on address many of the challenges explored in the Report: commodities.12 This important exposure to commodities • Developing transport and ICT infrastructure: renders the region vulnerable to fluctuations in Chapter 2.1 lists inadequate infrastructure—including commodity prices, as evidenced by their current fall, unreliable energy, an ineffective urban-rural road possibly also jeopardizing governments’ fiscal stability. network, and inefficient ports—as main impediments Export diversification—both in goods and services and to better performance of the agriculture sector. also across geographies—therefore remains essential Increased spending on rural infrastructure (irrigation, to raising Africa’s resilience to external shocks and roads, and energy) will help reduce the continent’s moving up the value chain. The region’s participation dependence on rain-fed agriculture by supporting in GVCs remains a small (albeit growing) share at intensified irrigation, increasing resilience to climate 2.2 percent of total GVC trade, of which two-thirds change, and improving access to markets for is determined by forward integration related to the intermediate inputs and agricultural produce. The continent’s rich endowments in natural resources and availability and quality of infrastructure is also an low levels of industrialization. Further development of important determinant to unlock (intra-) African GVCs, in particular backward linkages, will depend on trade in general and participation in regional and the implementation of a broad set of policies with a GVCs specifically (Chapter 2.3). Likewise, developing particular focus on trade facilitation, investment policy, ICT infrastructure cuts across all sectors: ICTs and improved transport infrastructure and access can streamline production knowledge and market to finance. These policies will have most impact on information flows between stakeholders in the African small- and medium-sized enterprises, which agriculture sector by, for example, (1) facilitating face the greatest hurdles to GVC integration and whose the process of land registration and access to participation is especially hindered by limited access to credit; (2) ensuring more efficient land use and finance. Moreover, the chapter argues that accelerating water management; (3) obtaining weather, crop, the harmonization and implementation of regional trade and market information;14 and (4) allowing food agreements should help African firms, in particular and animals to be traced. ICTs are also critical to small- and medium-sized enterprises, develop a greater facilitate the provision of services within countries capacity to compete on a global scale. The chapter and across national borders (Chapter 2.2). warns, however, that gains from GVC participation will xvi | The Africa Competitiveness Report 2015 Overview • Increasing the quality of education: Most transport services—are relatively restricted in importantly, increasing levels and quality of many countries. For example, restrictive policies education will be essential to raising productivity and disjointed regional regulations have caused across all sectors. Chapter 1.1 shows that, although a fragmented market in the professional services the continent has made considerable progress in industry in East Africa, which is further aggravated improving access to primary education, enrollment by strict immigration policies in some countries in rates in higher education—especially in tertiary the region. Yet lifting restrictiveness alone is not institutions—remain disappointingly low. Increasing enough without complementary regulatory reform levels and quality of education, including enhancing (Chapter 2.2). Similarly, the absence of competition skills in biotechnology as a way to increase and inefficient regulation in the freight logistics agricultural productivity, will be important to raising sector add to high transportation costs that pose productivity in the agriculture sector (Chapter 2.1). an important barrier to increased trade and GVC Empirical evidence shows that tertiary education participation, as explored in Chapter 2.3. enrollment is an important determinant of services Efforts to address all these challenges are underway in developing countries, primarily via skills and in some parts of the continent, but in order to truly entrepreneurial activity (Chapter 2.2). Indeed, a transform Africa’s economies, these efforts must be highly educated workforce is needed to develop scaled up and accelerated. high-value-added service exports such as finance, Following the discussions above, the final section of communication, and business services. With regard the Report provides detailed competitiveness profiles for to GVCs, improving the quality of education will help the 40 African countries included in the World Economic increase the attractiveness of African producers and Forum’s Global Competitiveness Index that allow for a ensure technology and knowledge transfers and detailed assessment country-specific context and unique spillovers in order for the continent to upgrade along challenges. These profiles present the detailed rankings GVCs. that underlie the broader global competitiveness • Reducing barriers to trade: The reduction of rankings. barriers remains a critical component for increasing Africa’s competitiveness. Beyond the poor NOTES quality of physical infrastructure and high tariffs, 1 Authors’ calculation, based on the International Monetary Fund’s World Economic Outlook (IMF 2015). estimates shows that 60 to 90 percent of trade costs relate to non-tariff measures (Chapter 2.3). 2 Growth opportunities are contingent on several factors, such as the critically important issue of the employment of the expanding In addition, delays and unpredictability are often workforce. Successfully extended employment opportunities a strong impediment to the region’s participation would lead to greater economic output and labor income per household, and among other aspects, would increase per capita in GVCs because many industries rely on just- investments in health, education, and infrastructure, and a move in-time production and depend on the reliability away from the informal to the formal sector. For a complete discussion, see also IMF 2015, Chapter 2. of the supply of intermediate inputs. Chapter 2.1 provides an example, based on agriculture value 3 Only one in two young Africans participates in wage-earning jobs; see World Bank 2014a. chains, where reducing shipping time and costs 4 This figure is 46.8 percent of the population measured against would significantly reduce losses in perishable a threshold of US$1.25 dollar a day. See http://povertydata. food shipping. Key recommendations noted in the worldbank.org/poverty/region/SSA for details. last edition of the Africa Competitiveness Report, 5 IMF 2015. therefore, remain critical for Africa’s participation in 6 UNESA 2015. GVCs. Essential among these are simplifying import- 7 World Bank 2014b. export procedures—including streamlining border 8 These numbers refer to 2010 and cover 11 sub-Saharan and 2 administration to reduce the cost of procedures North African economies for which data are available in the GGDC and delays during clearance, and improving the Africa Sector Database (Timmer et al. 2014). The sub-Saharan Africa sample includes Botswana, Ethiopia, Ghana, Kenya, Malawi coordination of the clearance process. (1966 data have been used for 1965), Mauritius (1970 for 1965), Nigeria, Senegal (1970 for 1965), South Africa, Tanzania, and • Strengthening the regulatory framework: Zambia. The North Africa sample includes Egypt and Morocco. Chapter 2.1 discusses land access based on 9 The green revolution refers to the dramatic rise in the productivity customary rights that disadvantage women, unequal of global agriculture in other parts of the world as a result of distribution, and the absence of land markets that chemical advances and the development of high-yield crops, which made possible the production of much larger quantities of are preventing the most efficient farmers from the food and feed the growing population. opportunity to scale up their production. Insecure 10 Baldwin 2011, 2012. See also Feenstra 2010; Grossman and land tenure also limits farmers’ ability to use their Rossi-Hansberg 2008; Helpman 2011; and Jones 2000 for an land as collateral and thus to access credit markets. analysis of defragmentation, trade in tasks, and offshoring. In the service sector, key components—such as 11 UNCTAD 2013. telecommunications, professional services, and The Africa Competitiveness Report 2015 | xvii Overview 12 Fuels and mining products account for over half of sub-Saharan exports, compared with only about 10 percent for developing Asia and advanced economies. 13 Traditional cash-crops (such as coffee, cotton, cocoa, sugar, tea, and tobacco) tend to be producer-driven chains with limited scope for functional upgrading, given the tight control by lead producers with higher-value activities—such as processing and manufacturing—that are carried out outside Africa. 14 The Esoko Ghana commodity exchange publishes a weekly cash price index of commodities. Esoko has expanded in a dozen countries and provides price and knowledge data to farmers via mobile text messages. REFERENCES Baldwin, R. 2011. “Trade and Industrialisation after Globalisation’s 2nd Unbundling: How Building and Joining a Supply Chain Are Different and Why It Matters.” NBER Working Paper No. 17716. Cambridge, MA: National Bureau of Economic Research. Available at http://www.nber.org/papers/w17716. Baldwin, R. 2012. “Global Supply Chains: Why They Emerged, Why They Matter, and Where They Are Going.” Centre for Economic Policy Research Discussion Paper No. 9103, August. Feenstra, R. 2010. Offshoring in the Global Economy: Microeconomic Structure and Macroeconomic Implications. Boston, MA: MIT Press. Gereffi, G. and K. Fernandez-Stark. 2011. “Global Value Chain Analysis: A Primer.” Durham, NC: Center of Globalization, Governance and Competitiveness. Grossman, G. and E. Rossi-Hansberg. 2008. “Task Trade Between Similar Countries.” NBER Working Paper No. 14554. Cambridge, MA: National Bureau of Economic Research. Available at: http:// www.nber.org/papers/w14554. Helpman, E. 2011. Understanding Global Trade. Cambridge, MA: Belknap Press of Harvard University Press. IMF (International Monetary Fund). 2015. Regional Economic Outlook: Sub-Saharan Africa: Navigating Headwinds, April. Washington, DC: IMF. Available at http://www.imf.org/external/pubs/ft/reo/2015/ afr/eng/pdf/sreo0415.pdf. Jones, R. 2000. Globalization and the Theory of Input Trade. Cambridge, MA: MIT Press. Timmer, M. P., G.J. de Vries, and K. de Vries. 2014. “Patterns of Structural Change in Developing Countries.” GGDC research memorandum 149. University of Groningen. Available at http:// www.ggdc.net/publications/memorandum/gd149.pdf. UNCTAD (United Nations Conference on Trade and Development). 2013. Economic Development in Africa Report 2013: Intra-African Trade: Unlocking Private Sector Dynamism. Geneva: United Nations. Available at http://unctad.org/en/publicationslibrary/ aldcafrica2013_en.pdf. UNESA (United Nations Department of Economic and Social Affairs, Population Division). 2015. World Urbanization Prospects: The 2014 Revision. Available at http://esa.un.org/unpd/wup/. World Bank. 2014a. Youth Employment in Sub-Saharan Africa. Washington, DC: World Bank. Available at http://www-wds. worldbank.org/external/default/WDSContentServer/WDSP/IB/2014 /01/22/000333037_20140122102826/Rendered/PDF/840830V10Y outh0SSA0Overview0English.pdf. World Bank 2014b. “Sub-Saharan Africa Implements the Most Business Regulatory Reforms Worldwide.” Press release, October 29. Available at http://www.worldbank.org/en/news/ press-release/2014/10/29/sub-saharan-africa-business-regulatory- reforms-worldwide. xviii | The Africa Competitiveness Report 2015 Part 1 Assessing Africa's Competitiveness CHAPTER 1.1 The 2015 Africa Competitiveness Report comes out as Africa is growing at a brisk pace, surpassed only by emerging and developing Asia. Indeed, compared with Assessing Africa’s the economic turmoil that affected advanced economies in recent years, economic growth in the African region Competitiveness: has provided something of a silver lining. Growth is now returning in some advanced economies—notably Opportunities and the United States—although it remains anemic in much of Europe, Japan, and other advanced economies. In Challenges to Transforming contrast, many sub-Saharan economies continue to register growth rates of over 5 percent on average. Yet, Africa’s Economies despite maintaining such healthy growth rates for over a decade, Africa’s levels of productivity are low and overall EL-HADJ M. BAH competitiveness has remained stagnant—a concern JENNIFER MBABAZI MOYO voiced since the first Africa Competitiveness Report AUDREY VERDIER-CHOUCHANE came out in 1998. African Development Bank Low levels of competitiveness are concerning for two reasons. In the short run, they render the region’s CARLOS CONDE economies vulnerable to important economic downside PHILIPP HEINRIGS shocks; such shocks range from a slowdown in ANTHONY O’SULLIVAN emerging markets to repercussions of the four-year low OECD in oil prices and lower prices for other commodities for BARAK HOFFMAN the region’s resource-rich economies. In the medium JOHN SPEAKMAN run, they call into question whether the continent will World Bank be able to leverage its demographic dividend: Africa’s population of over 1 billion people represents a large ATTILIO DI BATTISTA emerging consumer market and labor force that provides MARGARETA DRZENIEK significant growth opportunities.1 In this context, making CAROLINE GALVAN Africa’s economies more competitive will be critical. World Economic Forum This year’s Report therefore explores whether structural transformations critical for driving competitiveness are being implemented. It also asks the question: are policymakers putting the fundamentals into place to maintain the high growth trajectory needed to ensure increases in living standards? Following a brief analysis of the current structure of the region’s economies, this chapter will assess in detail the competitiveness landscape on the continent and in the individual countries covered by our analysis. By highlighting the strengths and weaknesses of the region and comparing individual African economies in a regional and global context, policymakers, business leaders, and other stakeholders are offered an important tool for formulating competitiveness-enhancing policies. This approach lays the groundwork for a more in-depth analysis of structural transformation in the chapters to follow. AFRICA’S COMPETITIVENESS CHALLENGE Much talk has centered on whether or not recent economic growth rates in Africa are sustainable in the medium to long run. The analysis undertaken in this Report can help inform this debate because the levels The authors would also like to thank Charlotte Karagueuzian and Anna von Wachenfelt (AfDB Consultants) for their excellent research assistance. The Africa Competitiveness Report 2015 | 3 1.1: Assessing Africa’s Competitiveness Figure 1: Prosperity and economic growth, 1990–2013 Figure 2: Africa’s falling productivity GDP based on purchasing power parity (PPP) per capita, Labor productivity per person employed in 1990 US$ current int’l dollars (converted at Geary Khamis PPPs) 16,000 100 Emerging and developing Asia OECD Latin America and the Caribbean Latin America and the Caribbean 80 Southeast Asia Africa 12,000 Sub-Saharan Africa 60 8,000 40 4,000 20 0 0 1990 1995 2000 2005 2010 2013 1950 1960 1970 1980 1990 2000 2010 Source: IMF, 2014c. Source: The Conference Board Total Economy Database™, forthcoming, June 2015, http://www.conference-board.org/data/economydatabase. Note: Southeast Asia includes Cambodia, Indonesia, Malaysia, Myanmar, Philippines, Singapore, Thailand, and Vietnam; Africa includes Algeria, Angola, Burkina Faso, of competitiveness of African economies are important Cameroon, Côte d'Ivoire, the Democratic Republic of Congo, Egypt, Ethiopia, Ghana, determinants of productivity. In other words, more Kenya, Madagascar, Malawi, Mali, Morocco, Mozambique, Niger, Nigeria, Senegal, South Africa, Sudan, Tanzania, Tunisia, Uganda, Zambia, and Zimbabwe; Latin America and competitive African economies will tend to produce the Caribbean includes Argentina, Barbados, Bolivia, Brazil, Chile, Colombia, Costa Rica, Dominican Republic, Ecuador, Guatemala, Jamaica, Mexico, Peru, St. Lucia, Trinidad and higher levels of prosperity (see Figure 1). Tobago, Uruguay, and Venezuela; OECD countries include Australia, Austria, Belgium, Canada, Chile, the Czech Republic, Denmark, Estonia, Finland, France, Germany, Greece, Hungary, Iceland, Ireland, Israel, Italy, Japan, Korea, Rep., Luxembourg, Mexico, the Structural transformation Netherlands, New Zealand, Norway, Poland, Portugal, the Slovak Republic, Slovenia, Spain, Sweden, Switzerland, Turkey, the United Kingdom, and the United States. As widely recognized, the past decade has heralded a new era of a reinvigorated Africa on the back of in Southeast Asia has since become more productive, high average growth rates. The most critical question effectively converging toward the Organisation for observers and analysts have since debated is whether Economic Co-operation and Development (OECD) the continent will be able to continue growing briskly and average. In contrast, as Figure 2 shows, not only has ensure rising living standards. The opportunities arising Africa been trailing Southeast Asia, but in fact the from Africa’s rapid population growth—most notably productivity gap between the two regions deepened a large consumer market and a young and dynamic between 1960 and 2005. However, the slight recovery workforce—stand in stark contrast to the present in productivity seen since the early 2000s provides structures of economies that are characterized to a a small bright spot, indicating that economic growth large extent by primary product dependency, insufficient is increasingly driven by rising productivity in some education (both in quantitative and qualitative terms), and African countries. Data from the Groningen Growth consistently low rankings in overall human development.2 and Development Centre (GGDC) 10-sector database,5 For some economies—as some observers suggest3— further explored below, suggest that these productivity recent growth has been the result of high commodity gains occurred across many sectors, including prices, which would mean slower growth during the agriculture, but were especially large in the utilities, current downturn in commodity prices. Other observers transport, and telecommunication services. reference sounder macroeconomic policies and a more In this context, structural transformation—here efficient business environment as decisive underlying defined as the reallocation of economic activity away drivers of African growth performance, which would from the least productive sectors of the economy to point to a more sustainable evolution.4 In addition, Africa more productive ones—stands as a fundamental driver is far more stable and better governed now than at any of economic development.6 Structural transformation other time since independence. Although there is not contains two elements: the rise of new, more productive yet agreement on where the continent’s economy is activities and the movement of resources from traditional headed, the debate highlights the diversity of a region activities to more sophisticated ones.7 Is there evidence with elements that range from diversified middle-income of reallocation of labor across sectors in Africa? economies such as South Africa and Mauritius to fragile Agriculture continues to play an important role ones such as Burundi and resource-dependent ones in terms of value-added on the continent, yet its such as Chad and Angola. decline over the past four decades has largely been Figure 2 compares labor productivity—as a proxy offset by the larger role of the service sector while for overall productivity—in Africa with that of other manufacturing has been stalling.8 Figure 3 shows regions for the past 50 years. Although Africa and the composition of value-added for selected economies Southeast Asia started from similar, very low levels, labor from sub-Saharan Africa, North Africa (Egypt and 4 | The Africa Competitiveness Report 2015 1.1: Assessing Africa’s Competitiveness Figure 3: Sectoral value-added by regions, 1965–2010 (% total value-added) 3a: Sub-Saharan Africa 3b: North Africa 1965 1965 1980 1980 1995 1995 2010 2010 0 20 40 60 80 100 0 20 40 60 80 100 Note: The sub-Saharan Africa sample includes Botswana, Ethiopia, Ghana, Kenya, Malawi Note: The North Africa sample includes Egypt and Morocco. (1966 data have been used for 1965), Mauritius (1970 for 1965), Nigeria, Senegal (1970 for 1965), South Africa, Tanzania, and Zambia. 3c: Latin America 3d: ASEAN 1965 1965 1980 1980 1995 1995 2010 2010 0 20 40 60 80 100 0 20 40 60 80 100 Note: The Latin America sample includes Argentina, Bolivia, Brazil, Chile, Colombia, Costa Note: The ASEAN sample includes Indonesia, Malaysia (1970 data for 1965), the Philippines Rica, Mexico, Peru, and Venezuela. (1971 for 1965), Singapore, and Thailand. Agriculture Industry Market services Non-market services Agriculture Mining Business services Government services Manufacturing Trade services Personal services Construction Transport and Utilities communication services Source: Timmer et al., 2014. Note: The 10 economic sectors are grouped following the ISIC Rev. 3.1 classification as follows: agriculture (ISIC Rev. 3.1: A,B); mining (C); manufacturing (D); construction (F); utilities (E); business services (J,K); trade services (G,H); transport and communication services (I); government services (L,M,N); personal services (O,P). For Bolivia, Chile, Colombia, Peru, Venezuela, and Singapore, data on personal services (O,P) also include data on government services (L,M,N). Morocco), and two comparator regions—the Association and communications, and business services. Today of Southeast Asian Nations (ASEAN) and Latin America. the share of services in the economy in sub-Saharan The GGDC 10 sector database allows for a more countries is similar to the services share in ASEAN granular analysis of value-added.9 For sub-Saharan countries, although market services—in particular Africa, the data show that although the agricultural value- business services—are playing a smaller role. For North added share in GDP has significantly decreased in the Africa, the data show a similar picture: the share of past 40 years (from close to 34 percent in 1965 down value-added in agriculture decreased by half over the to 21 percent in 2010), the share of the service sector past 40 years, from 30 to 15 percent, while the share has experienced an increase and in 2010 accounted for of the service sector rose to 55 percent in 2010 from close to 60 percent of GDP of the 11 economies in the 35 percent four decades ago. Similarly, we see a fall in sample, most notably in the areas of trade (including manufacturing value-added, which has dropped from hotels and restaurants, wholesale and retail), transport 18 percent in 1965 to 15 percent in 2010. What differs The Africa Competitiveness Report 2015 | 5 1.1: Assessing Africa’s Competitiveness Figure 4: Employment share, 1965–2010 (% total employment) 4a: Sub-Saharan Africa 4b: North Africa 1965 1965 1980 1980 1995 1995 2010 2010 0 20 40 60 80 100 0 20 40 60 80 100 Note: The sub-Saharan Africa sample includes Botswana, Ethiopia, Ghana, Kenya (1969 Note: The North Africa sample includes Egypt and Morocco. data have been used for 1965), Malawi (1966 for 1965), Mauritius (1970 for 1965), Nigeria, Senegal (1970 for 1965), South Africa, Tanzania, and Zambia. Agriculture Industry Market services Non-market services Agriculture Mining Business services Government services Manufacturing Trade services Personal services Construction Transport and Utilities communication services Source: Timmer et al., 2014. Note: The 10 economic sectors are grouped following the ISIC Rev. 3.1 classification as follows: agriculture (ISIC Rev. 3.1: A,B); mining (C); manufacturing (D); construction (F); utilities (E); business services (J,K); trade services (G,H); transport and communication services (I); government services (L,M,N); personal services (O,P). For Zambia, data on personal services (O,P) also include data on government services (L,M,N). For Egypt and Morocco, data on government services (L,M,N) also include personal services (O,P). in North Africa from sub-Saharan Africa is that business of value-added in manufacturing increased from 9.3 services, in terms of value-added, are close to those in to 12.1 percent and the corresponding employment the ASEAN economies. Chapter 2.2 further discusses share from 4.8 to 7.2 percent. These data indicate the role of service exports in Africa and their forward and that, after their independence, African economies backward linkages to the domestic economy. developed and workers moved out of agriculture to be The data also show the well-documented stalling absorbed in manufacturing. For the following decade, of manufacturing in sub-Saharan Africa compared with however, industrialization stalled. The charts of Figures developments in the ASEAN economies. Currently, 3 and 4 illustrate what is commonly known as the de- manufacturing accounts for just 11 percent of overall industrializing phase between 1995 and 2010, which is value-added in the sub-Saharan Africa region—a share characterized by a stable employment share but a falling that has remained stable over the past decades—much share of manufacturing value-added. Indeed, the data lower than the close to 30 percent of the ASEAN suggest that during the same years workers have shifted economies. But where has employment shifted? away from both agriculture and manufacturing into the About half of employment in sub-Saharan Africa market service sector—most notably retail, distribution, continues to take place in the agriculture sector, and other trade services—where the employment although labor has primarily been moving out of share increased by 50 percent. Furthermore, the figure agriculture into the service sector, “bypassing” the indicates the fact that the mining sector provides only a manufacturing sector. Figure 4 shows the employment negligible fraction of employment. A similar pattern can shares for 11 sub-Saharan economies and two North be observed in the sample of North African economies, African economies across agriculture, industry, and Morocco and Egypt. services. The more disaggregated level allows for a more However, labor productivity both in agriculture comprehensive analysis of structural transformation. and trade service sectors—where most employment There are a few interesting observations: in 2010, has shifted—remains low. Figure 5a shows the agriculture still accounted for half of the employment, comparatively low (though gradually increasing) labor on average, despite a declining share both in productivity in the agriculture sector,10 as further employment and value-added (see Chapter 2.1 for an explored in Chapter 2.1. Figure 5b breaks down in-depth discussion of the agriculture sector). In terms productivity into different market services. As seen of labor mobility, between 1965 and 1980 the share above, trade services has absorbed most of labor in the 6 | The Africa Competitiveness Report 2015 1.1: Assessing Africa’s Competitiveness Figure 5: Labor productivity per worker, sub-Saharan Africa (US$ thousands, PPP-adjusted, 2005 prices) 5a: Selected sectors 5b: Within market services 12 80 70 10 60 8 50 6 40 Business services Agriculture 30 Trade services 4 Manufacturing Transport and communication services Market services 20 2 10 0 0 1970 1975 1980 1985 1990 1995 2000 2005 2010 1970 1975 1980 1985 1990 1995 2000 2005 2010 Source: de Vries et al., 2013; Timmer et al., 2014. Notes: The 10 economic sectors are grouped following the ISIC Rev. 3.1 classification as follows: agriculture (ISIC Rev. 3.1: A,B); mining (C); manufacturing (D); construction (F); utilities (E); business services (J,K); trade services (G,H); transport and communication services (I); government services (L,M,N); personal services (O,P). Agriculture and manufacturing include ISIC Rev. 3.1 categories A and B, and D respectively. Market services correspond to the sum of business services (J,K), trade services (G,H), and transport and communication services (I). Numbers correspond to un-weighted average productivity per employee for the following countries: Botswana, Ethiopia, Ghana, Kenya, Malawi, Mauritius, Nigeria, Senegal, South Africa, Tanzania, and Zambia. For each country, productivity per employee has been calculated using value-added data in 2005 constant local currency sourced from the GGDC 10-sector Database and converted into 2005 constant PPP-adjusted US dollars using 2005 exchange rates and 2005 sector-specific PPPs sourced from the GGDC Africa Sector Database.11 past decades, yet it is this sector that also exhibits the citing the example of India.12 Others doubt that a similar lowest and declining labor productivity. This observation route is viable for Africa in view of the continent’s large is confirmed by Figures 6a–6d, which show the relative catch-up requirements and small share of employment in productivity levels of different sectors in sub-Saharan the business services (shown in Figure 4). They point to Africa—that is, the ratio of specific sectors’ labor the fact that even in India manufacturing still represents productivity level to the total economy productivity almost 20 percent of overall value-added, compared at five-year intervals, beginning in 1965. Relative with 11 percent in sub-Saharan Africa.13 Moreover, highly productivity appears higher in business services, but it productive business services constitute a significant has nonetheless also been declining in this sector. The share of value-added and employment in only a handful transport and communication service sectors, together of advanced economies. For such services to prosper, with the construction and utilities sectors, appear to countries need long-term investments in widespread and be the main drivers of productivity growth since 2000. well-developed higher education and training systems. Today, together with mining and business services, They also need to create an enabling environment for these sectors boast the highest relative productivities. foreign direct investment and technology transfer; both However, as discussed in Chapter 2.2, transport these things together will support building regional services on the continent—while presenting a significant value and tap into global value chains (see Chapter 2.3). percentage of total services exports across most African Going forward, Africa will need broad-based productivity economies—have only weak links to other domestic increases to create shared prosperity. sectors’ exports. Identifying the drivers of productivity needed to Overall, evidence suggests that although workers ensure sustained economic growth is the goal of the shifted from agriculture to services, most of them moved Global Competitiveness Index (GCI), which defines into the least productive jobs in retail and distribution competitiveness as the set of institutions, policies, and services (including small shops, hotels, and restaurants). factors that determine the level of productivity of a For the service sector to be a viable alternative to country. The current and future levels of productivity, in manufacturing on the path to economic structural turn, set the sustainable level of prosperity that can be change, focus must be on high-productivity jobs in earned by an economy in the medium to long term. business services. The measurement of competitiveness is a complex What does this mean for Africa? The prevailing undertaking. To address this complexity, the idea wisdom has emphasized industrialization as the driving that many different factors matter for competitiveness force of economic development. This perception is reflected by the 12 distinct pillars of the Index:14 has been corroborated by the rapid industrial-led institutions (public and private), infrastructure, the developments of East and Southeast Asia since the macroeconomic environment, health and primary 1960s, among other observations. Some commentators, education, higher education and training, goods market however, have argued that it may be possible to bypass efficiency, labor market efficiency, financial market manufacturing and shift into high-productivity services, development, technological readiness, market size, The Africa Competitiveness Report 2015 | 7 1.1: Assessing Africa’s Competitiveness Figure 6: Relative sector productivity, sub-Saharan Africa (relative sector productivity, 1 = total economy productivity) 6a: 1965 6b: 1980 0 1 5 10 15 0 1 5 10 15 6c: 1995 6d: 2010 0 1 5 10 15 0 1 5 10 15 Agriculture Industry Market services Non-market services Agriculture Mining Business services Government services Manufacturing Trade services Personal services Construction Transport and Utilities communication services Source: Timmer et al., 2014. Notes: The 10 economic sectors are grouped following the ISIC Rev. 3.1 classification as follows: agriculture (ISIC Rev. 3.1: A,B), mining (C), manufacturing (D), construction (F), utilities (E), business services (J,K), trade services (G,H), transport and communication services (I), government services (L,M,N), personal services (O,P). The sub-Saharan Africa sample includes Botswana, Ethiopia, Ghana, Kenya (1969 data have been used for 1965), Malawi (1966 for 1965), Mauritius (1970 for 1965), Senegal (1970 for 1965), South Africa, Tanzania, and Zambia. Nigeria has been excluded because the country represents a clear outlier as a result of the extremely high productivity in the mining sector. business sophistication, and innovation (see Figure 7). on their factor endowments—primarily unskilled labor Improving competitiveness across the 12 GCI pillars and natural resources. Maintaining competitiveness in would be important for meeting Africa’s sustainable this stage depends relatively more on well-functioning growth challenge. public and private institutions (pillar 1), well-developed The GCI takes into account the fact that countries infrastructure (pillar 2), a stable macroeconomic around the world are at different stages of economic environment (pillar 3), and a healthy and literate development and offers guidance on the priority areas workforce (pillar 4). As wages rise with advancing for reforms. Specifically, the GCI distinguishes three development, countries move into the second, efficiency- stages of development. In their first stage, economies driven stage of development, when they must begin are factor-driven and their competitiveness is based to develop more efficient production processes and 8 | The Africa Competitiveness Report 2015 1.1: Assessing Africa’s Competitiveness Figure 7: 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 Pillar 11. Business sophistication Pillar 1. Institutions Pillar 5. Higher education and and training Pillar 11. Business sophistication Pillar 2. Infrastructure training Pillar 12. Innovation Pillar 2. Infrastructure Pillar 12. Innovation Pillar 6. Goods market efficiency Pillar 3. Macroeconomic Pillar 6. Goods market efficiency Pillar 3. Macroeconomic environment Pillar 7. Labor market efficiency environment Pillar 7. Labor market efficiency Pillar 4. Health and primary Pillar Pillar 4. Health and primary Pillar 8. 9. Technological Financial marketreadiness education education development Pillar 8. Financial market developmentreadiness Pillar 9. Technological Pillar 10. Market Pillar size 10. Market size Key for Key for Key for factor-driven efficiency-driven innovation-driven economies economies economies Source: World Economic Forum, 2014a. increase product quality. At this stage, competitiveness require them to move into higher level of efficiencies depends more on higher education and training (pillar 5), to maintain growth.16 Seven other African economies an efficient goods and services market (pillar 6), are currently in the efficiency-driven stage of the GCI, frictionless labor markets (pillar 7), developed financial where higher education and market efficiencies (goods, markets (pillar 8), the ability to make use of latest labor, and financial) take a more prominent role. Along technological developments (pillar 9), and the size of the with Seychelles, Mauritius is currently transitioning domestic and foreign markets available to the country’s to the innovation-driven stage. To increase their companies (pillar 10). Finally, as countries move into the competitiveness, these small open economies need third, innovation-driven stage, they are able to sustain to do more to put into place a skilled workforce and a higher wages and the associated level of productivity business environment that is supportive for innovation only if their businesses are able to compete with new and adaptive to new technologies. It is important to bear and unique products. At this stage, companies must in mind that the priorities proposed by the GCI serve as compete by producing new and different goods or guidelines rather than carved-in-stone policies, and a services using the most sophisticated management holistic competitiveness agenda needs to consider the methods (pillar 11) and innovation (pillar 12). country-specific context and unique challenges. The GCI classifies most African countries as factor- The next section will assess and analyze the driven economies (see Table 1).15 It suggests that a overall competitiveness of Africa. To get a sense of competitiveness agenda for most African countries the region’s performance in international comparison, should prioritize building out the basic fundamentals it also compares the performance of relevant regions as their first critical step toward improving productivity and countries (Southeast Asia, Latin America and the and competitiveness. That is, these economies Caribbean, and the BRIC economies).17 should prioritize providing sound institutions and macroeconomic policies, adequate infrastructure, Country coverage and the means for ensuring a healthy and educated As in the previous Africa Competitiveness Report, workforce. This is particularly important for the five this year’s Report features 38 African economies that countries (Algeria, Angola, Botswana, Gabon, and were covered by the GCR 2014–2015. The sample has Libya) that are currently transitioning to the second— changed slightly from the last report: two countries— efficiency-driven—stage of development, which will Angola and Tunisia—were re-instated in the GCI, and The Africa Competitiveness Report 2015 | 9 1.1: Assessing Africa’s Competitiveness Table 1: African countries by stage 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%) GDP per capita < US$2,000 Cameroon, Chad, Côte d'Ivoire, Vietnam, Yemen and efficiency enhancers (35%) Ethiopia, Gambia, Ghana, Guinea, Kenya, Lesotho, Liberia,* Madagascar, Malawi, Mali, Mauritania, Mozambique, Nigeria, Rwanda, Senegal, Sierra Leone, Tanzania, Uganda, Zambia, Zimbabwe Transition from 1 to 2 Algeria, Angola, Botswana, Azerbaijan, Bolivia, Brunei Basic requirements (between GDP per capita US$2,000 Gabon, Libya Darussalam, Iran, Islamic Rep., 40% and 60%) and efficiency to US$3,000 Venezuela enhancers (between 35% and 50%)* Stage 2 (efficiency-driven) Cape Verde, Egypt, Morocco, Albania, Belize, China, Colombia, Basic requirements (40%) and GDP per capita US$3,000 to US$9,000 Namibia, South Africa, Swaziland, Indonesia, Jordan, Peru, South Africa efficiency enhancers (50%) Tunisia Transition from 2 to 3 Mauritius, Seychelles Argentina, Brazil, Chile, Croatia, Basic requirements (between GDP per capita US$9,000 to US$17,000 Malaysia, Mexico, Russian Federation, 20% and 40%) and efficiency Turkey enhancers (50%) Innovation factors (10% to 30%)* Stage 3 (innovation-driven) Germany, Korea, Rep, Norway, Spain, Basic requirements (20%) and GDP per capita > US$17,000 United Kingdom, United States efficiency enhancers (50%) Innovation factors (30%)* Sources: World Economic Forum 2014a, 2013b (Benin and Liberia). Note: Countries with a share of mineral exports in their total exports higher than 70 percent are moved toward a lower stage of development. See endnote 15 for more details. * Based on the GCI 2014–2015. two previously covered countries—Benin and Liberia— Despite high and persistent growth rates were not included in 2014–2015 because sufficient experienced in the region for over a decade, Africa’s Executive Opinion Survey data could not be collected. overall competitiveness has remained stagnant—a For the sake of completeness, their competitiveness message that the Africa Competitiveness Report profiles are presented using 2013–2014 data, marked by series has been highlighting since it began in 1998. an asterisk in Part 3.18 Figure 9 compares 24 African economies that have been included in the GCI since 2006. Their performance Africa’s performance in an international context is benchmarked against that of the OECD average, Despite recent rapid growth, African economies on providing a sense of how these regions compare with average trail the rest of the world in competitiveness: a group of the world’s more advanced economies; it is 15 out of the 20 least competitive economies in the also measured against the performance of Southeast GCI sample that forms the basis of this Report are from Asia and Latin America, which provide more comparable Africa. Figure 8 identifies competitiveness “hotspots” and benchmarks in terms of stages of development. For the regions or countries that exhibit weak performances instance, although both Africa and Southeast Asia had in the GCI. The 10 best-performing countries are shaded approximately the same levels of GDP per capita in the in dark blue. The remaining countries are shaded in 1960s, Southeast Asia's GDP per capita has since risen increasingly warmer tones, moving from a dark purple considerably more rapidly than sub-Saharan Africa (see (the second-best-performing group) through shades also Figure 1). This is reflected in their competitiveness of purple-red, dark orange, orange, and finally yellow; performance, which shows a stagnation of Africa’s this last color identifies the least-competitive nations competitiveness overall and a widening gap with according to the GCI. As shown on the map, a vast Southeast Asia (Figure 9). majority of African countries covered in this Report fall Overall, Africa is lagging other regions into the group of least-competitive economies (orange in establishing the basic requirements for to yellow). Outside of Africa, only four Latin American competitiveness, but does comparatively well in countries (Guyana, Haiti, Paraguay, and Venezuela), three the GCI assessment of goods, labor, and financial Asian economies (Myanmar, Pakistan, and Timor-Leste), market efficiency. Comparing Africa’s performance and one country from the Middle East (Yemen) perform with other, more advanced regions helps to identify similarly. However, within Africa, Mauritius, Rwanda, the region’s overall strengths and weaknesses. To and South Africa (burgundy red), and Botswana and this end, Figure 10 compares the performance of Morocco (lighter red) are relatively more competitive. this year’s sample of 38 African economies with that of regional comparators out of a total sample of 10 | The Africa Competitiveness Report 2015 1.1: Assessing Africa’s Competitiveness Figure 8: The Global Competitiveness Index 2014–2015 Global Competitiveness Index Percentile Rank n 90–100% (most competitive) n 80–90% n 70–80% n 60–70% n 50–60% n 40–50% n 30–40% n 20–30% n 10–20% n 0–10% (least competitive) n Not covered Source: World Economic Forum, 2014a. 144 economies in the 12 pillars of competitiveness. government efficiency—two components of the public African economies consistently underperform the institutions subpillar—would appear to be at the core of Southeast Asian average across all the pillars. The this decline. Sound public institutions and governance most critical gaps continue to be seen in the areas of are an important prerequisite for economic development; basic requirements of competitiveness: institutions, infrastructure, and education and skills.19 This is troubling because the majority of African economies Figure 9: Trends in the GCI, 2006–14 are classified as factor-driven economies (see Table 1), GCI scores (1–7) so these areas are currently the most critical areas for 5.5 OECD Latin America and the Caribbean the competitiveness of these countries. On a more Southeast Asia Africa positive note, Africa’s financial, goods, and labor markets 5.0 function comparatively well (on par, or nearly on par, with Latin America). However, ease of entry and exit from 4.5 low-wage, low-productivity jobs will not lead to improved competitiveness. It will be important to build upon the region’s comparatively efficient markets by investing in 4.0 other competitiveness-enhancing reforms. A particular point of concern is the continent’s 3.5 weak institutions. Although Africa’s performance is similar to that of Southeast Asia and Latin America 3.0 2006– 2007– 2008– 2009– 2010– 2011– 2012– 2013– 2014– and the Caribbean in this pillar, the institutions in all 2007 2008 2009 2010 2011 2012 2013 2014 2015 three regions receive scores below 4 out of 7. This suggests that more effort should be made to increase Source: World Economic Forum, 2014a. Note: Africa (2006 constant sample) includes Algeria, Egypt, Morocco, Botswana, Burkina the capacity of the institutional framework, as it Faso, Burundi, Cameroon, Chad, Ethiopia, Gambia, Kenya, Lesotho, Madagascar, Mali, provides a critical foundation for the other dimensions Mauritania, Mauritius, Mozambique, Namibia, Nigeria, South Africa, Tanzania, Uganda, Zambia, Zimbabwe; Latin America and the Caribbean (2006 constant sample) includes of competitiveness. Indeed, the quality of institutions Argentina, Barbados, Bolivia, Brazil, Chile, Colombia, Costa Rica, Dominican Republic, El Salvador, Guatemala, Guyana, Honduras, Jamaica, Mexico, Nicaragua, Panama, has actually been deteriorating in both OECD and Paraguay, Peru, Trinidad and Tobago, Uruguay, Venezuela; Southeast Asia (2006 African economies according to the GCI. This might constant sample) includes Cambodia, Indonesia, Malaysia, the Philippines, Singapore, Thailand, Timor-Leste, Vietnam; OECD countries include Australia, Austria, Belgium, explain in part why Africa’s competitiveness seems to Canada, Chile, the Czech Republic, Denmark, Estonia, Finland, France, Germany, have stagnated in comparison to OECD economies Greece, Hungary, Iceland, Ireland, Israel, Italy, Japan, Korea, Rep., Luxembourg, Mexico, Netherlands, New Zealand, Norway, Poland, Portugal, the Slovak Republic, Slovenia, (see Figure 11a). In Africa, a decline in security and Spain, Sweden, Switzerland, Turkey, the United Kingdom, the United States. The Africa Competitiveness Report 2015 | 11 1.1: Assessing Africa’s Competitiveness Figure 10: Africa’s performance in regional comparison, 2014–2015 GCI scores (1–7) Institutions Innovation 7 Infrastructure 6 BASIC REQUIREMENTS PILLAR 5 OECD 5.37 Business sophistication Macroeconomic environment 4.62 4 Southeast Asia 3 Latin America and the Caribbean 4.32 2 Africa 3.82 Market size 1 Health and primary education EFFICIENCY ENHANCERS PILLAR OECD 4.89 Southeast Asia 4.10 Technological readiness Higher education and training Latin America and the Caribbean 3.87 Africa 3.44 Financial market development Goods market efficiency Labor market efficiency INNOVATION AND SOPHISTICATION FACTORS PILLAR OECD 4.65 Southeast Asia 3.74  OECD  Latin America and the Caribbean Latin America and the Caribbean 3.49  Southeast Asia  Africa Africa 3.23 Source: World Economic Forum, 2014a. Note: Africa includes Algeria, Angola, Botswana, Burkina Faso, Burundi, Cameroon, Cape Verde, Chad, Côte d’Ivoire, Egypt, Ethiopia, Gabon, Gambia, Ghana, Guinea, Kenya, Lesotho, Libya, Madagascar, Malawi, Mali, Mauritania, Mauritius, Morocco, Mozambique, Namibia, Nigeria, Rwanda, Senegal, Seychelles, Sierra Leone, South Africa, Swaziland, Tanzania, Tunisia, Uganda, Zambia, Zimbabwe; Latin America and the Caribbean includes Argentina, Barbados, Bolivia, Brazil, Chile, Colombia, Costa Rica, Dominican Republic, El Salvador, Guatemala, Guyana, Haiti, Honduras, Jamaica, Mexico, Nicaragua, Panama, Paraguay, Peru, Suriname, Trinidad and Tobago, Uruguay, Venezuela; Southeast Asia includes Cambodia, Indonesia, Lao PDR, Malaysia, Myanmar, Philippines, Singapore, Thailand, Timor-Leste, Vietnam; OECD countries include Australia, Austria, Belgium, Canada, Chile, the Czech Republic, Denmark, Estonia, Finland, France, Germany, Greece, Hungary, Iceland, Ireland, Israel, Italy, Japan, Korea, Rep., Luxembourg, Mexico, Netherlands, New Zealand, Norway, Poland, Portugal, the Slovak Republic, Slovenia, Spain, Sweden, Switzerland, Turkey, the United Kingdom, the United States. against this backdrop, their weakening—as indicated suggest that the annual infrastructure and maintenance by the data—raises questions about whether the needs for sub-Saharan Africa stand at 10 percent of fundamentals are in position that will put growth on a GDP.24 The Priority Action Plan of the Programme for sustainable footing. Infrastructure Development in Africa (PIDA PAP) alone Africa suffers from a persistent infrastructure encompasses an investment need of US$68 billion deficit. The GCI data confirm once more the region’s between 2012 and 2020, incorporating 51 programs pronounced infrastructure deficit—a critical bottleneck to of regional importance in the transport, water, energy, reaping the benefits from increased regional integration, and information and communication technologies a topic explored in the 2013 Africa Competitiveness (ICT) sectors.25 Africa’s stagnation with respect to Report.20 Connecting Africa’s markets will be a critical infrastructure stands in stark contrast to the regions of driver for the region in boosting intra-African trade. Data Southeast Asia and Latin America and the Caribbean, suggest that, to date, only 11.3 percent of trade in Africa where infrastructure investments have managed to is intra-regional,21 and that total exports remain heavily reduce the infrastructure gap with OECD economies. skewed toward exports of raw minerals. In addition, Southeast Asia, for instance, has narrowed the gap major bottlenecks—such as the unreliable electricity from 70 percent in 2006 to 80 percent in 2014 (see supply—are hampering the continent’s transition to Figure 11b). One of the main challenges going forward higher-value-added activities. Africa—based on a sample will be to balance public finance and infrastructure of 48 economies—generates roughly the same power as investment needs. A recent IMF study, however, finds Spain, although Africa’s population is nearing 1.1 billion that the lack of financing is not always the primary cause while there are 49 million people in Spain.22 of infrastructure underinvestment; in many countries, The years between 2006 and 2009 were promising insufficient regulatory and implementation capacity seem and seemed to usher in a gradual convergence in to be the main constraints.26 the region’s performance in terms of the quality of Most worryingly, Africa is not benefitting infrastructure compared with that of OECD economies, from its human capital potential. The entire region but the past six years show a divergence (Figure 11b). is underperforming significantly in education This is particularly worrisome given that, for the time and public health (see Figures 11c and 11d). being, Africa’s performance in infrastructure stands Communicable diseases are not under control in parts at just little over half of that of the OECD.23 Estimates of the region; child mortality is over twice that of Latin 12 | The Africa Competitiveness Report 2015 1.1: Assessing Africa’s Competitiveness Figure 11: Africa’s performance in selected pillars against comparators (relative performance, 100 = OECD) 11a: Institutions pillar 11b: Infrastructure pillar 100 100 90 90 80 80 70 70 OECD Southeast Asia 60 Latin America and the Caribbean 60 Africa 50 50 2006– 2007– 2008– 2009– 2010– 2011– 2012– 2013– 2014– 2006– 2007– 2008– 2009– 2010– 2011– 2012– 2013– 2014– 2007 2008 2009 2010 2011 2012 2013 2014 2015 2007 2008 2009 2010 2011 2012 2013 2014 2015 11c: Health and primary education pillar 11d: Higher education and training pillar 100 100 90 90 80 80 70 70 60 60 50 50 2006– 2007– 2008– 2009– 2010– 2011– 2012– 2013– 2014– 2006– 2007– 2008– 2009– 2010– 2011– 2012– 2013– 2014– 2007 2008 2009 2010 2011 2012 2013 2014 2015 2007 2008 2009 2010 2011 2012 2013 2014 2015 11e: Goods market efficiency pillar 11f: Technological readiness pillar 100 100 90 90 80 80 70 70 60 60 50 50 2006– 2007– 2008– 2009– 2010– 2011– 2012– 2013– 2014– 2006– 2007– 2008– 2009– 2010– 2011– 2012– 2013– 2014– 2007 2008 2009 2010 2011 2012 2013 2014 2015 2007 2008 2009 2010 2011 2012 2013 2014 2015 Sources: World Economic Forum, The Global Competitiveness Report, (various editions). Note: Africa (2006 constant sample) includes Algeria, Egypt, Morocco, Botswana, Burkina Faso, Burundi, Cameroon, Chad, Ethiopia, Gambia, Kenya, Lesotho, Madagascar, Mali, Mauritania, Mauritius, Mozambique, Namibia, Nigeria, South Africa, Tanzania, Uganda, Zambia, and Zimbabwe; Latin America and the Caribbean (2006 constant sample) includes Argentina, Barbados, Bolivia, Brazil, Chile, Colombia, Costa Rica, Dominican Republic, El Salvador, Guatemala, Guyana, Honduras, Jamaica, Mexico, Nicaragua, Panama, Paraguay, Peru, Trinidad and Tobago, Uruguay, and Venezuela; Southeast Asia (2006 constant sample) includes Cambodia, Indonesia, Malaysia, the Philippines, Singapore, Thailand, Timor-Leste, and Vietnam; OECD countries include Australia, Austria, Belgium, Canada, Chile, the Czech Republic, Denmark, Estonia, Finland, France, Germany, Greece, Hungary, Iceland, Ireland, Israel, Italy, Japan, Korea, Rep., Luxembourg, Mexico, the Netherlands, New Zealand, Norway, Poland, Portugal, the Slovak Republic, Slovenia, Spain, Sweden, Switzerland, Turkey, the United Kingdom, the United States. The Africa Competitiveness Report 2015 | 13 1.1: Assessing Africa’s Competitiveness America and the Caribbean and Southeast Asia; and Despite Africa’s mobile revolution, the region life expectancy amounts to just 50 years on average, as a whole is not keeping up with the rapid compared with over 70 years in both comparator technological improvements elsewhere. The GCI’s regions. Similarly, only every second child on the African technological readiness pillar measures the agility continent receives a secondary education and just with which an economy adopts existing technologies a tenth of the age cohort goes on to enroll in tertiary to enhance the productivity of its industries, with a institutions, compared with over a third in the comparator specific emphasis on its capacity to fully leverage ICTs. regions. This is especially important in view of the changing Low education levels are a pressing concern in view role of ICTs. Indeed, they have become critical tools in of the region’s youth unemployment challenge and its today’s economy, accounting for a significant share of potentially detrimental consequences. Events such as value-added and employment in advanced economies, the Arab Spring have highlighted the tensions that can supporting efficiency gains, and enabling transformative arise from a growing population without accompanying innovation. For developing economies, for instance, a economic and social progress that ensures decent living 10 percent increase in the penetration rates of mobile standards, employment, and fair opportunities to better phones has been associated with a 0.8 percent people’s lives.27 Already Africa is home to the youngest increase in GDP per capita, while the same increase in population worldwide; by 2020 half its population is broadband networks could add a further 1.4 percent to projected to be under 25 years of age. A World Bank overall economic growth.31 report estimates that each year between 2015 and 2035 Africa’s rate of mobile subscriptions per 100 there will be half a million more 15-year-olds in Africa population has increased dramatically in our sample: just than in the previous year.28 To absorb this growing labor one-tenth of the population held a subscription in 2006, force, it is estimated that 18 million jobs will need to be while over four-fifths held one in 2014, representing created per year until 2035.29 a more rapid increase than either of the comparator A well-educated workforce will be the single most regions. However, ICTs generally remain a moving important enabler for transforming Africa’s economies target. Figure 11f shows that Africa continues to perform and allowing them to benefit from a demographic at 50 percent of OECD economies in the pillar on dividend. In the short term, absorbing the large technological readiness. A similar stagnation compared number of new labor-market entrants will require the with advanced economies is observed in Latin America development of job-intensive sectors (see Chapter 2.1). and the Caribbean and in Southeast Asia. The situation In the longer term, moving up the value chain into is even less positive when considering ICT use, one of more advanced manufacturing and service sectors the two subpillars of the technological readiness pillar while increasing these sectors’ productivity will require (see Appendix A), where Africa’s performance remains significant and immediate investment in education if just 30 percent of that of OECD economies. Going the workforce is to move beyond simple production forward, African economies need not only to make the processes. Africa’s underperformance in educating its types of investment necessary to build out their ICT workforce and upgrading skills is particularly worrying infrastructure, but also to create an enabling environment given the shift of workers into the service sector, to fully leverage ICT uptake to boost economic and with its large share of value-added and its low (labor) social impacts.32 productivity, as explored earlier in this chapter. What In particular, increasing competition in ICT markets is more, high unemployment rates among youth with will be vital for increasing affordability, improving the secondary and tertiary education even in countries that provision of services, and accelerating uptake. Almost do well on educational attainment, such as Mauritius one out three countries in sub-Saharan Africa have and Tunisia, indicate a mismatch between the education already fully liberalized their ICT markets. This group system and the needs of employers. Surveys among of reformers includes not only region leaders such as employers confirm these trends: 54 percent of African Kenya, Mauritius, and Nigeria, but also fragile and least- employers state that job seekers’ skills do not match developed countries such as Burkina Faso, Madagascar, their needs and 41 percent that the unemployed lack and Uganda. Competitive markets are low-hanging fruits skills in general.30 Education can play an even more that can increase ICT use and connectivity across the prominent role by ensuring knowledge spillovers from the country. In this year’s sample of 38 African economies, natural resource sector to the domestic economy. This less than 20 percent of the population has access to the will happen only through skills and training efforts (see Internet, compared with close to 30 percent in Southeast Box 1), because the adoption of new technologies and Asia and 50 percent in Latin America. Although the strengthening innovation will become more important region has shown its capacity for innovative ICT business to ensure that the continent remains competitive going models, such as the widely known M-PESA system, forward. connecting more of its population to the Internet and closing the gap with other fast-moving economies will be critical for its future, particularly in view of the shift 14 | The Africa Competitiveness Report 2015 1.1: Assessing Africa’s Competitiveness Box 1: The Africa Skills Initiative Addressing Africa’s unemployment challenge and its growing Second, in an environment of ongoing disruption, skills mismatch will require the concerted efforts of all interventions are most effective if they are sustainably stakeholders. Although it is governments that must create the designed for the long term rather than reactive or based only enabling environment that promotes the creation of quality on past successes. For example, efforts to place unemployed employment overall and secures access to quality education, youth in apprenticeships in traditional job categories may it is critical that business, civil society, and the education and not provide a high return on investment for the company or training sector are engaged in identifying and implementing the individuals involved if those job categories are likely to solutions. be obsolete in five years’ time. Instead there may be greater Under the umbrella of the World Economic Forum’s opportunity in entirely new high-growth occupations for which Global Challenge on Employment, Skills & Human Capital,1 the new forms of apprenticeships may need to be created. Africa Skills Initiative convenes the Forum’s multi-stakeholder This approach can be seen in Digital Jobs Africa communities in an effort to understand the present and future by the Rockefeller Foundation, which responds to the needs of this challenge and identify potential solutions. The current disruptions by catalyzing sustainable information initiative uses a set of analytical tools that includes the Human communication technology (ICT)-enabled employment Capital Index, which measures and benchmarks countries on opportunities and skills training for African youth.2 Partnering their human capital endowment; the Future of Jobs analysis, with actors from the private sector, government, civil society, which provides sector-level diagnostics on key trends and and the development community, the initiative gives youth disruptions to the job market and their effects on employment access to digital job opportunities while building and refining and skills; and the Disrupting Unemployment portal, which transferable skills that make them resilient in the future consolidates information on business-led solutions for economy. addressing skills gaps, fostering entrepreneurship, and Third, technology is a key enabler to reach scale. Cisco’s facilitating the talent market. Leveraging this knowledge, the Networking Academy,3 for example, partners with education initiative aims to identify what can be done today to disrupt institutes and local nongovernmental organizations in more the employment crisis now while at the same time preparing than 170 countries to deliver an ICT training program that for the future. Led by the Africa Business Council, the initiative combines on- and offline modules and is tailored to different calls on businesses to make public commitments to creating regions. jobs and improving skills over a period of two years. Fourth, initiatives that tap into core business processes Some vital lessons emerge from existing solutions and and match the public good with private interest are often best practices. First and foremost, partnerships between very successful and demonstrate sustainable results. 5by20,4 different sectors are an indispensable component of finding for example, is an initiative by the Coca-Cola Company that scalable solutions. Across the most successful initiatives an enables women entrepreneurs in Coke’s value chain by explicit partnership arrangement between multiple sectors breaking down the barriers they face. The offered programs of society is crucial to tackling the magnitude of the current include business skills training courses as well as access to situation. financial services and support networks of peers or mentors. Notes 1 Information about the Employment, Skills & Human Capital 3 Information about Cisco’s Networking Academy is available at Initiative is available at http://www.weforum.org/projects/employ- http://reports.weforum.org/disrupting-unemployment/networking- ment-skills-and-human-capital. academy/. 2 Information about the Digital Jobs Africa is available at http:// 4 Information about 5by20 is available at http://reports.weforum.org/ reports.weforum.org/disrupting-unemployment/digital-jobs-africa/. disrupting-unemployment/5by20/. of African economies toward services. As described benefitted from capital inflows could feel the effects of earlier in this chapter, data show that the transport and rising interest rates in the United States; and energy- communication sector (including ICTs) has experienced exporting countries could suffer from the four-year low one of the highest productivity gains in sub-Saharan in oil prices. Africa’s limited integration into the global Africa since 2000. Once again, a skilled and educated economy has helped to prevent spillovers from the global workforce will be needed to scale up, multiply successful economic crisis to the continent (with the exception of ICT businesses, and facilitate the shift toward a higher- South Africa). And although integrating into the global value-added service-based economy.33 economy more fully provides opportunities, it also On the upside, macroeconomic stability in the renders the region more vulnerable to external shocks. region has been improving since the last Report, Recent work by the IMF suggests that higher growth as countries have been reining in inflation and in advanced or emerging markets translates one-to- government debt has been stable at around 40 one into higher growth in sub-Saharan Africa and vice percent of GDP on average. But the region needs versa.35 Enhancing competitiveness will be critical for to remain vigilant with regard to its macroeconomic attracting sustained investment, and hence sustainable stability.34 Important downside risks remain—for growth. example, a slowdown in growth in key emerging markets that have been a driving force for Africa’s economies would present severe difficulties; economies that have The Africa Competitiveness Report 2015 | 15 1.1: Assessing Africa’s Competitiveness Finally, improvements in goods market efficiency Table 2: The Global Competitiveness Index 2014–2015: Africa and selected comparators have been remarkable, primarily on the back of improvements in domestic competition (see Figure 11e). Among the Report’s constant sample of GCI GCI 2013– 2014–2015 2014 24 economies, the number of days to start a business, Economy Rank/144 Direction Score Rank/148 for instance, has halved from about two months in China 28 á 4.9 29 2006 to below one month in 2014. A recent World Bank Mauritius 39 á 4.5 45 report finds that sub-Saharan Africa had the highest Russian Federation 53 á 4.4 64 number of business regulatory reforms in 2013, with over South Africa 56 â 4.4 53 three-fourths of the region’s economies improving their Brazil 57 â 4.3 56 business regulations for local entrepreneurs.36 A strong Southeast Asian business environment is critical, as it will set the operating average 4.3 framework for a strong private sector and, hence, for Rwanda 62 á 4.3 66 employment creation; it will also facilitate foreign direct India 71 â 4.2 60 investment. At a time when international investment flows Morocco 72 á 4.2 77 were stalling elsewhere, foreign direct investment into Botswana 74 à 4.2 74 the region reached US$57 billion in 2013. In particular, Algeria 79 á 4.1 100 investors have focused on infrastructure development Latin America and both in the transport and in the utilities sectors. The the Caribbean average 4.0 potential of a large domestic market with an increasing Tunisia 87 â 4.0 83 middle class has also gained the interest of consumer- Namibia 88 á 4.0 90 oriented service sectors, such as ICTs, finance, tourism, Kenya 90 á 3.9 96 and retail. In contrast, according to the World Investment Seychelles 92 â 3.9 80 Report 2014, the share of foreign direct investment North African average 3.9 directed to the primary sector has been gradually Zambia 96 â 3.9 93 declining in Africa, while that of the greenfield projects Gabon 106 á 3.7 112 service sector has increased significantly.37 Lesotho 107 á 3.7 123 Ghana 111 á 3.7 114 Africa’s competitiveness divide Senegal 112 á 3.7 113 Aggregate numbers mask big differences among Cape Verde 114 á 3.7 122 African economies, which range from the region’s Côte d'Ivoire 115 á 3.7 126 best-performing economy Mauritius (39th) to the Cameroon 116 â 3.7 115 its worst-performing economy, Guinea (144th), Ethiopia 118 á 3.6 127 indicating that the region is far from a homogeneous Egypt 119 â 3.6 118 entity in terms of competitiveness. Table 2 shows Sub-Saharan the GCI performance of all African economies covered African average 3.6 and comparator regions and countries. Mauritius and Tanzania 121 á 3.6 125 South Africa, ranked 39th and 56th, respectively, are Uganda 122 á 3.6 129 the continent’s top performers and come in above the Swaziland 123 á 3.6 124 Southeast Asian average—an improvement since the last Zimbabwe 124 á 3.5 131 Report when they ranked below that comparator region. Gambia, The 125 â 3.5 116 They also rank above the emerging market economies of Libya 126 â 3.5 108 Brazil and India. They are followed by a second cluster of Nigeria 127 â 3.4 120 countries—Rwanda (62nd), Morocco (72nd), Botswana Mali 128 á 3.4 135 (74th), and Algeria (79th)—which are more competitive Madagascar 130 á 3.4 132 than Latin America and the Caribbean on average. A Malawi 132 á 3.2 136 third group of African economies—Tunisia, Namibia, Mozambique 133 á 3.2 137 Kenya, and Seychelles—cluster between the Latin Burkina Faso 135 á 3.2 140 American and North African averages. Egypt (119th) and Sierra Leone 138 á 3.1 144 Libya (126th) do less well than the North African average, Burundi 139 á 3.1 146 while a number of countries—Zambia, Gabon, Lesotho, Angola 140 á 3.0 142 Ghana, Senegal, Cape Verde, Côte d’Ivoire, Cameroon, Mauritania 141 à 3.0 141 and Ethiopia—do better than the sub-Saharan average. Chad 143 á 2.8 148 Guinea 144 á 2.8 147 Sources: World Economic Forum 2013b, 2014a. 16 | The Africa Competitiveness Report 2015 1.1: Assessing Africa’s Competitiveness Figure 12: GCI score dispersion among groups of African economies, OECD comparison GCI Score (1–7) 7 6 OECD average 5 Africa average Low-income average 4 Middle-income average Fragile average Oil-exporting average 3 2 1 Institutions Infrastructure Macro- Health and Higher Goods Labor Financial Technological Market Business Innovation economic primary education market market market readiness size sophistication environment education and training efficiency efficiency development Source: World Economic Forum, 2014a. Note: The length of each bar is determined by the score of the best- and worst-performing economy in the Africa 2015 sample. Low-income countries include Burkina Faso, Ethiopia, The Gambia, Kenya, Malawi, Mali, Mozambique, Rwanda, Sierra Leone, Tanzania, and Uganda; Middle-income countries include Botswana, Cape Verde, Egypt, Ghana, Lesotho, Mauritius, Morocco, Namibia, Senegal, Seychelles, South Africa, Swaziland, Tunisia, and Zambia; Oil-exporting countries include Algeria, Angola, Cameroon, Chad, Gabon, Libya, and Nigeria; Fragile countries include Burundi, Côte d’Ivoire, Guinea, Madagascar, Mauritania, and Zimbabwe. OECD countries include Australia, Austria, Belgium, Canada, Chile, the Czech Republic, Denmark, Estonia, Finland, France, Germany, Greece, Hungary, Iceland, Ireland, Israel, Italy, Japan, Korea, Rep., Luxembourg, Mexico, the Netherlands, New Zealand, Norway, Poland, Portugal, the Slovak Republic, Slovenia, Spain, Sweden, Switzerland, Turkey, the United Kingdom, the United States. These wide differences in the overall within the region, where the differences between performance of African countries demonstrate that the best- and worst-performing economies account countries and country groups are at very different for more than three points on the scale of 1–7 (see levels in terms of competitiveness, and that there Figure 12). More positively, this means that some is no one-size-fits-all blueprint for improving pockets of quality exist that can measure up to other competitiveness. Following the IMF’s classification, the regions. The performance of a few select economies in following paragraphs group countries into four distinct the area of health and primary education, for instance, groups of African economies: oil exporters, middle- is encouraging, where—as previously seen—the region income economies, non-fragile low-income economies, otherwise underperforms other comparator regions by and fragile economies.38 Figure 12 underscores the a wide margin. These are the small open economies divergence within the region across the 12 pillars of of Mauritius, Seychelles, and Cape Verde, which score competitiveness, showing the average performance of around 6 on the scale of 1–7, as well as four out of five the OECD as an international benchmark (shown by a North African economies, which all score above 5 (see black circle) and the African average (shown by a blue Table 3). In these countries, people can expect to live to bar). To complement the analysis further, Table 3 shows more than 70 years and enrollment in primary education the score performance at an individual country level. The is well above 90 percent. Figure 12 and Table 3 provide aim of this classification is to facilitate discussion and additional information on the similar divergence in these draw some general conclusions about the strengths and countries’ performance in infrastructure. Although weaknesses of these country groups. Yet it is important Mauritius receives the region’s best assessment (42nd), to note the limitations of such a general analysis, which followed by Seychelles (53rd), Morocco (55th), and South would need to be complemented by an in-depth country Africa (60th), the majority of countries in the sample analysis of the specific challenges and priorities (see score lower than 3 (out of 7). Some countries, such as individual country profiles in Part 3).39 Chad and Guinea, score under 2, further illustrating the Two basic requirements for competitiveness— immense infrastructure challenge on the continent. infrastructure (pillar 2) and health and primary The data also point to a large divide within the education (pillar 4)—suffer from the largest region in the areas of macroeconomic and financial competitiveness gaps with other regions (“between” market performance. Africa boasts some economies regions). They are also cause of the largest divides with efficient financial markets: most prominent is South The Africa Competitiveness Report 2015 | 17 1.1: Assessing Africa’s Competitiveness Table 3: The Global Competitiveness Index 2014–2015, selected pillars: Score dispersion among African economies (GCI score 1–7) BASIC REQUIREMENTS EFFICIENCY ENHANCERS* 4th pillar: Global 3rd pillar: Health 5th pillar: 6th pillar: 7th pillar: 8th pillar: 9th pillar: Competitiveness 1st pillar: 2nd pillar: Macroeconomic and primary Higher education Goods market Labor market Financial market Technological Country/Economy Index Institutions Infrastructure environment education and training efficiency efficiency development readiness Mauritius 4.52 4.60 4.74 4.66 6.14 4.66 4.92 4.33 4.74 3.97 South Africa 4.35 4.50 4.29 4.45 3.96 4.04 4.71 3.80 5.37 3.86 Morocco 4.21 4.21 4.38 4.72 5.66 3.56 4.41 3.81 4.02 3.57 Botswana 4.15 4.47 3.19 6.30 4.14 3.59 4.12 4.56 4.22 3.58 Tunisia 3.96 3.70 3.80 4.03 6.00 4.28 4.03 3.51 3.35 3.38 Namibia 3.96 4.19 4.17 4.62 4.63 3.23 4.13 4.31 4.43 3.42 Middle-income Seychelles 3.91 4.04 4.50 4.89 5.98 4.04 4.18 4.44 3.65 3.73 Zambia 3.86 4.12 2.67 4.16 4.56 4.16 4.65 4.06 4.37 2.99 Lesotho 3.73 3.86 2.77 5.69 4.03 3.23 4.24 4.16 3.27 2.37 Ghana 3.71 3.85 3.03 3.38 4.46 3.46 4.34 3.94 4.15 3.11 Senegal 3.70 3.81 2.93 4.29 3.96 3.18 4.34 4.23 3.80 3.21 Cape Verde 3.68 3.89 3.14 4.11 5.96 3.91 4.01 3.59 3.36 3.54 Egypt 3.60 3.41 3.20 2.96 5.37 3.27 3.95 3.08 3.19 3.21 Swaziland 3.55 3.94 3.26 4.79 3.69 3.18 4.09 3.86 4.00 2.66 Rwanda 4.27 5.21 3.14 4.62 5.52 2.98 4.62 5.08 4.26 3.14 Kenya 3.93 3.73 3.27 3.73 4.55 3.77 4.40 4.68 4.77 3.48 Ethiopia 3.60 3.46 2.49 4.36 4.82 2.63 3.84 4.15 3.33 2.46 Tanzania 3.57 3.49 2.26 4.06 4.86 2.45 3.90 4.39 3.72 2.51 Uganda 3.56 3.29 2.28 4.36 4.45 2.68 3.95 4.66 3.81 2.78 Low-income The Gambia 3.53 4.29 3.27 2.96 3.88 3.45 4.00 4.54 3.74 3.02 Mali 3.43 3.18 3.15 4.48 3.33 2.70 4.07 3.89 3.32 2.86 Malawi 3.25 3.74 2.21 2.42 4.42 2.57 4.03 4.63 3.82 2.41 Mozambique 3.24 3.16 2.36 4.06 3.58 2.39 3.99 3.88 3.14 2.71 Burkina Faso 3.21 3.28 2.01 4.55 3.18 2.42 3.81 4.22 3.14 2.49 Sierra Leone 3.10 3.37 2.07 3.94 3.18 2.39 3.98 4.01 3.36 2.36 Côte d'Ivoire 3.67 3.64 3.41 4.70 3.25 3.12 4.23 4.21 3.86 2.81 Zimbabwe 3.54 3.31 2.54 4.48 4.99 3.18 3.58 3.25 3.44 2.95 Madagascar 3.41 3.13 2.10 4.60 4.26 2.64 4.08 4.53 2.85 2.63 Fragile Burundi 3.09 2.92 2.01 4.02 4.64 2.14 3.49 3.89 2.37 2.10 Mauritania 3.00 2.76 2.59 4.00 3.48 2.16 3.35 3.07 2.50 2.71 Guinea 2.79 2.81 1.78 3.20 3.25 2.19 3.40 4.05 2.85 2.35 Algeria 4.08 3.41 3.12 6.41 5.61 3.69 3.48 3.15 2.72 2.59 Gabon 3.74 3.72 2.86 6.03 4.01 2.78 3.81 4.23 3.57 2.95 Oil-exporting Cameroon 3.66 3.53 2.47 4.45 4.70 3.22 3.99 4.11 3.51 2.76 Libya 3.48 2.62 2.88 5.36 4.55 3.59 3.32 3.41 1.95 2.56 Nigeria 3.44 3.01 2.13 4.62 2.97 2.88 4.19 4.53 4.06 3.02 Angola 3.04 2.61 2.01 4.70 3.54 1.94 2.92 3.52 2.50 2.34 Chad 2.85 2.66 1.67 4.68 2.72 2.05 2.94 3.72 2.74 2.09 n [1.67–2.33[ n [2.33–3.00[ n [3.00–3.67[ n [3.67–4.35[ n [4.35–5.04[ n [5.04–5.72[ n [5.72–6.41] Source: World Economic Forum, 2014a. Note: Color coding follows maximum and minimum scores of the sample. The interval [x,y[ is inclusive of x but exclusive of y. * Excluding the 10th pillar, Market size. Africa, which ranks 7th globally, followed by Kenya and business executives consider the lack of access to Mauritius. This good performance stands, however, finance to be the most problematic factor for doing in stark contrast to many economies characterized business on the continent (Figure 14). The inability to by rudimentary financial markets, including two North allocate savings to their most productive investments African economies: Algeria at 137th and Libya at 144th. constitutes an important barrier for the region, preventing The problem of inefficient financial markets is illustrated it from fully leveraging its growth potential. The later in this chapter by the fact that the majority of divergence in terms of macroeconomic performance is 18 | The Africa Competitiveness Report 2015 1.1: Assessing Africa’s Competitiveness largely fueled by the fact that resource-rich economies— the higher education pillar. Finally, inefficiencies in goods for example, Algeria (11th), Botswana (13th), and Gabon and labor markets are prevalent. Strikingly, for instance, (18th)—perform well on the related indicators. This despite the strides Africa has made in goods market good performance is largely attributable to the better efficiency that has garnered recognition, the region’s oil- fiscal position resulting from strong resource revenues and gas-exporting economies largely remain among the at the time data were collected.40 The decline in world bottom 30 performers globally. oil prices of more 50 percent—from US$115 a barrel in Box 2 expands the analysis to all natural resource– June 2014 to less than US$50 at the time of writing—will rich countries on the continent that record a poor GCI have significant consequences for some resource-rich score because there are numerous mineral-rich African economies because it can expose budget weaknesses. countries that are low income as well as fragile and At the same time, it offers an opportunity for energy- face competitiveness challenges similar to those of importing countries to remove subsidies or use political the oil- and gas-rich countries. The IMF categorizes momentum to gather support for competitiveness- resource-rich countries as those countries with energy enhancing reforms. exports accounting for 30 percent and mineral exports The competitiveness analysis suggests that accounting for 25 percent of total exports, or those with oil- and gas-exporting economies are a long way revenue from natural resources accounting for more from establishing the fundamentals for a competitive than 20 percent of government revenue. Based on this economy. Because Africa’s high growth rates are to threshold, Africa counts 22 resource-rich countries some extent rooted in oil- and gas-abundance, whether (20 in sub-Saharan Africa and 2 in North Africa). The or not growth will be sustainable moving forward has McKinsey Global Institute defines resource-driven been subject to much debate. On average, Africa’s oil- countries as countries that meet at least one of three and gas-rich economies perform as poorly as fragile criteria: (1) resource exports accounted for 20 percent or economies do in eight out of the twelve competitiveness more of total exports in 2011; (2) resources on average pillars. In particular, these economies are characterized accounted for more than 20 percent of government by weak institutions, poor quality or absent revenue from 2006 to 2010; and (3) resource rents were infrastructure, a volatile macroeconomic environment, more than 10 percent of GDP in 2010 or the most recent a low level of human capital, and poorly functioning year for which data are available.42 This definition adds factors and goods markets. Although the poor quality of eight more countries to the list of African resource-rich institutions is somewhat expected in fragile economies, economies. Among the top 20 resource-rich countries the fact that institutions are weak reveals important in sub-Saharan Africa, nine are classified as low insights into the functioning of oil-exporting economies. income, with GDP per capita below US$1,025, while Although Gabon fares comparatively well in the quality only Equatorial Guinea is considered high income; a few of institutions (79th), its peers mostly populate the lower others, including Botswana, Namibia, and South Africa, end of the rankings in this pillar: Chad at 140th, Libya are upper-middle income.43 at 142nd, and Angola at 143rd have rankings similar Overall, low-income economies have registered to those of the fragile economies of Burundi (132nd), improvements in their competitiveness since the Guinea (134th), and Mauritania (138th) (see Appendix C). GCI 2013–2014. Non-fragile low-income economies This poor performance raises doubts about their efficient are dispersed throughout the middle to the bottom of management of resource revenues and their ability to the rankings, ranging from Rwanda at 62nd to Sierra re-allocate revenue proceeds elsewhere in the economy Leone at 138th. This is a diverse group of countries that to lay the foundations for more diversified growth includes all low-income countries not classified as oil- while avoiding boom-bust cycles that could jeopardize exporting or fragile, and where “economic development macroeconomic stability. can be explained by reference to more conventional In addition to institutional challenges, infrastructure economic factors.”44 Overall, this group performs better is inadequate in all oil exporters, with all countries in this than both oil-exporting and fragile economies across group ranking below 100. Furthermore, the majority of most pillars. The difference between these groups and oil-exporting economies are very poorly assessed in the low-income economies is particularly pronounced in Inequality-adjusted Human Development Index.41 This the quality of institutions and goods, labor, and financial is worrisome because these economies will need to market efficiencies. Kenya (ranked 24th) and Rwanda diversify growth to ensure that resource wealth spreads (ranked 55th) boast more efficient financial markets than to all parts of the population in order to make growth their peers. Similarly, Rwanda and Gambia have relatively overall more sustainable in the long run (see Box 3 for good institutional environments, ranking 18th and 44th, a discussion on inclusive growth). To diversify, a skilled respectively, in this pillar and pulling up the average for workforce is needed. However, the rankings show that all this group, which closes with Mali at 126th. A majority oil exporters perform very poorly in providing education in this group have relatively efficient labor markets. As and skills—indeed, Chad ranks last (144th) on health and indicated in Table 3, Rwanda, Kenya, and Uganda lead primary education and, with a score of 2.1, just 143rd on African economies in this pillar, and more than two-thirds The Africa Competitiveness Report 2015 | 19 1.1: Assessing Africa’s Competitiveness Box 2: How to make resource-rich economies in the bottom 20 of the GCI ranking more competitive Despite having higher GDP growth on average than those Currently the commodity price shocks present that are resource-scarce, Africa’s resource-rich economies additional challenges that have magnified the macroeconomic fare poorly and therefore feature prominently in the bottom vulnerabilities of these economies and undermined their 20 in the Global Competitiveness Index (GCI) 2014–2015. The ability to undertake competitiveness-enhancing investments. bottom 20 takes in several resource-rich African countries, For oil-exporters, the recent oil price plunge of more than 50 including four oil-exporters (Angola 140th, Chad 143rd, Libya percent between September 2014 and February 2015, tipping 126th, and Nigeria 127th) and six mineral exporters (Guinea below US$50 per barrel in January 2015, has significantly 144th, Mali 128th, Mauritania 141st, Mozambique 133rd, reduced oil-rich countries’ revenues and magnified their Sierra Leone 138th, and Zimbabwe 124th), two of these macroeconomic vulnerabilities.1 Other commodity exports mineral exporters (Guinea and Mauritania) being fragile states. have seen similar declines; for example, the price of iron ore The poor performance of resource-rich economies indicates dropped by 51 percent between January 2014 and February that they have not been able to effectively channel their 2015. The resulting declines in revenues have deteriorated natural resource revenues to enhance their competitiveness. countries’ fiscal and external positions, with concomitant Indeed, although the resource-rich economies have had the adverse consequences on government spending capacity, opportunity to enhance their competitive prospects in the thereby limiting their ability to invest in competitiveness- wake of commodity-price booms, the data show no notable enhancing programs. improvement in their competitiveness and the chapter points Going forward, it will be imperative for these resource- to myriad remaining challenges. rich countries to put in place the fundamentals for The absence of solid institutions has left these enhanced competitiveness and broad-based economic economies open to corruption and rent-seeking, which development. As argued by McKinsey, resource-rich negatively affects their overall competitiveness. More countries “should reframe their economic strategies around investment and maintenance of infrastructure are needed three key imperatives: effectively developing their resource to reduce indirect costs to businesses and make them sector, capturing value from it, and transforming that value more competitive. The business environment would be into long-term prosperity.”2 This reframing will include more efficient with less bureaucracy and enhanced financial building the resource sector’s institutions and governance, development. Overall, these countries have suffered from developing infrastructure, ensuring robust fiscal policy and the “Dutch Disease” syndrome, with real exchange rate competitiveness, supporting local content, deciding how to appreciations and wages increasingly driving out export spend resource windfalls wisely, and transforming resource and import-competing industries. Taking this into account, wealth into broader based economic development. governments should support the development of the traded sector and non-natural-resource traded goods. Notes 1 AfDB 2014. 2 Dobbs et al. 2013, p. 26. of these economies are in the upper half of the global their peers (with the exception of Zambia, Lesotho, and rankings. On the other hand, a majority of low-income Senegal, which score below 3 on a scale of 1–7) and African economies perform poorly in the areas of have particularly well-functioning goods and financial infrastructure, education, and technological readiness, markets. To progress, business will require a talent placing them in the bottom third of the global rankings in pool on which to draw, and this is an area where most these areas.45 middle-income economies have reached a bottleneck. Africa’s middle-income economies on average With a few exceptions, most of them place somewhere compare well with other regions, such as Latin in the lower half of the rankings of the pillars that gauge America and the Caribbean, having put in place a country’s ability to fully leverage its human resource the basic requirements of competitiveness. Africa’s potential. South Africa, for example, ranks just 113th in middle-income economies face a more complex and the labor market efficiency pillar and has a university diverse set of competitiveness challenges than all other enrollment rate of just 19 percent, compared with 94 groups. Having entered the middle-income group, these percent in the United States and 99 percent in the countries will need to put into place the fundamentals Republic of Korea.46 Going forward, increasing education that will allow them to transition to higher-value-added attainment rates and adapting education to match the activities. In this light, some important variations in skills needed by the private sector as well as making the performance are evident, and middle-income African labor market more flexible will be critical for the required economies range from Mauritius at 39th to Swaziland at structural transformation. 123rd. Although middle-income economies outperform on average their regional peers in institutional quality, they barely reach the middle score of this pillar (4 on a scale of 1–7). As described earlier, these countries generally have already built a better infrastructure than 20 | The Africa Competitiveness Report 2015 1.1: Assessing Africa’s Competitiveness Figure 13: Change in the performance of African economies GCI score (1–7), ACR 2007 compared with ACR 2015 4.6 4.2 Improved Declined 3.8 3.4 3.0 2.6 Tunisia South Africa Egypt Namibia Nigeria Burkina Faso Mauritania Mauritius Botswana Morocco Algeria Kenya Tanzania Lesotho Gambia, The Uganda Cameroon Madagascar Zimbabwe Mali Ethiopia Zambia Mozambique Chad Burundi Source: Data sourced from the GCR 2006–2007 (World Economic Forum, 2006) and the GCR 2014–2015 (World Economic Forum, 2014a). Africa’s competitiveness then and now: good transport infrastructure (by regional standards), Re-visiting Africa’s competitiveness over the and efficient goods and financial markets as well as its past decade relatively innovative companies. However, its Achilles’ Figure 13 provides a view of competitiveness heel remains opaque public institutions, poor health and improvements at two points in time: 2006 and 2014. education, and an extremely rigid labor market. Other To complement this analysis, Appendix D shows the middle-income economies, such as Botswana and evolution in performance of all 24 African economies in Namibia, have maintained a relatively stable performance the constant sample grouped into fragile, middle-and across the years. Both benefit from comparatively good low-income, and oil-exporting economies.47 institutions but critically neglect their human resource Africa’s middle-income and oil-exporting base, both in terms of health and education. Of the North economies exhibit a mixed picture when it comes to African middle-income group, Egypt and Tunisia have improvements in competitiveness compared to nine not succeeded in putting their economies on a more years ago. Mauritius and Zambia register the largest stable footing since the Arab Spring, although the fact improvements in competitiveness, but South Africa, that these economies are slowly stabilizing and starting Egypt, and Tunisia show declines, the latter two following to focus on economic reforms holds promise for the the events of the Arab Spring. The data suggest that the future. Conversely, we see that Morocco (72nd)—the region’s current best-performing economy, Mauritius (at most competitive economy in North Africa—has been 39th, replacing South Africa two years ago), has made registering a gradual upward trend, reflecting efforts made impressive strides toward improved competitiveness over the years to develop its business environment. Oil- on the back of the wide-ranging structural reforms that exporting economies demonstrate a mixed performance began in 2006. This improvement has been particularly over the past nine years: Cameroon has seen slight visible in its creation of an enabling environment in its improvements because its public institutions are financial, goods, and labor markets. Similarly, Zambia developing, although this is reflected in its score in this has made the most progress in the region, particularly pillar but not in the rankings, as other countries have upgrading the quality of its institutions and improving been doing relatively better. At the same time, countries goods market efficiencies, now ranked 96th. such as Chad and Nigeria are stagnating in their overall These countries stand in contrast to the performance performance of competitiveness. of South Africa, which has been experiencing a gradual The majority of fragile and low-income but steady decline in its competitiveness since 2006 and economies register slight improvements. On the ranks 56th in this year’s Report, down from 35th in 2006. upside, we see improvement in competitiveness, The country continues to benefit from strong private albeit from a very low base, in the majority of fragile institutions, such as auditing and reporting standards, economies. This progress is most notable in Burundi: The Africa Competitiveness Report 2015 | 21 1.1: Assessing Africa’s Competitiveness Box 3: Measuring inclusive growth Africa has enjoyed a significant increase in economic growth the Forum’s Inclusive Growth and Development framework over the past decade, yet unequal distribution of its benefits (Figure A) identifies a range of policy incentives and has limited the ability of that growth to reduce poverty and institutional mechanisms that have a bearing on the inclusivity improve living standards. Instead, in many countries in the of growth. This multidimensional framework includes areas region, the gap between rich and poor is widening, youth such as creating an enabling environment for human capital unemployment is rising, and access to basic services remains formation, reinforcing the wage and productivity growth restricted to a small share of the population. The share of link, fostering entrepreneurship and investment, reinforcing wealth held by the top decile has increased over the last business and political ethics, promoting gender parity, several years and concentration of wealth on the continent is reviewing fiscal policy (tax code and social protection), and the second highest of all regions in the world.1 Against this providing improved public services and infrastructure. background is a growing need for analytical frameworks and A beta version of the benchmarking tool and related evidence-based solutions to tackle these challenges and analysis will be released by early fall 2015 as part of a series ensure that growth translates into improved living standards of public-private dialogues with key experts and decision and benefits the population at large. makers from multiple policy domains and countries in a The international community has made significant structured series of evidence-based discussions. The progress in defining inclusive growth, building on the objective is to contribute to a better appreciation within work of the Organisation for Economic Co-operation and societies of how the desire for a more inclusive model of Development (OECD), World Bank, and regional development economic growth and development can be translated into a banks. One widely accepted definition of inclusive growth practical national or regional strategy. An important element involves output growth that is sustained over decades, is of this undertaking is working in conjunction with the Report’s broad-based across economic sectors, creates productive partner organizations: the World Bank’s country strategies employment opportunities for the majority of the country’s support programs that primarily target the bottom 40 percent population, and reduces poverty.2 Reductions in excessive of the population as part of achieving the organization’s twin income inequality have also emerged as a prerequisite for goals of inclusive growth by 2030 (the other being reducing growth; this concept is supported by mounting evidence that the percent of people living in extreme poverty (<$1.25 PPP) inequality undermines growth.3 In summary, inclusive growth to 3 percent of the world’s population). Under the umbrella is about both the pace and pattern of economic growth.4 of its 10-year strategy 2013–22, the African Development The World Economic Forum’s workstream on inclusive Bank’s first and overarching objective is to promote growth growth aims to mobilize a better response to the challenge of that is more inclusive, leading not just to equality of treatment inequality by assembling a comparative analysis of the extent and opportunity but to deep reductions in poverty and a to which countries make use of the wide spectrum of policy corresponding large increase in jobs. Toward achieving this incentives and institutional mechanisms that influence the end, the African Development Bank pays special attention to pattern and pace of broad-based progress in living standards. fragile states, agriculture and food security as well as gender.5 Consisting of six policy domains and thirteen subdomains, Figure A: Inclusive Growth and Development benchmarking framework Pillar 4: Pillar 2: Pillar 3: Pillar 1: Financial Pillar 5: Pillar 6: Pillar 7: Employment Entrepreneurship Education and Intermediation Corruption and Basic Services Fiscal and Labor and Asset Skills of Real Economy Rents and Infrastructure Transfers Compensation Building Investment Productive Small business Financial system Business & political Basic Access Tax code employment ownership inclusion ethics infrastructure Intermediation Health-related Wages & non-wage Home & financial Concentration of Quality of business services & Social protection compensation asset ownership rents investment infrastructure Equity Source: World Economic Forum 2015d, forthcoming. Notes 1 Credit Suisse Research Institute 2014. 4 Ianchovichina and Lundstrom Gable 2012. 2 Commission on Growth and Development 2008; Ianchovichina 5 AfDB 2013. The Strategy also outlines the five following opera- and Lundstrom 2009. tional priorities to improve Africa’s quality of growth: (1) infrastruc- ture development, (2) regional economic integration, (3) private- 3 Berg and Ostry 2011; Ostry et al. 2014. sector development, (4) governance and accountability, and (5) skills and technology. 22 | The Africa Competitiveness Report 2015 1.1: Assessing Africa’s Competitiveness Figure 14: Most problematic factors for doing business (2012 and 2014 scores compared) 14a: Sub-Saharan Africa Access to financing Corruption Inadequate supply of infrastructure Inefficient government bureaucracy Tax rates Inadequately educated workforce Poor work ethic in national labor force Restrictive labor regulations Policy instability Inflation Foreign currency regulations Tax regulations ■ 2014 Insufficient capacity to innovate ■ 2012 Crime and theft Government instability/coups Poor public health 0 5 10 15 20 Weighted score 14b: North Africa Access to financing Corruption Inadequate supply of infrastructure Inefficient government bureaucracy Tax rates Inadequately educated workforce Poor work ethic in national labor force Restrictive labor regulations Policy instability Inflation Foreign currency regulations Tax regulations ■ 2014 Insufficient capacity to innovate ■ 2012 Crime and theft Government instability/coups Poor public health 0 5 10 15 20 Weighted score Source: World Economic Forum Executive Opinion Survey, 2012, 2014. 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 figures show the responses weighted according to their rankings. although ranked a low 139th, the country has shown a The most problematic factors for doing business steady improvement since the 2013 Report. Zimbabwe in Africa likewise has been showing gradual improvement since its The results of the GCI provide a sense of the many nadir in performance in 2009. In contrast, Madagascar— factors that are holding back Africa’s competitiveness. To another fragile economy in our sample—has been complement this analysis, each year the World Economic stagnating, while Mauritania has declined to 141st place. Forum collects the perspective of top executives about When it comes to low-income economies, Figure 13 the main bottlenecks to doing business in their countries. suggests a small but positive development in six out From a list of 16 factors, respondents are asked to select of seven economies in our 2006 constant sample. the five most problematic among them and rank them Among these, Ethiopia and Kenya register the largest from 1 (most problematic) to 5. Figure 14 shows that this improvements while only Burkina Faso has seen a slight year, similar to the 2013 Report, access to financing, decline in competitiveness. corruption, and the inadequate supply of infrastructure The Africa Competitiveness Report 2015 | 23 1.1: Assessing Africa’s Competitiveness not only remain the most important hindrances to doing in Mauritius, and Kenya’s rise as a regional financial, business in sub-Saharan countries, but are considered consumer retail, and telecommunications exporter in East to be so by a larger share of respondents. These Africa. Yet the ICT frontier remains a moving target, and factors also represent the most important barriers to Africa will need to keep up with other regions that are doing business in North Africa. While in the last Report pressing ahead. On the upside, however, the analysis inefficient government bureaucracy was considered the points to the generally improving macroeconomic stability second most important barrier in North Africa, concerns in the region—evident, for example, in lower inflation about this factor have been somewhat alleviated. although, even with this progress, important downside Interestingly, business leaders across the region are risks to stability remain—and the rapid reforms in the concerned about an inadequately educated workforce, goods market. indicating an insufficient education and, in some of the A more detailed look at the performance of more advanced economies, also a skills mismatch in the individual country groups reveals a competitiveness region,48 as well as poor work ethic. divide across the continent, as demonstrated by wide However, businesses in both subregions are divergences in performance. As in the past, Mauritius concerned about somewhat different challenges and South Africa continue to perform as well or better in regard to all other most problematic factors. For than other emerging market economies such as Brazil instance, government instability coupled with policy and India. In particular, Mauritius has been pressing uncertainty continue to be a worry for business leaders ahead steadily since 2006, and now ranks as the most in North African countries, whereas inflation is a greater competitive African economy, ahead of South Africa. A concern in sub-Saharan countries. It is interesting to note second cluster of countries, including Rwanda, Morocco, that, similar to the findings of the 2013 Report, public Botswana, and Algeria, performs better than the health receives little attention from business leaders. This Latin American average, while a third and wider set of is somewhat counterintuitive given the continent’s major countries, including Tunisia, Namibia, Kenya, Seychelles, health challenges, which culminated in the recent Ebola Zambia, Gabon, Lesotho, Ghana, Senegal, Cape Verde, pandemic. Côte d’Ivoire, Cameroon, and Ethiopia outperform the sub-Saharan African average; the first four even CONCLUSIONS outperform the North African average. This chapter has provided input into the debate of what it In view of these divergences, this year’s chapter would take for Africa to transform its economies to reach classifies African economies into four specific groups— a higher level of competitiveness by analyzing the results oil-exporting economies, fragile economies, non- of 38 African economies in the Global Competitiveness fragile low-income economies, and middle-income Index 2014–2015. Although high and persistent economic economies—continuing the analysis of the 2013 Report. growth rates characterize Africa’s past decade, the same The analysis suggests that Africa’s middle-income cannot be said for the region’s overall performance in economies on average compare well with other regions, competitiveness, which has been stagnating. Most African such as Latin America and the Caribbean, as they countries find themselves in a development stage where have in place comparatively strong basic requirements. basic requirements—such as sound institutions and However, oil- and gas-exporting economies are a macroeconomic policies, adequate infrastructure, and long way from establishing the fundamentals needed a healthy and educated workforce—will be necessary for competitive economies. Low-income economies to establish a solid basis for sustainable growth. Yet and selected fragile economies, such as Burundi, these are the areas that constitute some of the biggest Côte d’Ivoire, and Zimbabwe, have made slow but gaps with other regions. The continent’s persistent encouraging improvements since the 2013 Report. infrastructure deficit and poor education outcomes as well Having identified the main competitiveness as its difficulties in providing the right set of skills to match challenges, the following chapters explore in greater detail the needs of its businesses constitute the most important specific barriers and challenges to transforming Africa’s barriers to transforming African economies. This is economies. Chapters 2.1 and 2.2 look at agriculture particularly significant in view of the shifts of employment and services, respectively, addressing the two main toward the service sector over the past two decades and sectors that account for the largest share of employment. the region’s rapidly growing workforce. In this context, Increasing productivity in these sectors could help unleash investments in public goods ranging from infrastructure Africa’s development through productivity enhancements to education and health are needed. Relatedly, in view of and greater integration into global and regional value the potential for a larger value-added share of the service chains. Chapter 2.3 brings these together by exploring sector to GDP, efforts to foster greater technological how Africa could tap the potential of global value chains adoption among the population and businesses must be to transform its economies by developing and expanding made. Undoubtedly, much progress has been achieved new activities and building dynamic and competitive on the continent that gave rise to innovative business manufacturing, agriculture, and service sectors. models. Examples include M-PESA, the service exports 24 | The Africa Competitiveness Report 2015 1.1: Assessing Africa’s Competitiveness NOTES 16 The data for Libya derive from the Global Competitiveness Index 2014–2015, which was published in early September 2014. The 1 Estimates suggest that by 2020 more than half of the continent’s data, therefore, do not reflect current developments in the country. population will be below the age of 25 (IMF 2014a). These are expected to be reflected in the next iteration of the GCI 2 The Human Development Index scores are available for each of 2015–2016. the countries highlighted in this Report in the Country Profiles of 17 The BRIC economies are Brazil, the Russian Federation, India, and Part 3. China; they exclude South Africa. 3 Lipton 2012. 18 To provide the most complete picture of Africa’s competitiveness, 4 The World Bank’s Doing Business 2015: Going Beyond Efficiency Part 3 of this Report features a country profile for Benin and shows that over the past five years, 11 different sub-Saharan Liberia based on the GCI 2013–2014 results. For a detailed African countries have appeared on the annual list of the 10 global description of the Executive Opinions Survey, see Browne et al. top improvers. Some, such as Burundi, Cape Verde, Côte d’Ivoire, 2014. and Rwanda, have done so multiple times. 19 Education refers to primary education and health (pillar 4) and 5 Timmer et al. 2014. higher education and training (pillar 5), although the latter is, strictly speaking, classified as an efficiency enhancer in the Global 6 Duarte and Restuccia 2010; Herrendorf et al. 2013; McMillan and Competitiveness Index. Harttgen 2014. 20 World Economic Forum 2013a. 7 AfDB, OECD, and UNDP 2013. 21 UNCTAD 2013. 8 Part of the difficulty in measuring structural transformation in Africa stems from the lack of updated data on the composition of 22 World Economic Forum 2013a. value-added. As GDP rebasing takes place with some time lag, 23 Even in developed economies, the infrastructure gap is widening we might not be capturing part of the changes that have occurred as a result of demographics, lack of public financing, inadequate in recent years. For Nigeria, for example, the GGDC 10-sector public-private partnership delivery models, and unplanned database does not yet provide a complete value-added time- operations and maintenance of infrastructure. The OECD series consistent with the GDP rebasing carried out in 2014, since benchmark is, therefore, to be seen as a second best. full details and potential additional refinements behind the revision have not been published yet. Currently available data may thus 24 World Economic Forum 2012b. underestimate the size of the service and manufacturing sector in Nigeria, assigning disproportionate weight to the agriculture and 25 World Economic Forum 2014b. mining sectors. 26 IMF 2014b. 9 Alternatively, sector value-added as a percent of GDP can be 27 And indeed, new data from the Global Risks Perception drawn from the World Bank’s World Development Indicators Survey indicate that Africa stands least prepared to address database. Yet this allows only for a breakdown into agriculture, unemployment and underemployment. See World Economic industry, and services. On an aggregate level, the two databases Forum 2015a, 2015b. See also The Africa Competitiveness Report support the same story. 2013, Chapter 1 (World Economic Forum 2013a) on the youth 10 This may in part be the result of declining employment in the unemployment challenge. sector. 28 World Bank 2014a. 11 Also see Inklaar and Timmer 2014. 29 IMF 2015. 12 Ghani et al. 2012. 30 AfDB et al. 2013. 13 AfDB et al. 2013. 31 Qiang and Rossotto 2009. 14 The 12 pillars are measured using both quantitative data from 32 See The Global Information Technology Report 2015 (World public sources (such as inflation, Internet penetration, life Economic Forum 2015c) for a detailed discussion on economic expectancy, and school enrollment rates) and data from the and social impact of ICTs. World Economic Forum’s Executive Opinion Survey (the Survey), conducted annually among top executives in all of the countries 33 World Bank and African Development Bank 2012. assessed. The Survey provides crucial data on a number of qualitative issues (e.g., corruption, confidence in the public sector, 34 This pillar consists of quantitative data: (1) government budget quality of schools) for which no hard data exist. balance, (2) gross national savings, (3) inflation, and (4) government debt as well as qualitative data on country credit 15 In order to capture the resource intensity of an economy, we use rating. It is important to note that this pillar evaluates the stability as a proxy the exports of mineral products as a share of overall of the macroeconomic environment, so it does not directly take exports according to the sector classification developed by the into account the way in which public accounts are managed by International Trade Centre in their Trade Performance Index. In the government. This qualitative dimension is captured in the addition to crude oil and gas, this category contains all metal institutional pillar of the GCI. ores and other minerals as well as petroleum products, liquefied gas, coal, and precious stones. The data used cover the years 35 IMF 2014b. 2009 through 2013 or the most recent year available. Further 36 World Bank 2014b. information on these data can be found at http://legacy.intracen. org/appli1/TradeCom/Documents/ TradeCompMap-Trade%20 37 UNCTAD 2014, p. 10. Performance%20Index-Technical%20 Notes-EN.pdf. All countries with more than 70 percent of their exports made up of mineral products are considered to be to some extent factor driven. The stage of development for these countries is adjusted downward smoothly depending on the exact primary export share. The higher the mineral export share, the stronger the adjustment and the closer the country will move to stage 1. For example, a country that exports 95 percent of mineral exports and that, based on the income criteria, would be in stage 3 will be in transition between stages 1 and 2. The income and primary exports criteria are weighted identically. Stages of development are dictated solely by income for countries that export less than 70 percent minerals. Countries that export only primary products would automatically fall into the factor-driven stage (stage 1). The Africa Competitiveness Report 2015 | 25 1.1: Assessing Africa’s Competitiveness 38 We follow the IMF’s country classification applied in the Regional Browne, C., T. Geiger, and T. Gutknecht. 2014. “The Executive Opinion Economic Outlooks on sub-Saharan Africa based on the most Survey: The Voice of the Business Community.” In The Global recent data on per capita gross national income (averaged over Competitiveness Report 2014–2015. Geneva: World Economic three years) and the 2013 World Bank’s (IDA) Resource Allocation Forum. 69–78. Index (IRAI). Oil-exporting countries are those where oil exports make up more than 30 percent of total exports. Middle-income Commission on Growth and Development. 2008. The Growth Report: countries not classified as oil-exporter or fragile countries are Strategies for Sustained Growth and Inclusive Development. those that had had average per capita gross national income in Washington DC: The International Bank for Reconstruction and the years 2011–13 of more than US$1,035.00 (calculated by the Development/World Bank, on behalf of the Commission on World Bank using the Atlas method, which reduces the impact of Growth and Development. Available at https://openknowledge. exchange rate fluctuations); and the IRAI (scores higher than 3.2). worldbank.org/bitstream/handle/10986/6507/449860PUB0Box310 Low-income countries not classified as fragile or oil exporters had 1OFFICIAL0USE0ONLY1.pdf?sequence=1. an average income per capita gross national income in the years The Conference Board. Forthcoming, June 2015. Total Economy 2011–13 equal to or lower than US$1,035.00 (World Bank, Atlas DatabaseTM, January. Available at http://www.conference-board. method) and IRAI scores higher than 3.2; and fragile countries org/data/economydatabase/. not classified as oil exporters had IRAI scores of 3.2 or less, with the exception of Malawi—on the basis that it is not classified as Credit Suisse Research Institute. 2014. Global Wealth Databook 2014, “fragile” in the World Bank’s harmonized list of fragile states (see researchers A. Shorrocks and J. Davies, with R. Lluberas. Zurich: IMF’s Regional Economic Outlook October 2014). The criteria are Credit Suisse AG. Available at http://economics.uwo.ca/people/ extended to North African economies. davies_docs/global-wealth-databook-2014-v2.pdf. 39 See Appendix C and individual country profiles in Part 3 for more de Vries, G.J., M.P. Timmer, and K. de Vries. 2013. “Structural detailed country-level information. 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Available at http://www.mckinsey. reflected in the GCI 2015–2016 that will launch at the end of com/insights/energy_resources_materials/reverse_the_curse_ September, 2015. maximizing_the_potential_of_resource_driven_economies. 41 The Inequality-adjusted Human Development Index is available at Duarte, M. and D. Restuccia. 2010. “The Role of the Structural http://hdr.undp.org/en/data. Transformation in Aggregate Productivity.” Quarterly Journal of Economics 125 (1): 129–73. 42 Dobbs et al. 2013. Easterly W. and R. Levine. 1997. “Africa’s Growth Tragedy: Policies and 43 Some of these resource-rich countries—such as Equatorial Ethnic Divisions.” Quarterly Journal of Economics CXII: 1203–50. Guinea—are not covered in this chapter because they are not included in the GCI. Ghani, E. , A. G. Goswami, and H. Kharas. 2012. Service with a Smile. 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The Africa Competitiveness Report 2015 | 27 1.1: Assessing Africa’s Competitiveness Appendix A: Computation and structure of the Global Competitiveness Index 2014–2015 This appendix presents the structure of the Global detailed information about each of these indicators. Competitiveness Index 2014–2015 (GCI). The numbering To make the aggregation possible, the indicators are of the indicator matches the numbering of the data converted to a 1-to-7 scale in order to align them with tables. The number preceding the period indicates to the Survey results. We apply a min-max transformation, which pillar the indicator belongs (e.g., indicator 1.11 which preserves the order of, and the relative distance belongs to the 1st pillar and indicator 9.04 belongs to the between, country scores.c 9th pillar). Indicators that are followed by the designation The computation of the GCI is based on successive “1/2” enter the GCI in two different pillars. In order to aggregations of scores from the indicator level (i.e., avoid double counting, we assign a half-weight to each the most disaggregated level) all the way up to the instance.d overall GCI score. Unless noted otherwise, we use an Weight (%) within arithmetic mean to aggregate individual indicators within immediate parent category a category.a For the higher aggregation levels, we use the percentage shown next to each category. This percentage BASIC REQUIREMENTS..........................................20–60% b represents the category’s weight within its immediate 1st pillar: Institutions...................................................25% parent category. Reported percentages are rounded A. Public institutions..........................................................................75% to the nearest integer, but exact figures are used in the 1. Property rights...........................................................................20% calculation of the GCI. For example, the score a country 1.01 Property rights achieves in the 11th pillar accounts for 50 percent of 1.02 Intellectual property protection 1/2 this country’s score in the innovation and sophistication 2. Ethics and corruption.................................................................20% factors subindex, irrespective of the country’s stage 1.03 Diversion of public funds of development. Similarly, the score achieved on the 1.04 Public trust in politicians transport infrastructure subpillar accounts for 50 percent 1.05 Irregular payments and bribes of the score of the infrastructure pillar. 3. Undue influence........................................................................20% Unlike the case for the lower levels of aggregation, 1.06 Judicial independence 1.07 Favoritism in decisions of government officials the weight put on each of the three subindexes (basic 4. Government efficiency................................................................20% requirements, efficiency enhancers, and innovation and 1.08 Wastefulness of government spending sophistication factors) is not fixed. Instead, it depends 1.09 Burden of government regulation on each country’s stage of development, as discussed 1.10 Efficiency of legal framework in settling disputes in the chapter.b For instance, in the case of Burundi—a 1.11 Efficiency of legal framework in challenging regulations country in the first stage of development—the score 1.12 Transparency of government policymaking in the basic requirements subindex accounts for 60 5. Security.....................................................................................20% percent of its overall GCI score, while it represents just 1.13 Business costs of terrorism 1.14 Business costs of crime and violence 20 percent of the overall GCI score of Sweden, a country 1.15 Organized crime in the third stage of development. For countries in 1.16 Reliability of police services transition between stages, the weighting applied to each B. Private institutions........................................................................25% subindex is reported in the corresponding profile at the 1. Corporate ethics........................................................................50% end of this volume. For instance, in the case of Gabon, 1.17 Ethical behavior of firms currently in transition from stage 1 to stage 2, the weight 2. Accountability............................................................................50% on each subindex is 51.5 percent, 41.4 percent, and 7.1 1.18 Strength of auditing and reporting standards percent, respectively, as reported in the country profile 1.19 Efficacy of corporate boards on page 126 of The Global Competitiveness Report 1.20 Protection of minority shareholders’ interests 2014–2015. 1.21 Strength of investor protection* Indicators that are not derived from the Executive Opinion Survey (the Survey) are identified by an asterisk (*) in the following pages. The Technical Notes and Sources section at the end of the Report provides 28 | The Africa Competitiveness Report 2015 1.1: Assessing Africa’s Competitiveness 2nd pillar: Infrastructure..............................................25% 2. Foreign competition..........................................................variable h 6.09 Prevalence of trade barriers A. Transport infrastructure................................................................50% 6.10 Trade tariffs* 2.01 Quality of overall infrastructure 6.11 Prevalence of foreign ownership 2.02 Quality of roads 6.12 Business impact of rules on FDI 2.03 Quality of railroad infrastructure e 6.13 Burden of customs procedures 2.04 Quality of port infrastructure 6.14 Imports as a percentage of GDP* j 2.05 Quality of air transport infrastructure 2.06 Available airline seat kilometers* B. Quality of demand conditions.......................................................33% 6.15 Degree of customer orientation B. Electricity and telephony infrastructure........................................50% 6.16 Buyer sophistication 2.07 Quality of electricity supply 2.08 Mobile telephone subscriptions* 1/2 7th pillar: Labor market efficiency..............................17% 2.09 Fixed telephone lines* 1/2 A. Flexibility.......................................................................................50% 3rd pillar: Macroeconomic environment.....................25% 7.01 Cooperation in labor-employer relations 3.01 Government budget balance* 7.02 Flexibility of wage determination 3.02 Gross national savings* 7.03 Hiring and firing practices 3.03 Inflation* f 7.04 Redundancy costs* 3.04 Government debt* 7.05 Effect of taxation on incentives to work 3.05 Country credit rating* B. Efficient use of talent....................................................................50% 7.06 Pay and productivity 4th pillar: Health and primary education.....................25% 7.07 Reliance on professional management 1/2 A. Health............................................................................................50% 7.08 Country capacity to retain talent 4.01 Business impact of malaria g 7.09 Country capacity to attract talent 4.02 Malaria incidence* g 7.10 Female participation in labor force* 4.03 Business impact of tuberculosis g 4.04 Tuberculosis incidence* g 8th pillar: Financial market development....................17% 4.05 Business impact of HIV/AIDS g A. Efficiency.......................................................................................50% 4.06 HIV prevalence* g 8.01 Availability of financial services 4.07 Infant mortality* 8.02 Affordability of financial services 4.08 Life expectancy* 8.03 Financing through local equity market B. Primary education.........................................................................50% 8.04 Ease of access to loans 4.09 Quality of primary education 8.05 Venture capital availability 4.10 Primary education enrollment rate* B. Trustworthiness and confidence...................................................50% 8.06 Soundness of banks 8.07 Regulation of securities exchanges EFFICIENCY ENHANCERS.......................................35–50% b 8.08 Legal rights index* 5th pillar: Higher education and training.....................17% 9th pillar: Technological readiness..............................17% A. Quantity of education....................................................................33% A. Technological adoption..................................................................50% 5.01 Secondary education enrollment rate* 9.01 Availability of latest technologies 5.02 Tertiary education enrollment rate* 9.02 Firm-level technology absorption 9.03 FDI and technology transfer B. Quality of education......................................................................33% 5.03 Quality of the education system B. ICT use..........................................................................................50% 5.04 Quality of math and science education 9.04 Internet users* 5.05 Quality of management schools 9.05 Broadband Internet subscriptions* 5.06 Internet access in schools 9.06 Internet bandwidth* 9.07 Mobile broadband subscriptions* C. On-the-job training........................................................................33% 2.08 Mobile telephone subscriptions* 1/2 5.07 Local availability of specialized research and training 2.09 Fixed telephone lines* 1/2 services 5.08 Extent of staff training 10th pillar: Market size................................................17% 6th pillar: Goods market efficiency.............................17% A. Domestic market size...................................................................75% 10.01 Domestic market size index* k A. Competition...................................................................................67% B. Foreign market size......................................................................25% 1. Domestic competition.......................................................variable h 10.02 Foreign market size index* l 6.01 Intensity of local competition 6.02 Extent of market dominance 6.03 Effectiveness of anti-monopoly policy 6.04 Effect of taxation on incentives to invest 6.05 Total tax rate* 6.06 Number of procedures required to start a business* i 6.07 Time required to start a business* i 6.08 Agricultural policy costs The Africa Competitiveness Report 2015 | 29 1.1: Assessing Africa’s Competitiveness d For those categories that contain one or several half-weight INNOVATION AND SOPHISTICATION FACTORS..........5–30% b variables, country scores are computed as follows: 11th pillar: Business sophistication ...........................50% (sum of scores on full-weight variables) 1 3 (sum of scores on half-weight variables) 11.01 Local supplier quantity (count of full-weight variables) 1 3 (count of half-weight variables) 11.02 Local supplier quality 11.03 State of cluster development 11.04 Nature of competitive advantage e “N/Appl.” is used for economies where there is no regular train 11.05 Value chain breadth service or where the network covers only a negligible portion 11.06 Control of international distribution of the territory. Assessment of the existence of a network was 11.07 Production process sophistication conducted by the World Economic Forum based on various 11.08 Extent of marketing sources. 11.09 Willingness to delegate authority f In order to capture the idea that both high inflation and deflation 7.07 Reliance on professional management 1/2 are detrimental, inflation enters the model in a U-shaped manner as follows: for values of inflation between 0.5 and 2.9 percent, 12th pillar: R&D Innovation..........................................50% a country receives the highest possible score of 7. Outside this range, scores decrease linearly as they move away from these 12.01 Capacity for innovation values. 12.02 Quality of scientific research institutions 12.03 Company spending on R&D g The impact of malaria, tuberculosis, and HIV/AIDS on competitiveness depends not only on their respective incidence 12.04 University-industry collaboration in R&D rates but also on how costly they are for business. Therefore, 12.05 Government procurement of advanced technology products in order to estimate the impact of each of the three diseases, 12.06 Availability of scientists and engineers we combine its incidence rate with the Survey question on its 12.07 PCT patent applications* perceived cost to businesses. To combine these data we first 1.02 Intellectual property protection 1/2 take the ratio of each country’s disease incidence rate relative to the highest incidence rate in the whole sample. The inverse of this ratio is then multiplied by each country’s score on the related NOTES Survey question. This product is then normalized to a 1-to-7 scale. Note that countries with zero reported incidence receive a Formally, for a category i composed of K indicators, we have: a 7, regardless of their scores on the related Survey question. K In the case of malaria, countries receive a 7 if the World Health ⌺ indicatork Organization (WHO) has classified them as malaria-free countries categoryi ϭ k=1 or included them in the supplementary list of areas where malaria K has never existed or has disappeared without specific measures. b As described in the chapter, the weights are as specified below. h The competition subpillar is the weighted average of two Refer to Table 2 of the chapter for country classification according components: domestic competition and foreign competition. In to stage of development: both components, the included indicators provide an indication of the extent to which competition is distorted. The relative Stage of development importance of these distortions depends on the relative size of Factor-driven Transition Efficiency- Transition Innovation- domestic versus foreign competition. This interaction between stage (1) from stage 1 driven from stage 2 driven the domestic market and the foreign market is captured by to stage 2 stage (2) to stage 3 stage (3) the way we determine the weights of the two components. Domestic competition is the sum of consumption (C), investment GDP per capita (US$) thresholds* (I), government spending (G), and exports (X), while foreign competition is equal to imports (M). Thus we assign a weight of <2,000 2,000–2,999 3,000–8,999 9,000–17,000 >17,000 (C + I + G + X)/(C + I + G + X + M) to domestic competition and a weight of M/(C + I + G + X + M) to foreign competition. Weight for basic requirements 60% 40–60% 40% 20–40% 20% i Indicators 6.06 and 6.07 combine to form one single indicator. Weight for efficiency enhancers j For indicators 6.14, imports as a percentage of GDP, we first apply a log-transformation and then a min-max transformation. 35% 35–50% 50% 50% 50% k The size of the domestic market is constructed by taking the Weight for innovation and sophistication factors natural log of the sum of the gross domestic product valued 5% 5–10% 10% 10–30% 30% at purchased power parity (PPP) plus the total value (PPP estimates) of imports of goods and services, minus the total * For economies with a high dependency on mineral resources, GDP per capita is value (PPP estimates) of exports of goods and services. Data not the sole criterion for the determination of the stage of development. See text are then normalized on a 1-to-7 scale. PPP estimates of imports for details. and exports are obtained by taking the product of exports as a percentage of GDP and GDP valued at PPP. The underlying data c Formally, we have: are reported in the data tables section (see Tables 10.03, 6.14, and 10.04). country score – sample minimum 6 x ( sample maximum – sample minimum ) + 1 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, normalized on a 1-to-7 scale. PPP estimates of exports are The sample minimum and sample maximum are, respectively, the obtained by taking the product of exports as a percentage of GDP lowest and highest country scores in the sample of economies and GDP valued at PPP. The underlying data are reported in the covered by the GCI. In some instances, adjustments were made data tables. to account for extreme outliers. For those indicators for which a higher value indicates a worse outcome (e.g., disease incidence, government debt), 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 30 | The Africa Competitiveness Report 2015 1.1: Assessing Africa’s Competitiveness Appendix B: The Global Competitiveness Index 2014–2015: Africa and comparator economies, by subindex SUBINDEXES Innovation and GCI 2014–2015 Basic requirements Efficiency enhancers sophistication factors Country/region Rank Value Rank Value Rank Value Rank Value NORTH AFRICA Morocco 72 4.21 57 4.74 78 3.92 82 3.50 Algeria 79 4.08 65 4.64 125 3.34 133 2.91 Tunisia 87 3.96 85 4.38 94 3.74 93 3.40 Egypt 119 3.60 121 3.73 106 3.58 113 3.18 Libya 126 3.48 111 3.86 137 3.03 143 2.49 North African 3.87 4.27 3.52 3.09 average SUB-SAHARAN AFRICA Mauritius 39 4.52 38 5.04 59 4.24 53 3.85 South Africa 56 4.35 89 4.30 43 4.45 37 4.07 Rwanda 62 4.27 67 4.62 91 3.77 66 3.64 Botswana 74 4.15 72 4.53 84 3.87 110 3.22 Namibia 88 3.96 81 4.40 97 3.71 91 3.41 Kenya 90 3.93 115 3.82 66 4.12 40 4.03 Seychelles 92 3.91 50 4.85 105 3.58 69 3.62 Zambia 96 3.86 109 3.88 86 3.85 57 3.76 Gabon 106 3.74 95 4.15 119 3.37 131 2.93 Lesotho 107 3.73 102 4.09 130 3.21 117 3.12 Ghana 111 3.71 123 3.68 89 3.78 68 3.62 Senegal 112 3.70 120 3.75 102 3.62 65 3.65 Cape Verde 114 3.68 91 4.27 127 3.29 109 3.23 Côte d'Ivoire 115 3.67 119 3.75 108 3.58 86 3.47 Cameroon 116 3.66 116 3.79 113 3.48 84 3.47 Ethiopia 118 3.60 117 3.78 120 3.37 119 3.09 Tanzania 121 3.57 124 3.67 114 3.43 107 3.26 Uganda 122 3.56 126 3.59 110 3.53 104 3.30 Swaziland 123 3.55 108 3.92 126 3.32 108 3.25 Zimbabwe 124 3.54 114 3.83 133 3.12 127 2.95 Gambia, The 125 3.53 125 3.60 117 3.40 79 3.52 Nigeria 127 3.44 140 3.18 82 3.89 103 3.30 Mali 128 3.43 128 3.54 129 3.25 97 3.36 Madagascar 130 3.41 129 3.52 128 3.25 105 3.27 Malawi 132 3.25 139 3.20 122 3.35 115 3.17 Mozambique 133 3.24 133 3.29 131 3.19 120 3.05 Burkina Faso 135 3.21 135 3.25 132 3.16 128 2.95 Sierra Leone 138 3.10 141 3.14 136 3.06 130 2.93 Burundi 139 3.09 130 3.40 144 2.62 137 2.68 Angola 140 3.04 137 3.21 140 2.84 144 2.36 Mauritania 141 3.00 138 3.21 143 2.69 138 2.63 Chad 143 2.85 143 2.93 142 2.74 141 2.55 Guinea 144 2.79 144 2.76 138 2.88 142 2.55 Sub-Saharan 3.58 3.76 3.42 3.25 African average BRICs China 28 4.89 28 5.34 30 4.68 33 4.14 Russian Federation 53 4.37 44 4.94 41 4.49 75 3.54 Brazil 57 4.34 83 4.40 42 4.46 56 3.82 India 71 4.21 92 4.25 61 4.19 52 3.86 BRIC average 4.45 4.73 4.45 3.84 Latin America and the Caribbean average 3.97 4.32 3.87 3.49 Southeast Asian average 4.29 4.62 4.10 3.74 The Africa Competitiveness Report 2015 | 31 1.1: Assessing Africa’s Competitiveness Appendix C: The Global Competitiveness Index 2014–2015: 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 GCI 2014–2015 Institutions Infrastructure environment primary education and training Country/Region Rank Value Rank Value Rank Value Rank Value Rank Value Rank Value NORTH AFRICA Morocco 72 4.21 49 4.21 55 4.38 66 4.72 76 5.66 104 3.56 Algeria 79 4.08 101 3.41 106 3.12 11 6.41 81 5.61 98 3.69 Tunisia 87 3.96 81 3.70 79 3.80 111 4.03 53 6.00 73 4.28 Egypt 119 3.60 100 3.41 100 3.20 141 2.96 97 5.37 111 3.27 Libya 126 3.48 142 2.62 113 2.88 41 5.36 119 4.55 102 3.59 North African average 3.87 3.47 3.48 4.70 5.44 3.68 SUB-SAHARAN AFRICA Mauritius 39 4.52 35 4.60 42 4.74 74 4.66 42 6.14 54 4.66 South Africa 56 4.35 36 4.50 60 4.29 89 4.45 132 3.96 86 4.04 Rwanda 62 4.27 18 5.21 105 3.14 79 4.62 86 5.52 122 2.98 Botswana 74 4.15 39 4.47 101 3.19 13 6.30 127 4.14 101 3.59 Namibia 88 3.96 50 4.19 66 4.17 78 4.62 115 4.63 115 3.23 Kenya 90 3.93 78 3.73 96 3.27 126 3.73 120 4.55 95 3.77 Seychelles 92 3.91 54 4.04 53 4.50 57 4.89 55 5.98 85 4.04 Zambia 96 3.86 52 4.12 118 2.67 103 4.16 118 4.56 80 4.16 Gabon 106 3.74 79 3.72 114 2.86 18 6.03 130 4.01 126 2.78 Lesotho 107 3.73 68 3.86 116 2.77 28 5.69 128 4.03 116 3.23 Ghana 111 3.71 69 3.85 108 3.03 133 3.38 121 4.46 106 3.46 Senegal 112 3.70 74 3.81 111 2.93 97 4.29 131 3.96 119 3.18 Cape Verde 114 3.68 66 3.89 104 3.14 106 4.11 57 5.96 89 3.91 Côte d'Ivoire 115 3.67 86 3.64 93 3.41 68 4.70 140 3.25 121 3.12 Cameroon 116 3.66 91 3.53 126 2.47 90 4.45 112 4.70 117 3.22 Ethiopia 118 3.60 96 3.46 125 2.49 95 4.36 110 4.82 131 2.63 Tanzania 121 3.57 93 3.49 130 2.26 109 4.06 108 4.86 134 2.45 Uganda 122 3.56 115 3.29 129 2.28 96 4.36 122 4.45 129 2.68 Swaziland 123 3.55 61 3.94 97 3.26 60 4.79 134 3.69 120 3.18 Zimbabwe 124 3.54 113 3.31 124 2.54 87 4.48 106 4.99 118 3.18 Gambia, The 125 3.53 44 4.29 95 3.27 142 2.96 133 3.88 107 3.45 Nigeria 127 3.44 129 3.01 134 2.13 76 4.62 143 2.97 124 2.88 Mali 128 3.43 126 3.18 103 3.15 86 4.48 138 3.33 128 2.70 Madagascar 130 3.41 128 3.13 135 2.10 81 4.60 125 4.26 130 2.64 Malawi 132 3.25 77 3.74 131 2.21 144 2.42 123 4.42 132 2.57 Mozambique 133 3.24 127 3.16 128 2.36 110 4.06 135 3.58 138 2.39 Burkina Faso 135 3.21 117 3.28 141 2.01 83 4.55 141 3.18 136 2.42 Sierra Leone 138 3.10 107 3.37 136 2.07 117 3.94 142 3.18 137 2.39 Burundi 139 3.09 132 2.92 140 2.01 112 4.02 114 4.64 142 2.14 Angola 140 3.04 143 2.61 139 2.01 71 4.70 136 3.54 144 1.94 Mauritania 141 3.00 138 2.76 123 2.59 115 4.00 137 3.48 141 2.16 Chad 143 2.85 140 2.66 144 1.67 73 4.68 144 2.72 143 2.05 Guinea 144 2.79 134 2.81 143 1.78 138 3.20 139 3.25 140 2.19 Sub-Saharan 3.58 3.62 2.81 4.38 4.21 3.01 African average BRICs China 28 4.89 47 4.22 46 4.66 10 6.41 46 6.08 65 4.42 Russian Federation 53 4.37 97 3.45 39 4.82 31 5.54 56 5.97 39 4.96 Brazil 57 4.34 94 3.47 76 3.98 85 4.49 77 5.65 41 4.92 India 71 4.21 70 3.84 87 3.58 101 4.22 98 5.35 93 3.86 BRIC average 4.45 3.74 4.26 5.17 5.76 4.54 Latin America and the 3.97 3.51 3.72 4.58 5.46 4.15 Caribbean average Southeast Asian average 4.29 3.94 3.88 5.08 5.56 3.94 32 | The Africa Competitiveness Report 2015 1.1: Assessing Africa’s Competitiveness 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 Value Rank Value Rank Value Rank Value Rank Value Rank Value Rank Value NORTH AFRICA Morocco 58 4.41 111 3.81 69 4.02 78 3.57 56 4.17 78 3.88 90 3.11 Algeria 136 3.48 139 3.15 137 2.72 129 2.59 47 4.39 131 3.22 128 2.60 Tunisia 107 4.03 129 3.51 117 3.35 90 3.38 64 3.87 88 3.78 99 3.01 Egypt 118 3.95 140 3.08 125 3.19 95 3.21 29 4.78 95 3.70 124 2.65 Libya 139 3.32 133 3.41 144 1.95 130 2.56 85 3.33 135 3.01 144 1.98 North African average 3.84 3.39 3.05 3.06 4.11 3.52 2.67 SUB-SAHARAN AFRICA Mauritius 25 4.92 52 4.33 26 4.74 63 3.97 113 2.83 33 4.48 76 3.22 South Africa 32 4.71 113 3.80 7 5.37 66 3.86 25 4.91 31 4.49 43 3.64 Rwanda 42 4.62 9 5.08 55 4.26 98 3.14 125 2.52 84 3.83 53 3.46 Botswana 97 4.12 36 4.56 57 4.22 76 3.58 97 3.12 116 3.47 102 2.97 Namibia 96 4.13 55 4.31 46 4.43 89 3.42 119 2.74 94 3.72 91 3.10 Kenya 62 4.40 25 4.68 24 4.77 87 3.48 74 3.62 44 4.38 38 3.69 Seychelles 88 4.18 44 4.44 103 3.65 70 3.73 143 1.46 66 3.99 73 3.25 Zambia 37 4.65 88 4.06 50 4.37 105 2.99 110 2.88 60 4.10 54 3.42 Gabon 126 3.81 69 4.23 105 3.57 108 2.95 109 2.89 133 3.18 122 2.68 Lesotho 80 4.24 76 4.16 123 3.27 137 2.37 139 2.01 123 3.37 110 2.87 Ghana 67 4.34 98 3.94 62 4.15 100 3.11 69 3.71 70 3.94 63 3.31 Senegal 68 4.34 68 4.23 85 3.80 96 3.21 104 2.96 77 3.90 57 3.39 Cape Verde 110 4.01 126 3.59 115 3.36 80 3.54 144 1.30 114 3.48 101 2.98 Côte d'Ivoire 82 4.23 73 4.21 78 3.86 117 2.81 94 3.23 100 3.66 69 3.28 Cameroon 113 3.99 81 4.11 108 3.51 120 2.76 91 3.30 98 3.68 71 3.27 Ethiopia 124 3.84 78 4.15 120 3.33 133 2.46 66 3.81 127 3.32 109 2.87 Tanzania 122 3.90 47 4.39 96 3.72 131 2.51 75 3.61 112 3.49 98 3.03 Uganda 119 3.95 27 4.66 81 3.81 119 2.78 86 3.32 109 3.53 96 3.06 Swaziland 98 4.09 105 3.86 71 4.00 125 2.66 136 2.09 101 3.63 112 2.86 Zimbabwe 133 3.58 137 3.25 112 3.44 109 2.95 132 2.31 130 3.28 125 2.63 Gambia, The 111 4.00 38 4.54 94 3.74 103 3.02 142 1.65 71 3.93 89 3.11 Nigeria 87 4.19 40 4.53 67 4.06 104 3.02 33 4.70 87 3.78 114 2.82 Mali 104 4.07 102 3.89 122 3.32 112 2.86 122 2.66 102 3.62 92 3.10 Madagascar 102 4.08 39 4.53 132 2.85 127 2.63 114 2.77 117 3.46 94 3.09 Malawi 108 4.03 28 4.63 79 3.82 135 2.41 123 2.63 108 3.54 115 2.80 Mozambique 116 3.99 104 3.88 126 3.14 122 2.71 101 3.07 125 3.34 118 2.76 Burkina Faso 127 3.81 70 4.22 127 3.14 132 2.49 111 2.87 136 3.00 107 2.89 Sierra Leone 117 3.98 95 4.01 116 3.36 138 2.36 133 2.27 128 3.28 130 2.58 Burundi 135 3.49 103 3.89 142 2.37 142 2.10 141 1.74 139 2.91 133 2.46 Angola 143 2.92 128 3.52 140 2.50 140 2.34 65 3.84 144 2.61 142 2.12 Mauritania 138 3.35 141 3.07 141 2.50 123 2.71 131 2.33 142 2.85 136 2.41 Chad 142 2.94 120 3.72 136 2.74 143 2.09 106 2.92 143 2.77 139 2.34 Guinea 137 3.40 89 4.05 134 2.85 139 2.35 127 2.44 141 2.85 141 2.25 Sub-Saharan 4.01 4.14 3.64 2.89 2.86 3.54 2.96 African average BRICs China 56 4.42 37 4.55 54 4.30 83 3.53 2 6.86 43 4.38 32 3.91 Russian Federation 99 4.09 45 4.42 110 3.50 59 4.19 7 5.77 86 3.79 65 3.29 Brazil 123 3.85 109 3.83 53 4.30 58 4.21 9 5.66 47 4.32 62 3.31 India 95 4.13 112 3.81 51 4.34 121 2.75 3 6.26 57 4.18 49 3.53 BRIC average 4.12 4.15 4.11 3.67 6.14 4.17 3.51 Latin America and the 4.06 3.85 3.92 3.62 3.60 3.89 3.10 Caribbean average Southeast Asian average 4.47 4.41 4.14 3.48 4.15 4.04 3.43 The Africa Competitiveness Report 2015 | 33 1.1: Assessing Africa’s Competitiveness Appendix D: Trends in scores: All African economies, 2006 constant sample The figures in this appendix show the performance of the 24 economies that have been covered in the Global Competitiveness Index since 2006. So that the trends can be considered by economy type, each category is presented separately; these groupings, which follow the International Monetary Fund’s classifications, are discussed in the chapter’s “Africa’s competitiveness divide” section and shown also in Figure 12. Figure D1: Middle-income economies Figure D2: Low-income economies GCI score (1–7) GCI score (1–7) 5.0 5.0 4.5 4.5 4.0 4.0 3.5 3.5 3.0 3.0 2.5 2.5 2006– 2007– 2008– 2009– 2010– 2011– 2012– 2013– 2014– 2006– 2007– 2008– 2009– 2010– 2011– 2012– 2013– 2014– 2007 2008 2009 2010 2011 2012 2013 2014 2015 2007 2008 2009 2010 2011 2012 2013 2014 2015 Egypt Botswana Namibia Burkina Faso Kenya Tanzania Morocco Lesotho South Africa Ethiopia Mali Uganda Tunisia Mauritius Zambia Gambia, The Mozambique Note: Data for Tunisia were not collected in 2012–2013. Figure D3: Oil-exporting economies Figure D4: Fragile economies GCI score (1–7) GCI score (1–7) 5.0 5.0 4.5 4.5 4.0 4.0 3.5 3.5 3.0 3.0 2.5 2.5 2006– 2007– 2008– 2009– 2010– 2011– 2012– 2013– 2014– 2006– 2007– 2008– 2009– 2010– 2011– 2012– 2013– 2014– 2007 2008 2009 2010 2011 2012 2013 2014 2015 2007 2008 2009 2010 2011 2012 2013 2014 2015 Algeria Chad Burundi Mauritania Cameroon Nigeria Madagascar Zimbabwe Sources: World Economic Forum, 2006–2014. Note: Only those countries that have been covered without interruption since 2006 are shown, with the exception of Tunisia (not covered in 2012–2013). 34 | The Africa Competitiveness Report 2015 Part 2 Transforming Africa’s Economies CHAPTER 2.1 Agriculture persists as an important sector of the African economy. Although its significance in the economy varies widely across African countries, agriculture remains a Transforming Africa’s vital sector for most countries. It contributes from 2.4 percent of GDP in Equatorial Guinea to 70 percent of Agriculture to Improve GDP in Liberia,1 providing an average of around 15 percent of GDP for the continent. The declining GDP Competitiveness contribution of agriculture to the economy is a sign of low productivity and limited value addition to agricultural JENNIFER MBABAZI MOYO commodities, as the sector provides employment for EL-HADJ M. BAH 50 percent of the labor force (see Chapter 1.1, Figure 4); AUDREY VERDIER-CHOUCHANE 47 percent of these workers are women.2 It is the main African Development Bank source of income for Africa’s rural population—estimated to represent 64 percent of the total. Africa’s agriculture is dominated by a variety of staple food crops (maize, rice, sorghum, millet, cassava, yams, sweet potatoes, etc.) and a few traditional cash crops (coffee, cotton, cocoa, oil palm, sugar, tea, and tobacco). The sector is also characterized by a high percentage of smallholder farmers (80 percent) cultivating low-yield staple food crops on small plots with a minimal use of inputs. These farms depend on rainwater, thus subjecting production to the vagaries of the weather. Despite its importance, agricultural productivity remains dismal, undermining Africa’s overall productivity and food security. The sector’s productivity in Africa considerably lags other developing regions (see Figure 1 for cereal yields; see also Chapter 1.1, Figure 5a) and, unlike other regions, Africa has not benefited from the green revolution.3 In spite of its vast natural resources, including a huge expanse of arable land, Africa has the highest incidence of undernourishment (estimated at almost one in four persons) worldwide. Africa imports food staples valued at about US$25 billion annually, essentially because food production, supply, and consumption systems are not functioning optimally. The level of value addition and crop processing of agricultural commodities is low and post-harvest losses in sub- Saharan Africa average 30 percent of total production, meaning that the region loses over US$4 billion each year.4 Moreover, the poor performance in agriculture undermines poverty reduction and inclusive growth. Despite its fast economic growth in the last two decades, poverty reduction in Africa has remained limited. The Millennium Development Goals Report finds that the share of people in sub-Saharan Africa living on less than US$1.25 a day slightly decreased, dropping The authors gratefully acknowledge the very useful comments provided by Steve Kayizzi-Mugerwa, Acting Vice-President and Chief Economist, AfDB; Issa Faye, Manager, AfDB Research Division; Zuzana Brixiova, AfDB Economics Complex; and Xavier Boulenger, Joseph Coompson, Ken Johm, Benedict Kanu, and Damian Onyema, AfDB Agriculture and Agro-industry Department. In particular, they would also like to thank Charlotte Karagueuzian and Anna von Wachenfelt (AfDB Consultants) for their excellent research assistance. The Africa Competitiveness Report 2015 | 37 2.1: Transforming Africa’s Agriculture to Improve Competitiveness agriculture. As outlined in its 10-year strategy 2013–22,11 Figure 1: Cereal yields by region, 1961–2013 Kilograms per hectare the African Development Bank (AfDB)—the first and overarching objective of which is to promote inclusive 5,000 Sub-Saharan Africa South Asia growth—will pay particular attention to agriculture and Middle East & North Africa World East Asia & the Pacific food security, to fragile states, and to gender. 4,000 This chapter presents the ingredients needed to transform Africa’s agriculture in order to make it more 3,000 competitive. The next section explains the missed green revolution in Africa and draws lessons for the 2,000 continent from Asia’s experience. The following section analyzes the mechanisms for productivity improvements, with a particular focus on the role of information 1,000 communication technologies (ICTs) in agriculture and the importance of land reforms. It also considers the 0 1961 1966 1971 1976 1981 1986 1991 1996 2001 2006 2011 opportunities and challenges of biotechnology for facilitating a quantum leap in productivity. The next Source: World Bank, 2015. section considers the role of value chains in unlocking markets for smallholders, who make up the bulk of agriculture producers in Africa. It begins with a from 56 percent in 1990 to 48 percent in 2010.5 The discussion of Africa’s positioning and potential within limited decrease in poverty is partly the result of the global and regional value chains and then addresses fact that growth has been driven mostly by low labor- the means for creating a conducive environment that intensive sectors such as mining, while agriculture fosters greater value chain integration. The chapter then played a minor role. A substantial body of the literature outlines the AfDB’s recent and planned future support finds that agriculture-led growth has greater impact on of the agriculture and agribusiness sectors to enhance poverty reduction than non-agriculture-led growth.6 The both inclusiveness and competiveness. Conclusions and agriculture sector is a key to achieving inclusive growth policy recommendations are then discussed. because, in Africa, it consists mostly of smallholder farmers, the majority of whom are women.7 With higher IMPEDIMENTS TO AFRICA’S GREEN REVOLUTION agricultural productivity; gender-equal access to land, The green revolution benefited most regions of seed, and fertilizer; and overall better performance the world, particularly East Asia, as it resulted in rural economies, growth will reach the most in regional food surpluses within 25 years. Asia disadvantaged—namely women and youth. However, benefited the most, with significant increases in cereal considerable effort is needed to ensure that institutions yields (Figure 1); in East Asia and the Pacific, for and mechanisms for inclusion are put in place, while at instance, cereal yields almost quadrupled between the same time pushing toward the development of large 1960 and 1990. Driven by the political will to make their commercial farming. countries food self-sufficient, Asian countries doubled The slow productivity growth in agriculture is cereal production between 1970 and 1995, while the also constraining Africa’s structural transformation total land area cultivated with cereals increased by only process and economic diversification. As reported in 4 percent.12 Drawing lessons from India’s experience, this several studies on structural transformation, reliance success has been attributed to several factors.13 First, on subsistence production and weak productivity the adoption of high-yielding seed varieties resulted in a growth in the agriculture sector prevents the workforce substantial increase in food grain production, particularly from moving out of this sector into manufacturing and wheat and rice. Second, the use of pesticides positively services.8 Globally, countries that have developed contributed to increased yields, albeit at the expense of successfully are those that have shifted their resources the environment, discussed later in this chapter. Third, from agriculture to manufacturing.9 However, as the availability and expansion of agricultural infrastructure indicated in Chapter 1.1 Figure 4, this is not the case for facilities such as irrigation facilities, machinery, extension Africa, where labor tends to move more into services, services, and broader infrastructure facilities—including in particular trade, rather than into the manufacturing transport and communication as well as storage and sector. Given the low productivity in services and the warehousing facilities—further supported the green prominence of the informal service sector, this current revolution. Fourth, the expansion of better crop and soil pattern of structural transformation will not yield management techniques, including multiple cropping sustainable income growth for the majority of people practices, fostered the advance of the green revolution. nor will it lead to economic development.10 Inclusive Fifth, agricultural credit and land reform were crucial growth and higher income for the majority requires ingredients that enhanced agricultural productivity. higher productivity in labor-intensive sectors, including Short-term credit facilities were provided by cooperative 38 | The Africa Competitiveness Report 2015 2.1: Transforming Africa’s Agriculture to Improve Competitiveness banks, while long-term credit was provided by EXPLAINING THE MISSED GREEN REVOLUTION development banks. This was done together with land IN AFRICA reforms aimed at consolidating land holdings and giving With regard to ecological factors, Africa’s soils vary farmers security of tenure, thereby enabling farmers to by region and are, in general, very different from, access credit facilities. and less fertile than, the Asian volcanic soils and However, the green revolution is more than alluvial valleys. Weather shocks such as droughts are a technology fix, and a supportive economic and frequent, and rainfall varies dramatically across Africa, policy environment remains vital to its success. with the northern half of the continent containing large Addressing the need for functioning markets to handle arid areas. These ecological factors are a significant the surge in production went hand in hand with impediment to Africa’s agricultural development, given addressing the need to educate farmers about the new the continent’s low use of irrigation and overwhelming technology and to ensure that they both have access dependence on rain-fed agriculture. to inputs and receive a fair reward for their investments. International research on high-yield crops In addition, government interventions were crucial to did not focus on African staple foods and agro- ensure that small farmers were included rather than left ecological systems. Although the green revolution in behind.14 For instance, Asian governments formulated Asia can be attributed to the extended use of irrigation, various pro-small farms policies including policies relating improved crop varieties, and expanded use of chemical to credit, incentive prices for crops, and subsidized input fertilizers, the implementation of similar strategies in prices. Consequently, the green revolution successfully Africa has not been successful.15 According to the reached poor and remote rural population on the Asian World Bank, the heterogeneity of both agro-ecological continent. conditions and crop production (maize, cassava, millet, In contrast, Africa did not benefit from the green sorghum, cassava, yams, sweet potatoes, etc.) suggests revolution. Figure 1 reveals that cereal yields in that “outside” technologies are often not directly Africa have been virtually constant during the period transferable to improve the continent’s productivity. In 1960–90. This lack of progress—together with factors other words, the productivity revolution in Africa needs such as high population growth, policy distortions, a tailored approach and a more careful contextualization weak institutions, poor infrastructure, extreme weather to better fit with Africa’s specific agricultural conditions.16 events, and political instability—explains why African This includes a focus on the development of technology countries are still dependent on food imports. While more suitable for Africa that is aimed not only at Asian countries largely increased cereal yields per increasing productivity of root and tree crop production hectare, African countries mainly expanded the area systems but also at saving labor for cereal production.17 cultivated to enhance production. The increase in the Likewise, improved varieties have to be developed land area cultivated, coupled with poor crop husbandry, to take into account the African environment with its resulted in extensive environmental problems such as specific requirements. This has started happening with nutrient mining; desertification; degraded soils; and loss the development of NERICA rice (see also Box 2) and of forests, wetlands, and pastures. Moreover, this poses high-yielding varieties of cassava. a challenge to Africa’s long-term agricultural productivity Inadequate policies have distorted Africa’s and the sustainability of its agricultural production. As agriculture sector, thereby constraining technology a result, in the face of rapid population growth, sub- adoption. In the past, indirect and direct taxes distorted Saharan Africa imports about US$25 billion of staple prices and prevented farmers from adopting modern foods annually despite the continent’s vast agricultural inputs such as fertilizers. In addition, many African potential, putting a strain on scarce foreign exchange governments established agricultural marketing boards reserves. that purchased products from farmers at fixed prices This chapter next considers the main reasons for and resold the products in domestic and international the missed green revolution in Africa, focusing primarily markets at prevailing market prices, while controlling on ecological, technical, policy, and institutional factors exchange rate to protect the local market. This scheme before drawing lessons from past green revolution served to control prices so as to ensure income stability experiences in Asia and adapting them to Africa. to the farmers. The implication was a lack of incentive to invest in intermediate inputs such as fertilizers.18 Policy and market failures account for the slow adoption of productivity-enhancing inputs such as equipment, fertilizers, and pesticides. Figure 2 shows that fertilizer use is still low in most countries. Voortman argues that several market and institutional factors have discouraged African farmers from using fertilizers.19 First, underdeveloped markets (low volumes), high prices, and high transport costs have The Africa Competitiveness Report 2015 | 39 2.1: Transforming Africa’s Agriculture to Improve Competitiveness Figure 2: Fertilizer consumption in selected African Box 1: Lessons for Africa from the Asian green countries, 2005–12 revolution Tons of nutrients (thousands) Some important lessons for Africa that can be drawn from 2,000 the Asian green revolution include: 2005 • “Double green” the agricultural revolution. Higher 2012 1,500 productivity came at the expense of environmental issues in Asia. The environmental effects of increased agricultural productivity in Africa depend heavily on the sources of productivity growth. Water- and soil- 1,000 saving innovations undoubtedly have positive effects. However, such techniques are often achieved through the intensive use of manufactured inputs such as 5,00 fertilizers and chemicals with negative externalities. Instead, productivity can be improved with best practices in terms of environmental impact at all levels of the value chain. Resilience to climate change will be 0 Egypt South Africa Morocco Nigeria Kenya Tunisia Ethiopia Libya Malawi Mali Zimbabwe Zambia Burkina Faso Tanzania Algeria Sudan (former) Côte d'Ivoire Cameroon Senegal Mauritius Ghana an increasingly difficult challenge to tackle. • Promote responsible farmers’ borrowing. In Asia, the technological dimension of the green revolution Source: AfDB Statistics Department, 2015. was supplemented by heavy government intervention through subsidies on inputs. However, these massive government expenses were not sufficient to limit farmers’ indebtedness. Green revolution packages Although official development assistance has increased ended up indebting a large number of smallholder by about 250 percent between the 1980s and the farmers, eventually pushing them into landlessness and poverty. 2010s, allocation to agriculture has halved. According to the Food and Agriculture Organization of the United • Develop rural non-farm activities to diversify income. The green revolution in Asia focused on rural Nations (FAO), on average, African governments reduced farm activities. Kanu et al. highlight the importance their spending on agriculture from 4.5 percent of total of emphasizing rural non-farm activities to diversify expenditure in 2001 to 2.5 percent in 2012,22 despite income sources, finance on-farm investments, buy their 2003 pledge to spend at least 10 percent under the food, and stabilize household income during difficult times of drought or price shock.1 To enhance its African Union’s 2003 Maputo Declaration target. Limited sustainability, income has to come from diverse funding has prevented the development of research sources. capability in biotechnology, the provision of adequate Note support for agricultural research, and private-sector 1 Kanu et al. 2014. participation in agriculture. Low investment in agriculture has partly led Sources: Based on Lappé et al., second edition, 1998; Kanu et al., to overreliance on rain-fed farming with very little 2014. irrigation. The irrigated share of Africa’s cropland is less than a quarter of the world average.23 Only 4 percent limited the availability of fertilizers. Indeed, as Chapter of crop areas are irrigated in sub-Saharan Africa; in 1.1 documents, sub-Saharan Africa’s infrastructure comparison, this represents only a small fraction of deficit (mainly roads and electricity, as well as ICTs) is the Asian investment in irrigation, where 39 percent of significant, particularly in small and landlocked countries. the production area is irrigated in South Asia and 29 This impedes the provision and use of productivity- percent in East Asia.24 In contrast, Africa has numerous enhancing inputs. For example, as Gollin and Rogerson river systems that are not fully exploited and significant argue, poor transportation networks account in large groundwater resources that remain largely untapped. part for the low productivity of Uganda’s agriculture.20 These groundwater resources are unevenly spread over Second and most importantly, fertilizer costs have not a wide range of agro-ecological zones, especially in been recouped because soil analysis has not been taken Southern Africa and some parts of North Africa. Irrigation into account to determine the appropriate fertilizers. The on the African continent is also hampered by poor water popular fertilizers (nitrogen and phosphorous) developed management, which is one result of underdeveloped for Asian and Latin American soils have had minimal or institutions. Furthermore, while Asia’s green revolution no effect on yield in Africa.21 Indeed, the heterogeneity mainly focused on irrigated wheat and rice, sub-Saharan of African soils requires the usage of targeted fertilizer Africa’s main staples comprise a much wider variety, applications. including maize, cassava, millet, sorghum, yams, sweet Despite recognition of the importance of the potatoes, and plantains. This wide range of food crops sector in Africa, investment in agriculture has been reinforces the argument that Africa’s agriculture needs to neglected by African governments and donors. focus on its specific context, as discussed earlier. 40 | The Africa Competitiveness Report 2015 2.1: Transforming Africa’s Agriculture to Improve Competitiveness Furthermore, the lack of good governance and economic institutions in Africa, especially in the Box 2: Recent success in the development of financial and insurance sectors, has hampered high-yield crops in Africa farmers’ ability to develop. The general low financial In recent decades, research efforts have resulted in high- inclusion in Africa is even worse in agriculture, where yield crop varieties. the production cycle consists of high initial investment, For the second most important staple food a medium to long period of no cash inflow during the in Africa, cassava, productivity changed with the growing season, and large cash windfall after harvest. introduction of an improved drought-tolerant cassava variety in 1977. Along with continuous improvement Many of the products offered by banks and financial in breeding and pest control, the cassava yields have intermediaries are inappropriate for smallholder farmers increased by over 40 percent in the past three decades. because loan repayment schedules do not take into West Africa has seen up to 60 percent in productivity account crop cycles. Modern financial services— gains, which has clearly helped to reduce poverty in the region. More recently Malawi and Rwanda have such as microloans, credit registries, and value chain demonstrated rapid production growth; it tripled in Rwanda financing—are therefore needed to improve access between 2007 and 2011.1 to credit to smallholder farmers. The challenges of The introduction of modern, high-yielding varieties providing acceptable collateral for agricultural lending of maize in East and Southern Africa during the 1960s are enormous. Moreover, most countries lack tailored allowed the crop to develop into one of the continent’s major sources of calories. Over the last decade, maize insurance products. This means that adverse shocks, production has been particularly significant in West Africa. such as droughts, often lead to famine because Nigeria, for instance, has seen its maize yields rise steadily farmers are unprepared to respond. In this context, as farmers adopted improved varieties and hybrids, which micro-insurance is emerging as a valuable instrument are drought tolerant. Overall maize production in Africa has increased at an average 5.5 percent per year between for protecting farmers. Land governance pertaining to 2000 and 2010, while areas harvested remain lower land access, distribution, and female ownership will be than in 1990, indicating an improvement in production further discussed below in the section on mechanisms technology.2 for productivity improvement. In many countries, land Beans are another major staple in Africa, particularly in East Africa. Recently, nearly 10 million ownership is governed by customary laws; this has farmers in the region, especially in Kenya, Tanzania, and resulted in high land inequality. Indeed, although women Uganda, have intensified production by relying on high- constitute the bulk of the labor force in the continent’s yielding climbing beans, which are more tolerant to warm agriculture sector, rules governing ownership and temperatures. These improved varieties have brought about substantial productivity gains, as yields in Rwanda transfer of land rights are unfavorable to women in and Uganda increased 53 percent and 60 percent, Africa.25 respectively.3 Moreover, in both the Democratic Republic The green revolution in Africa is not a lost of Congo and Rwanda, bio-fortified beans have been cause. Africa can gain from productivity improvements introduced to a wider audience, and by 2014 about one- third of the population in Rwanda farmed and consumed with the right set of policies, institutions, and resources, them. while also drawing from the lessons of the Asian green In 1999, the NERICA (New Rice for Africa) rice, revolution (Box 1). Today many organizations are working especially developed for African conditions, was toward this goal. Among them is the Alliance for a released to farmers. The NERICA rice—a combination of Green Revolution in Africa (AGRA), founded through a African and Asian rice varieties—has proven to be drought tolerant, high yielding, early maturing, and resistant to partnership between the Rockefeller Foundation and African’s major pests and diseases. It is now cultivated the Bill & Melinda Gates Foundation. AGRA is focusing on about 200,000 hectares across Africa. The rice yields on many of the issues highlighted above, including the in sub-Saharan Africa have increased significantly over development and distribution of high-yield seeds and the the last years as yields grew by 30 percent from 2007 and 2012, and with a faster rate than the global average.4 improvement of soil health, market access, and financial Efforts to develop other high-yield varieties of rice are access. Other research institutions, such as the Africa underway for other types of soils.5 Rice Center and the International Institute of Tropical Notes Agriculture (IITA), are also working to develop high-yield 1 FAO 2013. crops. In general, international research funding and 2 Cadoni and Angelucci 2013. coordination among stakeholders in the agriculture sector have both expanded as the value-added of the 3 Pabra 2015. green revolution for reducing poverty and eliminating 4 AfricaRice 2015. hunger has been increasingly recognized. Some success 5 Kimani et al. 2011; Singh et al. 2013. stories are highlighted in Box 2. The next section discusses ways to improve agricultural productivity by leveraging technology and reforming land governance. The Africa Competitiveness Report 2015 | 41 2.1: Transforming Africa’s Agriculture to Improve Competitiveness MECHANISMS FOR PRODUCTIVITY IMPROVEMENT to US$3 in benefits.30 However, the discovery of new IN THE CONTEXT OF THE GREEN REVOLUTION: crop varieties will not lead to transformation if national LEVERAGING TECHNOLOGY AND LAND REFORMS governments do not increase their efforts to promote The Comprehensive Africa Agriculture Development the adoption of these crops through effective extension Programme (CAADP) is at the heart of the quest services and the support of local bureaucracies. for agricultural productivity improvement in Africa. With the greater effects of climate change It was established by the African Union and the New on weather patterns, irrigation has to increase Partnership for Africa’s Development (NEPAD) in 2003, substantially. Using an econometric model and data with the goal of an annual productivity growth rate of on 31 countries in sub-Saharan Africa, Fuglie and at least 6 percent.26 The program has four pillars: (1) Rada find that that average yields in irrigated farms are land and water management, (2) market access, (3) 90 percent higher than the yields of nearby rain-fed food supply and hunger eradication, and (4) agricultural farms.31 You et al. estimate that internal rates of return research. Since 2003, agricultural GDP has grown on on irrigation projects in Africa vary between 6.6 and 28.0 average by 4 percent. Nin-Pratt et al. estimate that percent, depending on the type of irrigation and other total factor productivity (TFP) for the 2001–10 period conditions.32 The estimates show a huge potential for grew on average by 2.1 percent.27 Although this is a irrigation in Africa. Beyond this, weather changes are considerable improvement over the 1.4 percent growth increasingly unpredictable and Africa is severely hit in this seen in the 1990s, it is still below expectation. Assuming regard. This means that reliance on rain-fed agriculture the same growth rate of inputs as observed in the cannot continue and signals that Africa needs not only 1990s, Ludena estimates that a TFP growth rate of 4.4 an increase in irrigation, but also needs to develop percent is needed to achieve an output growth rate of better mechanisms for dealing with climate variability. 6.2 percent.28 To bridge this gap, the important factors International organizations and national governments are that contributed to the green revolution (as discussed working toward developing “climate-smart agriculture” in the previous section)—including the introduction of to prepare the world to adapt and mitigate the effects of high-yield varieties, irrigation, increased and better use climate change for food security, which will certainly be of fertilizers—are still pertinent. As aptly put by Hazell, of great interest to Africa’s agriculture. “there is an urgent need to bring the green revolution in As soil fertility deteriorates, fertilizer use must an appropriately modified form to Sub-Saharan Africa.”29 increase. As noted earlier, fertilizers are not widely Indeed, Africa’s agriculture should take advantage of used for a variety of reasons, including market failures. recent developments in ICTs and genetic research, Government interventions are, thus, needed to ensure which have the potential to revolutionize the sector. availability of the right type of fertilizers, at the right Land redistribution policies are also crucial for improving price, and at the right times. Subsidies can be helpful,33 productivity. Before discussing the role of ICTs and but strong governance and farmer education are both land reforms in these efforts, the chapter summarizes essential for success.34 Farmer field schools used for the various factors raised in the earlier discussion of education and the provision of agricultural extension the green revolution that are necessary to transform services are very beneficial for improving productivity agriculture in Africa. and income. Furthermore, improved knowledge about the use of fertilizers lessens their potential negative The productivity drivers of the green revolution impact on the environment. Davis et al. evaluate the The introduction and development of high- impact of these programs in East Africa. They find an yield crops is at the heart of Africa’s agricultural average increase of 61 percent in income, with varying transformation. This was the most important factor degrees of success across countries.35 In addition in Asia and will also be the key driver of agricultural to fertilizers, farmers need to protect their crops from productivity in Africa. This development entails increased insects and pests through the careful use of insecticides international and national research of plant breeding, and pesticides. taking into account the different types of soils on the Market access, regulations, and governance continent. As pointed out above, research focusing on need to improve. As shown earlier in the chapter, policy African agricultural conditions has increased, thanks to failures have prevented Africa from benefiting from the the work of various organizations, providing new hope green revolution, and thus policy needs to improve for for agriculture sector transformation. CGIAR (Consultative the agriculture sector to yield significant benefits. Fuglie Group on International Agricultural Research) and AGRA, and Rada estimate that eliminating policy distortions for instance, are working intensely to develop high- in agriculture would raise output by 4.7 percent.36 quality grains for African soils. Investments in research Improving rural infrastructure such as roads is also by international organizations and local government are crucial to raising productivity.37 Reducing shipping time highly beneficial. A US$1 invested by CGIAR is estimated and costs would significantly reduce losses in perishable to yield US$6 in benefits, while the same US dollar food shipping and make exporters more competitive. invested by governments in sub-Saharan Africa leads 42 | The Africa Competitiveness Report 2015 2.1: Transforming Africa’s Agriculture to Improve Competitiveness As the next section will discuss, ICTs can enable and At the crop cultivation and harvesting stage, complement the above reforms. ICTs also have other uses. ICTs can generate valuable information on land preparation and sowing, crop The role of ICTs for agricultural productivity health, input management—particularly the choice and improvement use of fertilizer—and pest and water management. The rapid uptake of ICTs in Africa provides an ICTs can also be used to get information to farmers, important opportunity to improve the performance particularly smallholder farmers who could otherwise be of agricultural value chains (AVCs) from the farm to out of reach. In 2011, the GSMA mAgri Programme, in the market. Indeed, ICTs—including mobile telephony, partnership with the Bill & Melinda Gates Foundation, radios, geographic information systems (GIS), and launched the mFarmer initiative to support the satellite imagery technologies—have been expanding in development of mobile agricultural value-added services Africa. The likely contribution from ICTs can be viewed (Agri VAS) in four countries: India, Kenya, Mali, and from the perspectives of potential stakeholders along Tanzania. The Agri VAS, developed by mobile network the value chain: businesses and business organizations, operators, is designed to offer information on crop farmers (smallholders, commercial farms, and trade cultivation and market prices to farmers.43 agencies), researchers, and government departments. As in previous examples, at the post-harvest ICTs in agriculture can also be considered based on their stage ICTs can provide market information that applications along the stages of the production cycle: is crucial to improving market efficiency. A lack of pre-cultivation, crop cultivation and harvesting, and sufficient information—including information on prices post-harvest.38 Several potential avenues are available and market conditions—along with price information at each stage for applying ICTs to increase agricultural asymmetries make it difficult for farmers to get fair productivity. The following analysis looks at various ICT prices for their crops. The uncertainty this causes can applications at each stage of the agricultural production also discourage attempts to invest more in inputs and cycle and highlights successes. technologies. Efforts are being made on the continent At the pre-cultivation stage, ICTs have several to deal with information generation and dissemination uses, ranging from land and crop selection to the issues within the context of commodity exchanges. development of crop insurance products; they can For example, the Esoko Ghana commodity exchange also enhance land and water management and use. (EGCI),44 operational since 2005, publishes a weekly In fact, ICTs can be used for facilitating the process of cash price index of commodities. Esoko has expanded land registration, allocation, and use for crop selection; in a dozen countries and provides price and knowledge taking inventory; obtaining weather information on the data to farmers via mobile text messages. An even planting calendar; and facilitating farmers’ access to better known commodity market is the Ethiopia credit. M-PESA in Kenya is a well-known example of Commodity Exchange (ECX), which addresses the a mobile technology–based payment system that is huge market inefficiency that prevented commodity increasing financial inclusion even in rural areas. ICTs buyers from interacting directly with sellers, and vice can help to develop crop insurance against adverse versa. Information was also asymmetrical on prices weather shocks and crop failures. An example of this is and product quality. The ECX disseminates information Kilimo Salama,39 a mobile technology–based insurance on products’ grades and prices and facilitates the on purchased inputs (certified seed, fertilizer, and crop coordination of buyers and sellers as well as the protection products) that protects farmers against bad enforcement of contracts. All farmers in the country, weather shocks. Mobile phones are used to scan the including smallholder farmer cooperatives representing barcode of products purchased by farmers and M-PESA 2.4 million of farmers, are members of the ECX. They is used for payout at the end of the growing season in have access to price information, which is provided case of bad weather. Moreover, GIS and remote sensing through a call center. Addressing the information (RS) are increasingly being used to ensure more efficient asymmetry about the prices of crops in different markets land use and water management.40 GIS combined with has allowed farmers to have more marketing options and RS has been used to support the assessment of land more bargaining power, and to increase their income by capability, soil conditions, crop condition and yield, flood 10 to 30 percent.45 and drought risk, groundwater contamination, and pest Other potential contributions of ICTs in infestation.41 For example, Egypt has developed a soil and agricultural productivity improvement include the terrain database for the Sinai Peninsula and other regions. traceability of food and animals, which is important Satellite imagery data and GIS have also been used in for participating in global value chains. Traceability Ethiopia and Mozambique to enable land registration entails displaying the lot number and the production and crop inventories. India has many applications using facility name on each case of the product and recording GIS technology to support sustainable agricultural this information on invoices and bills of lading. Data development. One of those applications is a cropping can be recorded and transmitted via different ICT system analysis that identifies low-productivity areas.42 platforms.46 Recently an application that monitors cattle The Africa Competitiveness Report 2015 | 43 2.1: Transforming Africa’s Agriculture to Improve Competitiveness and provides valuable information, called iCow, was in the midst of a famine in 2002, Zambia refused food launched in Kenya. A related application is vetAfrica, aid that contained GM crops based on precautionary which provides veterinary information. In addition, principles.51 common information systems platforms linking all The positive benefits of GM crops do not mean, stakeholders are being set up in several countries as however, that they are a panacea for food security a way to share information and decrease maintenance in the world. Food security depends not only on costs. One example is Kenya’s M-Kilimo, which production output but also on distribution and availability comprises a database containing farmers’ information at the right price. Moreover, yields of GM crops depend (land size, crop, language, etc.). Farmers can call to on farming conditions, and their benefits may not report problems and ask questions. Specific responses outweigh their costs under poor conditions. Other are tailored to the farmer whose information is already farming practices may increase yields as much as GM available in the system. Government extension services crops do. Another worry is that the seeds are controlled also use this system to provide farmers with customized by a small number of multinationals, which means that solutions. farmers will always be dependent on purchased seeds. Another recent scientific and technological Adverse consequences of GM crops on biodiversity and innovation in the field of biotechnology and genetic gene flow need further research.52 engineering is having a profound impact on global The 2014 AfDB-IFPRI report highlights the agriculture. Below the potential of this technology for conditions necessary to increase Africa’s adoption transforming African agriculture is considered. of GM crops.53 These conditions include increased funding for research and development to enhance Opportunities and challenges of genetically modified biotechnology capacity and genetic modification. (GM) crops Regulatory systems also need to boost their capacity The adoption of GM crops in Africa remains to inform decision makers. More outreach and better limited. In 2014, the AfDB and the International Food communication will ensure that Africans are well Policy Research Institute (IFPRI) published a report informed about the risks and benefits of GM crops. titled GM Agricultural Technologies for Africa: A State The next section explores how land reforms can of Affairs.47 The study examined the current status, address the issue of land access and distribution in issues, constraints, and opportunities presented by GM Africa to improve agricultural productivity. technologies in Africa. It noted that, although the use of GM crops is increasing in other developing countries, Land reform for higher productivity and inclusion its adoption is very limited in Africa: only four countries Africa has the highest area of arable uncultivated (Burkina Faso, Egypt, South Africa, and Sudan) are land (202 million hectares) in the world, yet most currently farming some GM crops (cotton and maize). farms occupy less than 2 hectares.54 This situation is Some other countries—such as Ghana, Kenya, Malawi, a result of poor land governance and ownership that is Mozambique, Nigeria, and Uganda—are piloting a variety based mostly on customary laws, which together have of GM crops (banana, cassava, cowpeas, etc.). resulted in unequal distribution of land and uncertainty With the continent’s rapid population growth of tenure. With the introduction of land markets, land and the intensification of the effects of climate inequality and landlessness are growing in some change on weather patterns, high-yield GM crops countries, such as Côte d’Ivoire, Kenya, and Liberia, that are resistant to weather shocks represent an and in the Southern African region. From the 1998 opportunity for Africa to address food insecurity. household survey for Côte d’Ivoire, it is estimated that A majority of scientists argue that GM crops are safe 5.56 percent of women own land versus 7.14 percent to consume, and they also reduce insecticide use, of men, and large land surfaces are concentrated in the greenhouse gas emissions, and soil-damaging tillage hands of public employees.55 The customary laws that while enhancing farmers’ income and farm production often prevent women from ownership are a constraint without increasing the cultivated area.48 A meta-analysis to inclusive growth. Byamugisha sees land reforms as a of 147 impact studies found that the adoption of GM pathway to shared prosperity in Africa.56 crops (soybean, maize, and cotton) has, on average, Land reforms that clearly define property rights, “reduced chemical pesticide use by 37%, increased crop ensure the security of land tenure, and enable yields by 22%, and increased farmer profits by 68%.”49 A land to be used as collateral and to be allocated recent survey of members of the American Association more efficiently will be necessary in many African for the Advancement of Science found that 89 percent of countries. Land allocation under customary laws often scientists argue that GM crops are safe to eat.50 Despite lacks the security of tenure and prevents owners from the positive effects, there is still a debate on the safety of using their assets as collateral to access finance for GM foods and a resistance to GM crops, especially from purchasing inputs. Moreover, highly productive farmers Europe. This debate has influenced perceptions in Africa may lack sufficient land to expand their production. and given way to extensive misinformation. For instance, Depending on the country, land reforms have to 44 | The Africa Competitiveness Report 2015 2.1: Transforming Africa’s Agriculture to Improve Competitiveness address access to land and distribution of land. Some land allocation and farm productivity.61 They found that countries, such as Cameroon, are using GIS systems farm size was unrelated to farm productivity and capital, to first register land before implementing redistribution implying a misallocation of land. Overall, 78.3 percent of mechanisms. The reforms should also ensure some form farmers in Malawi operate on less than 1 hectare and of tenure security that allows farmers to leverage their only 0.3 percent of the farms are larger than 5 hectares. assets. The average plot size is 0.83 hectares. Land markets Land reforms in African countries where are practically nonexistent in the country, and most of colonial systems have resulted in high levels of the land is transferred through customary rights. This inequality have succeeded to varying degrees. In customary-based ownership and transfer system creates some countries, mostly in Southern Africa, colonial a misallocation of land, preventing more productive systems expropriated large portions of land from the farmers from acquiring larger plots. An efficient majority of the population for the benefit of a minority. redistribution of farm land would increase aggregate Most of these countries undertook land reforms to productivity by a factor of 3.6. This very large increase redistribute land and address inequality, but failed. calls for the establishment of a land market in Malawi. Zimbabwe tried land expropriation from white farmers Going forward, it will be crucial to harness to redistribute the land to black farmers. This has largely the complementarity between smallholder and failed because the reforms transformed the country large-scale farming to reduce the overreliance on from a food basket and exporter to a food importer. smallholders and expand much-needed commercial The South African reforms that attempted to avoid large-scale farming. Although a fringe of the latter those mistakes through a market-based and negotiated offers mixed results about the complementarity approach have, so far, failed to redistribute large between large-scale farming and smallholders, recent areas of land as a result of an inefficient system and analyses suggest that there is room to harness such insufficient implementation of land transfer, which has complementarity whereby large-scale farming can left the country with high levels of land inequality and, achieve better productivity.62 Successful transformation according to the government, 50 percent of land transfer of agriculture will require a recognition that, as stated projects have failed.57 Using a similar market approach, by Collier and Dercon, “smallholders are heterogeneous Namibia has been more successful in reallocating land. in potential and there is scope for large scale farmers Over the last two decades, 8 percent of agricultural as commercial enterprises, often in interaction with land has been transferred to black farmers in South smaller scale farmers using institutional frameworks that Africa, while Namibia has reallocated 27 percent of its encourage vertical integration and scale economies in farm land.58 One big difference in the two systems is processing and marketing.”63 If well regulated, large- that Namibia does not recognize ancestral land rights, scale farming could have positive spillover effects on and the state has the right of first refusal in any land smallholders including job creation, income generation, sale in the country. Byamugisha holds out the land and the transfer of knowledge and know-how. The reforms in Malawi as a model of success for other out-grower scheme model, where smallholder farmers countries to emulate.59 The model is based on voluntary supply products for a larger firm under pre-agreed redistribution of large corporate estates to poor farmer mutually beneficial conditions, could be a potential groups with community-based land rights. The farmer mechanism to ensure such mutual benefits. This groups are provided with funds to buy agricultural inputs complementarity will be explored in the context of value in order to use their newly acquired land or diversify chains, discussed in the next section. their production. The process has, thus far, helped 15,000 households, representing about 0.5 percent of ENHANCING THE INTEGRATION INTO total households, to gain land ownership. However, this AGRICULTURAL VALUE CHAINS (AVCS) success has yet to eliminate land misallocation in the Increased globalization has created both challenges country. and opportunities for Africa’s agriculture; these Land redistribution policies should, however, notably arise from the continent’s greater integration not prevent market mechanisms from supporting into AVCs. Thanks to globalization, African products can the development of commercial large-scale farming. now reach larger markets. However, to take advantage Adamopoulos and Restuccia found that the 1988 land of this potential, African farmers need to deliver higher- reform in the Philippines, which imposed a ceiling on quality products at competitive prices and integrate land holdings and restricted the transfer of distributed international distribution channels by satisfying the norms land, reduced farm size by 34 percent, and led to a and standards set out by their trading partners.64 This is decrease in agricultural productivity by 17 percent.60 a serious challenge for smallholder farmers, who supply The effect of land misallocation is also found in Malawi. up to 80 percent of the food in sub-Saharan Africa,65 but Restuccia and Santaeulalia-Llopis use micro data from who need to enhance their capacity to meet international the Malawi Integrated Survey on Agriculture collected standards. by the World Bank in 2010–11 to study the link between The Africa Competitiveness Report 2015 | 45 2.1: Transforming Africa’s Agriculture to Improve Competitiveness Greater integration into AVCs is expected to The production of non-traditional crops, however, boost benefits to small-scale farmers and facilitate offers more scope for greater integration within the the creation of agribusinesses for increased value global AVCs. African economies have progressively addition in exported goods. The participation of small- diversified from the traditional cash crops and are scale farmers in AVCs will enable them to harness the increasingly engaged in the production and global sale interdependence among the different actors in the value of crops such as fruits, vegetables, fish, and flowers chain, namely the suppliers of inputs and seeds, the that belong to buyer-driven value chains. This has, in farmers, the businesses providing technical support part, been the result of the proliferation of supermarkets for the farmers such as agricultural machinery, the seeking to consolidate their supply networks in order to financiers, the wholesale producers of farm products, exert more control over production processes.72 Indeed, the processors, and associated sellers.66 Consequently, with Africa’s greater urbanization and growing middle participation in AVCs will facilitate small-scale farmers’ class, rising consumption creates more demand for local access to inputs, financing, and end-markets at the products.73 Functional upgrading can occur in such value local, national, regional, and international levels, thereby chains as retailers seek “ready-to-sell” products more enabling them to have a greater voice in the value chain and more, thereby advancing processing and packaging and enhancing their economic returns. This will, in turn, activities further along the value chain.74 facilitate the creation of modern integrated agribusiness Regional value chains offer great promise in value chain economies based on specialization.67 facilitating the integration of Africa’s agriculture Participation in such AVCs will enable firms to “move up” into global value chains and need to be supported. into higher-value activities, capture a greater share of Meeting the standards required for integrating into value in global markets, and thus enhance the sector’s global value chains will be a gradual process for Africa’s competitiveness.68 agriculture exporters. In the interim, gains can be made The discussion that follows will explore the from integrating into regional value chains. Indeed, the potential of value chains to enhance Africa’s agricultural agriculture sectors of some African countries—especially competitiveness. It reviews Africa’s global positioning Kenya and South Africa, which are major regional as well as its potential integration into the global AVCs, exporters of processed food—are increasingly being which are both necessary for creating a conducive integrated into regional value chains. For instance, the environment. The AfDB has made significant efforts Kenya fresh vegetable (especially green beans) and dairy to enhance the continent’s integration into AVCs, as export industries grew considerably in size and value- discussed later in this chapter. added in the 2000s and are now leading producers in Africa. This success is the result of the sound Africa’s positioning and potential within global and implementation of new processes and operations by regional value chains private Kenyan businesses, as well as the support of the Even though Africa’s integration within global AVCs public sector. Given the nature of the smallholder-based is limited, it offers scope for greater integration agriculture in Africa, support will need to be provided within the traditional cash-crop production chain. to small-scale farmers to be better organized so as to Africa’s general participation in regional and global enhance their productivity and ensure the timely off-take value chain trade is discussed elsewhere in this Report of produce from farm to markets. Indeed, the United (see Chapter 2.3). Participation in AVCs is even more Nations Economic Commission for Africa (UNECA) challenging because international norms and standards underlines the need to support small-scale producers keep evolving and are difficult to satisfy. Africa is a through national and regional cooperatives or other large global supplier of traditional cash crops (coffee, farmer organizations in order to facilitate their access cotton, cocoa, sugar, tea, and tobacco) as raw material, to inputs, financial services, and markets and to enable which accounts for about 50 percent of Africa’s total them to defend their interests in the value chain.75 agricultural exports.69 These tend to be producer-driven chains with limited scope for functional upgrading, given Five keys to a conducive environment for greater the tight control by lead producers with higher-value AVC integration activities—such as processing and manufacturing— This section presents five keys to creating an environment that are carried out outside Africa.70 Nonetheless, conducive to fostering greater AVC integration. some scope exists for product differentiation and First, the need to address poor domestic quality upgrading within the cash-crop production productive capacity and infrastructure in order to chains. In fact, product differentiation presents various enhance Africa’s effective participation in value opportunities for increasing agricultural income from chains cannot be overemphasized. Africa is endowed cash crops, through branding and grading specialty with vast resources, but its low domestic productive coffee and establishing grading systems, for example, as capacity and poor infrastructure, as well as a focus well as by segregating different qualities for export.71 on low-value-added activities, are holding back the continent’s effective participation in value chains. Indeed, 46 | The Africa Competitiveness Report 2015 2.1: Transforming Africa’s Agriculture to Improve Competitiveness Africa’s considerable endowments in natural resources and its competitive wages, as well as the significant Box 3: The AfDB’s role in supporting the potential of domestic and regional markets, have been transformation of Africa’s agriculture for inclusive growth well documented.76 However, domestic productive capacity, in the form of skills and capital to produce on a The AfDB Group has a long experience, going back large scale and meet required standards, is limited. The to the late 1990s, of supporting African countries in performance of the agriculture sector is also hampered developing their agriculture sectors. The AfDB views by inadequate infrastructure, including unreliable energy, agriculture as key to the socioeconomic development of the continent. Between 2006 and 2014, the AfDB an ineffective urban-rural road network, inefficient ports, committed 198 operations in agriculture and agribusiness, and a business and regulatory environment that overall is amounting to a total of US$6.33 billion. Prior to 2000, not conducive to doing business in agriculture make trade the AfDB endorsed the Integrated Rural Development more costly. For instance, Bah and Fang show that, on approach to agriculture. In 2000, the AfDB adopted a average, Africa’s firms lose 25 percent of their output as a new strategic framework embodied in the Agriculture and Rural Development Policy, which focused on addressing result of the poor business environment.77 A 2009 report the critical bottlenecks of agricultural development, by the US international trade commission also shows that namely: high population growth rates, the poor state poor infrastructure (especially land and maritime transport of infrastructure, declining trends in agricultural prices, and energy) is putting African exporters at a competitive persistent political instability, reliance on rain-fed agriculture, high post-harvest losses, the complex land disadvantage by increasing costs and compromising the tenure system, limited human and institutional capacity, quality of exports.78 Addressing these shortcomings will and inaccessibility to credit. From 2010, the AfDB’s be crucial for Africa’s beneficial participation in AVCs. operations in agriculture were guided by its Agriculture Second, farmers need to be provided with Sector Strategy (AgSS), covering the period 2010–14, with its principal objective being to guide the AfDB’s operations appropriate financing schemes so they can make to contribute to greater agricultural productivity, food necessary investments and meet required standards security, and poverty reduction. Below are two examples for integration into global value chains. Limited access of inclusive agribusiness projects supported by the AfDB. to finance hinders local farmers from undertaking the The Maryland Oil Palm Plantation Project (MOPP) is a US$203 million agribusiness project. The AfDB requisite investments to increase productive capacity approved US$20 million for this project in 2013. MOPP and meet the quality requirements of integration into both entailed a 15,000 hectare greenfield palm oil plantation and regional and global value chains.79 Aforementioned efforts milling project in Liberia. The nucleus plantation constituted at land reform, enabling farmers to have security of tenure, 9,000 hectares, while 6,000 hectares were to be cultivated by local farmers in an out-grower scheme involving 600 will need to be complemented by efforts to ensure that farmers. These farmers are expected to receive financing farmers are well organized through cooperatives, farmers’ for their inputs from MOPP, which they will repay once unions, and associations to enhance their bargaining their product is sold. Access to modern inputs such as power, allowing them to obtain better financing terms. improved seed varieties and fertilizers, extension services, and access to finance is expected to improve the livelihood Improved organizational capacity on the part of farmers of these farmers. will also enable them to cooperate in working to meet the Approved by the AfDB in 2009, Agri-Vie is a US$100 standards required for integration of value chains. Better million private equity fund focusing on small- and medium- access to financial facilities will need to be complemented sized enterprises in the agribusiness and food sectors. The by financial literacy training to avoid the over-indebtedness fund closed in 2010 with 65 percent of the commitments coming from development finance institutions and the that accompanied the green revolution in Asia. rest from the private sector (life insurance, foundations). Third, efforts should be made to encourage Agri-Vie has a proactive and collaborative relationship the connection of small-scale farmers with large with investees and provides training and technology commercial farmers through mutually beneficial transfer to out-grower farmers. In terms of results, Agri-Vie has a continuous focus on driving selected impacts per contract farming (also called out-grower schemes), investee in the following sectors: governance (reporting, thus enhancing the sector’s inclusiveness. As large- policies, and controls), workers (employment, training, and scale farmers become better connected with AVCs, development), and community relations and environment agribusiness initiatives will increasingly seek value (environmental management practices). In terms of development outcomes, by the end of 2012, Agri-Vie Fund additions to agriculture products and there will be a had impacted more than 890 small- and medium-sized reduction in the export of raw material. In supporting enterprises, 2,900 farmers, and 312 non-farmer micro- these agribusiness initiatives, special attention should enterprises. One of the feedbacks from the managers be given to out-grower schemes because they not only of Agri-Vie Fund is that investment in African food and agribusiness remains robust, which is an encouraging sign. assist farmers to meet required production standards within the global value chain, but they also guarantee supply to leading firms. Contract farming usually involves (Cont'd.) a large agribusiness firm entering into contract with smallholder farmers, providing farmers with inputs on credit and extension in return for a guaranteed delivery of products.80 Box 3 discusses the AfDB’s role in The Africa Competitiveness Report 2015 | 47 2.1: Transforming Africa’s Agriculture to Improve Competitiveness These information asymmetries extend beyond the Box 3: The AfDB’s role in supporting the local market into regional and global markets. ICTs can transformation of Africa’s agriculture for inclusive be employed to improve the marketing of agricultural growth (cont’d.) products into regional and global markets, while at the same time being used to receive market information in a Going forward, the new AfDB Agriculture Sector Strategy (AgSS) (2015–2019) will seek to build on timely manner. previous AfDB work in agriculture by bringing the Last, state intervention is crucial in supporting agriculture sector and agribusiness to the front of greater value chain integration. In the majority of poor Africa’s structural transformation agenda. The AfDB’s development outcomes, coordination failure is one of the interventions within the framework of the AgSS for 2015–19 will be guided by two pillars: (1) agricultural infrastructure main culprits. As previously discussed, better integration and (2) natural resource management.1 The AgSS will into AVCs can be attained by organizing smallholder embrace a value-chain approach and support innovative farmers in cooperatives and groups. African governments technologies to foster the development of value chains can play a vital role in facilitating the formation of those within the agriculture sector and its commercialization. It will promote agricultural commodity exchanges and networks. Services can be leveraged for this purpose improve access to finance for agricultural small- and and provide information on how to better integrate AVCs. medium-sized enterprises. It will also help to improve Governments should also invest more in infrastructure capacity building by providing specific vocational training to improve the business climate, as its current state to farmers and agricultural product dealers, for example. It represents a significant competitive disadvantage will leverage mobile information services, allowing farmers to collect valuable data. It will promote best practices for for African exporters. International organizations can investments in land, ensuring that private investments also help to correct coordination failures by bringing benefit rural communities. It will also pay greater attention different stakeholders together and by boosting inclusive to increasing gender mainstreaming in the AfDB’s investments in the agriculture sector (see Box 4). operations and programs.2 The key features of the AgSS for 2015–19 are highlighted below. RECOMMENDATIONS AND CONCLUSIONS 1. Infrastructure in agriculture: Supporting regional member countries to develop their infrastructure This chapter recalls the main factors that make systems in the agriculture sector, including improving agriculture in Africa one of the least productive globally rural infrastructure, rural electrification, irrigation, water while the rest of the world, particularly Asia, greatly management, and leveraging information technology benefited from the green revolution. The chapter also systems for agriculture development; discusses the ingredients needed for a more competitive 2. Agribusiness and innovation: Supporting the agriculture sector that will lead to faster structural development of agribusiness and innovation, which transformation processes across Africa. includes commercializing agriculture by developing the agro-industry and value chains; implementing Agriculture remains an important source of income measures to enhance agricultural trade, including for the majority of Africans and represents a large share promoting commodity exchange markets in of economic output in most countries in the continent. the agriculture sector; and developing low-cost The sector consists primarily of small-scale farmers who technologies for primary processing that retains essential nutrients; and cultivate a large variety of low-yield crops on small plots of non-irrigated land, using a minimal amount of fertilizers 3. Resilience and natural resource management: Promoting resilience and the sustainable management and pesticides. These characteristics make the sector of natural resources, including managing the very unproductive, leading to food insecurity and large environmental impact of agriculture activities. imports of staple foods. The continent has not benefited Notes from the green revolution that started in the 1960s, and 1 AfDB 2015, forthcoming. that essentially focused on Asia and Latin America. The African continent was left behind for several reasons: 2 AfDB 2015, forthcoming. (1) the development of high-yield crops focused on Sources: AfDB, 2010; AfDB 2015, forthcoming. Compiled from the irrigated rice and maize, crops not very suited for African AfDB investment portfolio. soils and ecological systems; (2) market failures and infrastructure deficits have constrained the availability and access to productivity-enhancing inputs as well as supporting the transformation of Africa’s agriculture for the commercialization of agricultural production in Africa; inclusive growth. It provides some examples of inclusive and (3) policy and institutional factors, characterized by AfDB projects in the agribusiness sector, including the inefficient involvement of governments that resulted through private equity. in distorted prices of both agricultural inputs and outputs Fourth, ICTs play a key role in fostering greater as well as in low levels of technological innovation and integration into value chains. As noted earlier, ICTs adoption. In contrast to Africa, Asian governments have can reduce information asymmetry and improve market been heavily involved in the drive to revolutionize their efficiencies throughout the different phases of the agriculture sectors. production process as well as in the post-harvest period. 48 | The Africa Competitiveness Report 2015 2.1: Transforming Africa’s Agriculture to Improve Competitiveness In order to foster Africa’s green revolution, it is essential to address the factors above and simultaneously Box 4: Grow Africa’s approach to developing take into account the specificities of African conditions, responsible, sustainable, and inclusive private- sector investment including the continent’s variety of soils and appropriate crops. This will involve increased international and Since its inception in 2011, Grow Africa—a partnership national research to develop and promote high-yield platform created to catalyze investment and growth crops suitable for Africa. While international research in African agriculture, founded by the African Union efforts have greatly increased in recent years, national Commission, the NEPAD Agency, and the World Economic Forum—has established itself as a trusted platform for governments are failing to reach their target of devoting increasing responsible, sustainable, and inclusive private- 10 percent of national spending to agriculture as agreed sector investment in Africa’s agriculture. The network under the terms of the NEPAD-CAADP. Increased national collectively works to ensure that investment commitments spending should support better water management to made by international and domestic companies in intensify irrigation, reduce the continent’s dependence partnership with national governments are converted into investment on the ground. These investments are expected on rain-fed agriculture, and increase resilience to climate to increase farmers’ income and create local jobs. change. Moreover, governments need to put in a place a One of the most important aspects of the Grow sound regulatory and institutional framework to minimize Africa Secretariat’s work is using its convening power distortions and take advantage of new opportunities at the highest levels to support the development of strong, effective multi-stakeholder structures to enable provided by the development of science and technology. the public and private sectors to work together to drive Innovations in ICTs have several agricultural applications investments forward. The creation of a better coordination involving different stakeholders at different stages in between private-sector agricultural companies and the the production cycle. Diffusion of market information, public sector is a significant step toward accelerating the execution of investment commitments and bringing them production knowledge, and geographical information are to scale. among the top applications that are being increasingly Better coordination and alignment is required used in Africa but whose usage could be further among different private-sector players, agribusinesses, enhanced. Since the large majority of scientists believe and smallholder suppliers. Grow Africa is active in exploring, incubating, and disseminating best practice in that GM crops are safe to eat, the technology has the innovative models for ensuring sustainable supply chains potential to revolutionize Africa’s agriculture. Improved involving smallholder farmers. Agricultural corridors yield and resistance to pests can increase farmers’ and agri-processing zones that coordinate investments income. However, skills in biotechnology are needed for into geographically targeted value-chain clusters can significantly speed up the implementation time for the a wide-scale adoption across the continent, as well as individual investments within these geographic areas. regulatory systems that ensure health and environmental To further these efforts and locate them on the safety and provide accurate information to farmers and global stage, in 2015, the World Economic Forum customers. is introducing a Global Challenge Initiative on Taking full advantage of these technologies will Agriculture and Food Security—one of ten institutional initiatives addressing major issues of global concern.1 require a number of countries to improve their land The initiative builds on the work of the New Vision for governance systems. Land access based on customary Agriculture,2 and is intended to strengthen leadership rights that disadvantage women, unequal distribution, commitment and catalyze country-led action partnerships, and the absence of land markets are preventing the most such as Grow Africa. efficient farmers from the opportunity to increase their Notes production scale. Moreover, insecure land tenure limits 1 Information about this global challenge is available at farmers’ ability to use their land as collateral and thus to http://www.weforum.org/projects/group/agriculture-and-food- security. access credit markets. Land reforms accompanied with the development of financial instruments suited to the 2 Information about the New Vision for Agriculture Initiative is available at http://www3.weforum.org/docs/WEF_CO_NVA_ agricultural production cycle will improve the adoption of Overview.pdf. technology and expand the use of intermediate inputs. Finally the chapter acknowledges the potential of Source: Grow Africa Secretariat. Africa’s agriculture and proposes mechanisms by which it can benefit from integration with regional and global markets. Indeed, integration in AVCs will help small- improve their production and marketing processes. This scale farmers adopt better production processes and requires small-scale farmers to be better organized, garner higher prices for their produce. It also provides for example in farmers’ organizations, and to link up them with the opportunity to be linked with large-scale with large-scale agribusinesses through out-grower agribusinesses and diversify to higher-value crops, such schemes that establish production contracts between as fruits, vegetables, fish, and flowers. However, meeting agribusinesses and small-scale farmers. Indeed, this the high-quality standards in world markets is not easy, has been promoted by the AfDB as a way to enhance particularly for small-scale farmers. Thus regional AVCs inclusiveness as the sector increases the share of can provide a stepping-stone that allows farmers to large-scale commercial farming. Strong support from The Africa Competitiveness Report 2015 | 49 2.1: Transforming Africa’s Agriculture to Improve Competitiveness governments and international organizations will minimize 33 Africa Progress Panel 2010. coordination failures among stakeholders and ensure 34 Fuglie and Rada 2013. that increased integration into AVCs benefits small-scale 35 Davis et al. 2010. farmers, particularly women who represent a significant 36 Fuglie and Rada 2013. share in the agricultural employment breakdown. 37 Gollin and Rogerson 2010. 38 Deloitte 2012. NOTES 1 Equatorial Guinea is not included in the Country Profiles of this 39 See https://kilimosalama.wordpress.com/. Report because it did not have sufficient data to be included in the 40 Remote sensing (RS) is the use of aerial sensor technologies to Global Competitiveness Index. detect and classify objects on Earth with the help of propagated 2 AfDB 2014. signals (e.g., electromagnetic radiation). 3 The green revolution refers to the drastic rise in the productivity 41 Wilson 2005. of global agriculture as a result of chemical advances and the 42 Deloitte 2012. development of high-yield crops, thus making it possible to produce much larger quantities of food and feed the growing 43 GSMA, no date. population. 44 See http://www.esoko.com. 4 AfDB 2014. 45 Adewunmi 2012. 5 UNDP 2014. 46 World Bank 2011. 6 See de Janvry and Saddoulet 1996; Gallup et al. 1997; Timmer 1997; Bourguignon and Morrisson 1998; Thirtle et al. 2003; Salami 47 AfDB-IFPRI 2014. et al. 2010. 48 Brookes and Barfoot 2014; Nuffield Council on Bioethics 2003. 7 According to the International Fund for Agricultural Development 49 Klümper and Qaim 2014, p. 1. (IFAD 2010), 70 percent of the poor live in rural areas and are engaged in agriculture. At the same time, the share of urban poor 50 Entine 2015. is increasing rapidly with the high rate of urbanization and the slow job creation in African cities. 51 Lewin 2007. 8 See Berthold et al. 2014 for a survey of the literature on labor 52 Nuffield Council on Bioethics 2003. reallocation across sectors. 53 AfDB-IFPRI 2014. 9 Bah 2011. 54 World Bank’s World Development Indicators, 2015. 10 See Bah 2013 for the case of European countries. 55 Aka 2007. 11 AfDB 2013. The AfDB’s long-term strategy is available at http:// 56 Byamugisha 2013. www.afdb.org/fileadmin/uploads/afdb/Documents/Policy- Documents/AfDB_Strategy_for_2013%E2%80%932022_-_At_the_ 57 The Economist 2013. Center_of_Africa%E2%80%99s_Transformation.pdf. 58 Moneyweb 2014. 12 World Bank 2008. 59 Byamugisha 2013. 13 Mondal, no date. 60 Adamopoulos and Restuccia 2014. 14 Hazell 2009. 61 Restuccia and Santaeulalia-Llopis 2015. 15 Nin-Pratt and McBride 2014; World Bank 2008. 62 Collier and Dercon 2009. 16 Nin-Pratt and McBride 2014; World Bank 2008. 63 Collier and Dercon 2009, p. 3. 17 Nin-Pratt and McBride 2014. 64 AfDB et al. 2014. 18 Kayizzi-Mugerwa 1998. 65 FAO 2012. 19 Voortman 2013. 66 UNECA 2012. 20 Gollin and Rogerson 2010. 67 AfDB 2014. 21 Voortman 2013. 68 Gereffi et al. 2005 cited in AfDB et al. 2014. 22 FAO 2015. 69 Diao and Hazell 2004. 23 Svendsen et al. 2009. 70 AfDB et al. 2014. 24 World Bank 2008. 71 Diao and Hazell 2004. 25 NEPAD 2013. 72 Lee et al. 2012. 26 It is not clear what type of productivity (land, labor, or total factor productivity) the program is targeting. 73 Leke et al. 2010. 27 Nin-Pratt et al. 2012. 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Available at http://www. yourarticlelibrary.com/green-revolution/the-factors-contributing- ictinagriculture.org/content/ict-agriculture-0. to-green-revolution-in-india-750-words/4826/, accessed March 3, 2015. ———. 2015. World Development Indicators (online). Washington, DC: World Bank. Moneyweb. 2014. “Land Reform: Namibia 27%, South Africa 8%.” Available at http://www.moneyweb.co.za/uncategorized/land- World Economic Forum, African Development Bank, and the World reform-namibia-27-south-africa-8/. Bank. 2013. African Competitiveness Report 2013. Geneva: World Economic Forum. NEPAD (the New Partnership for Africa’s Development). 2013. Agriculture and Africa: Transformation and Outlook. Johannesburg, You, L., C. Ringler, U. Wood-Sichra, R. Robertson, S. Wood, T. Zhu, South Africa: NEPAD. G. Nelson, Z. Guo, and Y. Sun. 2011. “What Is the Irrigation Potential for Africa? A Combined Biophysical and Socioeconomic Nin-Pratt, A., M. Johnson, and Y. 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Brixiova. 2010. “Smallholder Agriculture in East Africa: Trends, Constraints and Opportunities.” African Development Bank Group Working Paper No. 105. Tunis, Tunisia: African Development Bank. 52 | The Africa Competitiveness Report 2015 CHAPTER 2.2 The increasingly important role of services in economies across Africa is challenging long-held theories of economic development. For decades, the typical first Valuing Trade in Services in steps on the path out of poverty have been increased agricultural productivity followed by growth in the Africa manufacturing sector. A larger share of services in an economy has traditionally been considered a destination SEBASTIAN SÁEZ far in the future, an area of comparative advantage for MILES MCKENNA more advanced economies. Over the last few years, BARAK HOFFMAN Africa has been growing along a very different trajectory. World Bank Group Across the region, agriculture’s share of gross domestic product (GDP) has declined and manufacturing, rather than growing as theory may have anticipated, has stagnated. Services, in contrast, are increasing as a share of total employment and GDP, driving value addition and providing critical inputs to boost other economic activities. Today the service sector has not only found its way onto the development agenda, but it has also become an agenda in its own right. Because countries have begun to seize opportunities within and through services, policymakers and economists need to question old assumptions and consider new implications. What is the role of services in structural transformation and overall competitiveness? Can this sector help to reduce poverty? Is it a viable export sector in Africa? At this point, there may be more questions than answers. For decades, the service sector has received scant attention, especially in Africa. Data are scattered, insufficient, and difficult to collect. However, using the best available data and analytical tools, we can begin to seek answers to these questions. In this context, this chapter examines the performance of services exports in Africa. A deeper analysis of trade statistics for countries in the region shows that service exports are much more significant for Africa than previously thought. The chapter also clearly illustrates the links among services and other sectors of the economy. By disaggregating value-added data, the importance of services as inputs to other export activities becomes much more evident, especially in exports of primary activities, such as agriculture and energy, and in exports of manufacturing. Based on this analysis, the chapter offers some insights to inform policies that can strengthen the competitiveness and export performance of the service sector in Africa. It also identifies how certain service trade policies, such as regulations that limit competition in service markets, have a negative impact on service exports. These findings support the argument that liberalization of the sector can contribute to service trade performance. To maximize potential gains, countries in Africa need to reduce the direct barriers to trade in services as well as the indirect ones that result from poor regulation. The authors would like to thank William Maloney, César Calderón, Melise Jaud, and Claire Hollweg for their valuable inputs and suggestions, and Annoula Rysova, Esteban Rojas P., and Laura Juliana Higuera Ardila for research assistance. The Africa Competitiveness Report 2015 | 53 2.2: Valuing Trade in Services in Africa have been dramatic, fueling much greater interest in Figure 1: Service exports: Africa compared with other developing countries this sector. Yet the shares of these exports in African Share of global service exports (percent of total exports) countries have actually declined. Why is this happening and how can we identify solutions? Are some countries 20 Sub-Saharan Africa Low-income developing countries or sectors performing better than others? What can we North Africa Developing countries learn from such comparisons? The chapter addresses 15 these issues in subsequent sections. New datasets and analytical tools have helped to confirm the significance of services in an economy. 10 This importance has been successfully demonstrated through two key elements: (1) services as final exports and (2) the role of services in increasing the competitiveness of 5 other economic activities, such as manufacturing. Productivity in services plays a critical role as a strategic driver of economic competitiveness. 0 The competitiveness of most exported goods in global 1980 1982 1984 1986 1988 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012 markets depends not only on access to raw material Source: UNCTADStat, http://unctadstat.unctad.org/EN/Index.html. inputs, but also on critical services inputs. These include efficient, competitively priced utilities (e.g., ICTs and transport), financial services (e.g., banking and insurance), SERVICES GO GLOBAL and other commercial services (e.g., accounting, Firms increasingly operate in a context of engineering, consulting, legal services, and marketing). internationally fragmented production chains, Imported services can serve as a transmission channel a concept captured in the emerging literature for transferring new technologies. These technologies on global value chains. Through this lens, trade is can boost performance in skill-intensive industries and facilitated by flows of goods, services, investment, and increase the value-added of manufacturing exports.2 As knowledge necessary to produce products in multiple overall trade in services increases, the productivity of the locations—giving rise to what has been called the trade- service sector also tends to rise, further exerting a positive investment-service-intellectual property (IP) nexus.1 Trade impact on overall productivity and growth over time.3 in services is one conduit that facilitates and coordinates Empirical literature on these impacts in Africa, in particular, the connections necessary to increase participation and also finds a significant and positive relationship between boost competitiveness within these chains. Enhancing firm productivity and service performance, and confirms the competitiveness of the service sector—in effect, that inadequate access to essential producer services strengthening a country’s bonds with the global hurts African firms by undermining their productivity.4 economy—is now imperative for Africa’s continued Beyond their direct role in the economy, the economic development. development of the service sector is crucial for Over the last few decades, the falling costs meeting broader poverty reduction and social of travel, improvements in information and development goals. For example, many of the Millennium communication technologies (ICTs), and the Development Goal targets—such as education, health, development of electronic infrastructure have greatly and water and sanitation—are services. In addition, a enhanced the ability of services to be produced in more competitive service sector can contribute to gender one location and consumed in another. As a result, equity in Africa (see Box 1).5 For these reasons, increasing exports of services have picked up for all income groups. the competitiveness of the service sector can generate The rising share of low-income developing countries’ broad benefits to a country’s its economy and society. service exports is particularly notable. Their participation in world service exports has increased dramatically, from ASSESSING THE VALUE-ADDED OF SERVICES 1.6 percent in 1990 to 4.5 percent in 2012 (Figure 1). But IN TRADE not all countries have enjoyed the same level of success. Trade data are usually measured by transaction Africa is lagging dramatically in terms of its values, which is the price actually paid or payable share of global service exports. The lack of reliable for goods and services. Transaction values are gross service trade data in Africa presents significant values, or value-added plus domestic and foreign challenges to understanding why this is the case. intermediate inputs. Value-added is measured as the However, based on the data that are available, certain net output of a sector after adding up all outputs and initial conclusions can be considered. Figure 1 shows subtracting intermediate inputs. A measure of the direct that the global shares of service exports from developing contribution of services can thus be calculated by adding countries have risen since 1980. The rising shares up the sector’s value-added in services sold directly to of developing and low-income developing countries final consumers (in the domestic economy or as exports). 54 | The Africa Competitiveness Report 2015 2.2: Valuing Trade in Services in Africa Box 1: The gender dimensions of trade in services in Africa Compelling new analysis by Coste and Dihel combines Some countries are making progress in integrating information from existing databases, qualitative evidence, women into management positions in the service sector. and insights gathered from a business survey on professional According to Coste and Dihel, Comoros, Madagascar, services conducted in 17 sub-Saharan African countries Rwanda, Swaziland, and Zambia are among the best to better capture gender participation in service trade.1 performers in balancing gender in management positions The study shows that the proportion of women employed of professional firms. Women in these countries represent by service firms in Africa exceeds female employment in almost 15 percent of the top management level. Analysis at manufacturing. Sub-Saharan African countries’ shares of the sector level shows that women are better represented female employment in services are also significantly higher in management of accounting and legal firms, but almost than those in the Middle East, North Africa, and South Asia, nonexistent in engineering and architectural firms. though slightly lower than those in East Asia, Latin America, The extent to which trade in services can act as a and Eastern Europe. Coste and Dihel further find that this driver of greater gender economic opportunity for women female employment is larger than female employment in and eliminate or mitigate barriers to achieving it requires manufacturing across all regions, with the exception of East further research. The potential links between service sector Asia where the shares are roughly equal. One possible reason employment and gender equity are even more difficult to more women work in the service sector than in manufacturing identify in African countries because of acute information and is the predominance of small firms involved in services. Their data gaps. There remains a critical need for more systematic comparative smaller size makes it easier for women to own data collection to fill the huge information gaps related to their own businesses. In female-managed businesses, the female participation in the service sector across Africa. The share of full-time female employees is substantially higher importance of improving data will only grow as the share than it is in firms managed by men across all regions, of female employment in these sectors increases. Better though these firms are less likely to engage in export data and analysis will allow a deeper understanding of the activities. By subsector, hotels and restaurants, along with opportunities for and constraints faced by women seeking wholesale and retail trade, have the highest share of female higher-skilled service jobs, as well as a further understanding employment, female ownership, and proportion of women in of the factors that affect the trade performance of African top management positions. As a result, a large proportion of service firms more broadly. women are employed in highly tradable activities. Notes Women lack the same opportunities to access the full range of services occupations as men. The latter are 1 Coste and Dihel 2013. overrepresented in managerial occupations, for example. 2 ILO 2012; Staritz and Reis 2013. Women represent only 6 percent of the top senior positions and 12 percent of the next-most-senior positions in Source: This box was adapted from the chapter “Services Trade and professional services firms in East and Southern Africa. Gender” by Coste and Dihel in the book Women and Trade in Africa: Moreover, women who work in the same occupation as men Realizing the Potential. See Brenton et al. 2013. have fewer responsibilities, lower pay, and lower status for reasons unrelated to their skill or experience.2 However, this is not a full reflection of the contribution of gross exports of services.8 The second (in red) represents services’ value-added since these services also enter as the share of direct service exports when measured by inputs in the production of products downstream in other value-added.9 The third bar (in blue) represents both the sectors. To account for total services’ value-added in direct and indirect (or total) value-added of services in all exports, one needs to measure not only direct services exports (e.g., including forward linkages).10 The data make exports but also their forward and backward linkages clear that service exports constitute a significant share of to other exports. Forward linkages are the value-added total exports in many countries in Africa. Among Africa’s contributions of a specific sector as inputs to all other least-developed countries, direct service exports comprise downstream sectors. Backward linkages, by contrast, more than 20 percent of total exports in Ethiopia, Senegal, capture value-added inputs demanded from other and Tanzania (Figure 2). Among the more developed sectors. These linkages represent the interdependence regional economies, they make up more than 30 percent of sectors of an economy. By not properly accounting for of total exports in Cameroon, Egypt, Kenya, Mauritius, the forward linkages of services embedded as inputs in and Tunisia (Figure 3). For other countries in the region, downstream sectors, gross export measures undervalue service exports are very low. This is particularly true for services’ full contribution to trade.6 Burkina Faso, Guinea, and Mozambique among the least- developed countries, as well as Nigeria. The importance of services in total African exports For many countries in Africa, services are an For many countries, direct service exports are a major important input to other economic activities. This component of export activity. Figures 2 and 3 provide is illustrated by the importance of total service exports, three different measures of the importance of service including forward linkages in the share of total exports exports in Africa.7 The first bar (in green) represents simply (the blue bar in Figures 2 and 3). Except for Egypt and The Africa Competitiveness Report 2015 | 55 2.2: Valuing Trade in Services in Africa Figure 2: Africa’s least-developed countries: Service export Figure 3: Selected African countries: Service export share share of total exports, 2011 of total exports, 2011 Percent of total exports Percent of total exports 60 50 Gross share Direct share Gross share Direct share Total share Total share 50 40 40 30 30 20 20 10 10 0 0 Benin Burkina Faso Ethiopia Guinea Madagascar Malawi Mozambique Rwanda Senegal Tanzania Togo Uganda Botswana Cameroon Cote d'Ivoire Ghana Kenya Mauritius Namibia Nigeria South Africa Zimbabwe Egypt Morocco Tunisia Source: World Bank’s Export Value Added Database, http://data.worldbank.org/data-catalog/ Source: World Bank’s Export Value Added Database, http://data.worldbank.org/data-catalog/ export-value-added. export-value-added. Zimbabwe, the share of total services in overall exports value-added is usually much higher than the direct (both goods and services) is significantly higher than contribution of services to total exports. By contrast, the direct share of services in total exports (red bar). the contribution of services as inputs into other activities The gap between the two indicates that services are such as primary exports and manufacturing exports supporting other export activities, such as manufacturing is much higher for total exports than it is for domestic and agricultural exports. For example, services account value-added. Figures 4 and 5 illustrate this point. They for 83 percent of the final price of Ethiopian roses in show the shares of service contributions to domestic the Netherlands. This is a clear indication of the central production and exports in 2011. Their contribution as role that services play in increasing Africa’s export intermediate inputs into primary production (agriculture competitiveness. and energy sectors) and the manufacturing sector Direct exports of services are relatively more represent an important share of domestic production important than their contribution as inputs for other for most of the least-developed countries in Africa, with export activities in some countries. For example, the Benin and Burkina Faso being the only major exceptions. share of service exports in Kenya and Mauritius is 25 Even so, the contribution of services to export value- and 34 percent, respectively, when trade is measured added to other sectors remains more important. For by gross value. When measured by direct value-added, Burkina Faso, Guinea, Malawi, Mozambique, Rwanda, the share of service exports in total exports reaches 32 Senegal, Togo, and Uganda, for example, the service and 34 percent, respectively. When forward linkages are contribution to inputs in other export activities is higher included, the total value-added contribution of services than their contribution to domestic value-added. to exports in Kenya increases only slightly, to 35 and For some countries at a higher level of 37 percent. A similar situation exists in Morocco and development in the region, the contribution Zimbabwe. A small gap between the direct and total of services to manufactured exports is more measurements suggests that services have not yet important than their contribution to the domestic developed strong links to other export activities. Overall, manufacturing value-added. This is true in all most countries have the potential for increasing direct countries, except for Mauritius, as Figure 5 shows. For service exports and diversifying their economies through Côte d’Ivoire, Morocco, Namibia, South Africa, and stronger links with downstream sectors. Tunisia, the role of services in manufactured exports is especially large. For Cameroon and Côte d’Ivoire, The significance of services to other economic services are an important input to the exports of primary activities in Africa products. The structure of services and their links to the domestic economy differs from the structure of SERVICE EXPORTS FROM AFRICA services and their links to exports activities. For Service exports from African countries are example, the direct contribution of services to domestic increasing. Many countries in Africa are joining with 56 | The Africa Competitiveness Report 2015 2.2: Valuing Trade in Services in Africa Figure 4: Service linkages to other economic activities and to exports: Africa’s least-developed countries, 2011 80 Inputs into manufacturing Inputs into primary production Direct value-added Inputs into services 70 60 50 Percent of GDP 40 30 20 10 0 D X D X D X D X D X D X D X D X D X D X D X D X Benin Burkina Faso Ethiopia Guinea Madagascar Malawi Mozambique Rwanda Senegal Tanzania Togo Uganda Source: World Bank’s Export Value Added Database, http://data.worldbank.org/data-catalog/export-value-added. Note: D = Domestic value-added; X = export value-added. Figure 5: Service linkages to other economic activities and to exports: Selected countries, 2011 80 Inputs into manufacturing Inputs into primary production Direct value-added Inputs into services 70 60 50 Percent of GDP 40 30 20 10 0 D X D X D X D X D X D X D X D X D X D X D X D X D X Botswana Côte Cameroon Ghana Kenya Mauritius Namibia Nigeria South Zimbabwe Egypt Morocco Tunisia d’Ivoire Africa Source: World Bank’s Export Value Added Database, http://data.worldbank.org/data-catalog/export-value-added. Note: D = Domestic value-added; X = export value-added. other developing countries that have demonstrated Transport, distribution, trade, and activities remarkable success exporting services both regionally categorized as “other business services” are the and farther abroad to major markets. Atop that list are main service exports of Africa.12 Figures 6 and 7 some of the world’s fastest-growing economies, such show the subsector contributions to total service exports as India, where service exports account for a significant for selected countries in the region (see Appendix B share of total exports. Although India’s success is well for descriptions of these sectors). The figures make known, African countries also are participating in service the importance of transport services very clear and growth. Today, for example, Kenya, Mauritius, Senegal, represent a significant percentage of total service and South Africa provide services both regionally and as exports in nearly all countries. However, their importance far away as European markets.11 diminishes when measured in terms of value-added. The decline in the share of value-added indicates weak links The Africa Competitiveness Report 2015 | 57 2.2: Valuing Trade in Services in Africa Figure 6: Structure of service exports: Selected least-developed countries, 2011 Percent contribution to value-added in total service exports 60 Transport Distribution & trade Water & utilities Communications Finance Other business Construction Insurance Other commercial 50 Share of exports (percent) 40 30 20 10 0 Direct Gross Total Direct Gross Total Direct Gross Total Direct Gross Total Direct Gross Total Direct Gross Total Direct Gross Total Direct Gross Total Direct Gross Total Direct Gross Total Direct Gross Total Direct Gross Total Benin Burkina Faso Ethiopia Guinea Madagascar Malawi Mozambique Rwanda Senegal Togo Tanzania Uganda Source: World Bank’s Export Value Added Database, http://data.worldbank.org/data-catalog/export-value-added. Figure 7: Structure of service exports: Selected countries, 2011 Percent contribution to value-added in total service exports 60 Transport Distribution & trade Water & utilities Communications Finance Other business Construction Insurance Other commercial 50 Share of exports (percent) 40 30 20 10 0 Direct Gross Total Direct Gross Total Direct Gross Total Direct Gross Total Direct Gross Total Direct Gross Total Direct Gross Total Direct Gross Total Direct Gross Total Direct Gross Total Direct Gross Total Direct Gross Total Direct Gross Total Botswana Cameroon Côte Ghana Kenya Mauritius Namibia Nigeria South Zimbabwe Egypt Morocco Tunisia d’Ivoire Africa Source: World Bank’s Export Value Added Database, http://data.worldbank.org/data-catalog/export-value-added. between transport and other service sector exports. By services—are important exports for several of the contrast, distribution and trade services (which includes region’s least-developed countries, including Malawi, hotel and restaurants) and other business services Senegal, and Uganda. (which includes ICTs and professional services) tend Disaggregating service export data also helps to have stronger links to other export sectors. In the in understanding how exactly services contribute case of Guinea, Senegal, and Tanzania, for example, to total exports in these countries. Figures 6 and these shares are much larger when forward linkages 7 visualize this information. In Kenya, for example, are included. This confirms the critical role that these the overall performance of service exports is driven services play in supporting other export activities in by the direct value-added provided by transport and these countries and the region as a whole. It is also communication services. In Cameroon, Mauritius, and interesting to note that exports of “other commercial Senegal, exports of other business services account for services”—such as personal, cultural, and recreational a significant share of direct and total exports. Distribution 58 | The Africa Competitiveness Report 2015 2.2: Valuing Trade in Services in Africa and trade services in Cameroon, Senegal, and Tunisia Figure 8: Correlation of service share of total exports and are important inputs to other economic activities. In economic development South Africa, and to a lesser extent Namibia, services Total value-added share of total exports (percent) are mainly an input into other export activities. 8a: Gross service exports SERVICE EXPORTS AND ECONOMIC 100 DEVELOPMENT Less-developed countries in sub-Saharan Africa Although service exports already play a significant Other countries in sub-Saharan Africa 80 North Africa role—both as final exports and as inputs to Rest of world other exports—in many economies in the region, 60 increasing their contribution to overall development still has noteworthy potential. Sáez et al. show that Morocco Tunisia 40 the size of the domestic service sector is a robust Senegal Egypt Mauritius Ethiopia Cameroon pre-condition for specialization in service exports in Tanzania 20 later years,13 but this relationship has weakened more recently. This weakening suggests that other forces, Côte d’Ivoire Botswana over time, have contributed to successful patterns of 0 4 6 Nigeria 8 South Africa 10 12 service exports. Goswami et al. review the empirical GDP per capita (hundreds of current US$) literature on determinants of services.14 They point out the importance of countries’ endowment of human capital and their electronic infrastructure, institutions, 8b: Direct value-added of service exports and other geographic and cultural factors. In particular, 100 they found that for industrial and developing countries, the availability of electronic infrastructure and tertiary education enrollment significantly affect service exports. 80 For developing countries only, however, the electronic infrastructure does not seem to have been critical 60 in promoting service exports, whereas the effect of Tunisia schooling is larger. The ability of large service-exporting 40 Senegal Egypt Mauritius firms in developing countries to create their own Cameroon Morocco Tanzania electronic infrastructure or to get access to dedicated Ethiopia 20 infrastructure may reduce the relevance of economy- Côte d’Ivoire wide access indicators. In addition, bilateral goods South Africa 0 exports are found to positively affect service exports. 4 6 Nigeria 8 Botswana 10 12 The effects of distance, language, and colonial history GDP per capita (hundreds of current US$) are significant as well: distance negatively affects service exports whereas common language and colonial history 8c: Total value-added of service exports have a positive and statistically significant effect. The 100 negative effect of distance suggests that, despite the growth of electronically delivered services, proximity between suppliers and consumers still matters. 80 While an initial analysis of the current limited South Africa data is not overwhelmingly conclusive, the share 60 Mauritius Senegal Tunisia of service exports does positively correlate with Cameroon economic development. This is true for the three 40 Tanzania Ethiopia different measures of service shares. In Figure 8,15 one Egypt can see the share of direct service exports (Figure 8b) Côte d’Ivoire 20 for the majority of least-developed countries in the Botswana Morocco region (depicted in black) are below what would be Nigeria 0 expected according to their level of development. 4 6 8 10 12 Ethiopia, Senegal, and Tanzania are the only exceptions. GDP per capita (hundreds of current US$) Services exports in higher-income countries have Note: The total value-added includes an accurate accounting of forward linkages. more heterogeneity. Botswana, Côte d’Ivoire, Nigeria, and South Africa have low service exports relative to Source: World Bank’s Export Value Added Database, http://data.worldbank.org/data-catalog/ their level of development, while service exports from export-value-added. Cameroon, Egypt, Mauritius, Morocco, and Tunisia are above average. Côte d’Ivoire, South Africa, and Tunisia The Africa Competitiveness Report 2015 | 59 2.2: Valuing Trade in Services in Africa illustrate the importance of services when accurately Figure 9: Correlation of sectoral service exports and accounting for forward linkages (Figure 8c). When these economic development, 2011 are included in the analysis, the share of total services in Total value-added share of total exports (percent) total exports increases significantly for all three countries, 9a: Transport above what would be expected according to their level of development. This, again, highlights the important role 30 services can play as inputs into other export activities. 25 It also confirms that low-cost and high-quality services generate economy-wide benefits.16 20 Interesting trends emerge when examining Kenya the correlation between total service exports Egypt 15 Tunisia (including forward linkages) for each subsector and Mauritius the country’s level of development. Figure 9 shows 10 these correlations. First, the figure shows that not all Senegal service exports are equally correlated with development. 5 As a country’s income level rises, some services tend Nigeria South Africa to become more important than others. For instance, 0 6 8 10 12 transport, distribution and trade, and utilities (water) GDP per capita (hundreds of current US$) services tend to be negatively correlated with the level of development. On the other hand, communication, finance, insurance, and other commercial services 9b: Finance are positively correlated with development. Other 25 business services have an especially strong and positive Less-developed countries in sub-Saharan Africa correlation with the level of development. Other countries in sub-Saharan Africa The fact that not all services are positively 20 North Africa Rest of world correlated with economic development reaffirms the importance of taking a country- and sector-specific 15 approach when considering policies to strengthen the competitiveness of service sector exports. To 10 take a few examples, Mauritius has a high share of Mauritius service exports in transport, other business services, Senegal Egypt Tunisia 5 and other commercial services relative to its level of Kenya development.17 This is perhaps not surprising given the 0 government’s commitment to developing its service 6 Nigeria 8 South Africa 10 12 export sectors. Senegal performs well in several service GDP per capita (hundreds of current US$) subsectors as well. Nigeria’s performance is well below other countries at its level of development for all service 9c: Communication sectors. 10 Most countries show a highly uneven performance in service exports. Kenya’s share of transport services in total exports is above all other 8 Senegal countries in the region, and the country comes in second highest in communication services. In fact, Kenya's 6 Kenya shares in these services are above most other countries South Africa of similar income per capita. Yet the country’s exports 4 Tunisia in all other subsectors are on par or even below those Egypt Mauritius of comparator countries. Distribution services, which in 2 general are important for trade, is one subsector where Kenya’s performance is particularly poor. Likewise, 0 Egypt performs well in transport, communication, and 6 Nigeria 8 10 12 construction exports, but not in any other subsector, GDP per capita (hundreds of current US$) while Tunisia is strong in trade and distribution services. Finally, South Africa performs very well in communications, distribution, insurance, and other (Cont’d) commercial services, but is average or below average in other subsectors. 60 | The Africa Competitiveness Report 2015 2.2: Valuing Trade in Services in Africa Figure 9: Correlation of sectoral service exports and economic development, 2011 (cont’d) Total value-added share of total exports (percent) 9d: Water and other utilities 9g: Insurance 2.5 6 5 2.0 South Africa 4 1.5 3 1.0 2 Tunisia Kenya Mauritius Tunisia 0.5 Senegal Egypt Nigeria Mauritius Senegal 1 0.0 0 Nigeria 6 Egypt 8 South Africa 10 12 6 Kenya 8 10 12 GDP per capita (hundreds of current US$) GDP per capita (hundreds of current US$) 9e: Construction 9h: Other business 8 30 25 6 20 4 15 Mauritius South Africa 10 Tunisia Senegal 2 Senegal Egypt Egypt 5 Tunisia Kenya 0 Kenya Nigeria Mauritius 0 Nigeria 6 8 South Africa 10 12 6 8 10 12 GDP per capita (hundreds of current US$) GDP per capita (hundreds of current US$) Note: The total value-added includes an accurate accounting of forward linkages. 9f: Trade and distribution 9i: Other commercial 70 20 60 15 50 40 10 30 Tunisia Senegal South Africa 20 5 South Africa 10 Senegal Mauritius Egypt Egypt Kenya 0 Nigeria Mauritius 0 Kenya Tunisia 6 8 10 12 6 Nigeria 8 10 12 GDP per capita (hundreds of current US$) GDP per capita (hundreds of current US$) Note: The total value-added includes an accurate accounting of forward linkages. Note: The total value-added includes an accurate accounting of forward linkages. Source: World Bank’s Export Value Added Database, http://data.worldbank.org/data-catalog/export-value-added. The Africa Competitiveness Report 2015 | 61 2.2: Valuing Trade in Services in Africa EXPORT PERFORMANCE AND TRADE POLICIES Box 2: The effects of restrictiveness on trade in How do service trade policies affect service export professional services in East Africa performance? To assess the impact of specific policies on service export performance, we use the World Bank In East Africa, firm-level surveys have shown that a Group’s database on applied service trade policies large number of formal-sector firms use professional services.1 The heterogeneity of professional endowments and regulations.18 The database provides comparable and the earning differentials across the region indicate information on service trade policy measures in five substantial scope for increasing trade in these types of sectors: telecommunications, finance, transportation, services. Yet the market for such services remains widely retail, and professional services. It is a valuable underdeveloped and fragmented as a result of restrictive policies and disjointed regional regulations. instrument for facilitating dialogue about, and analysis Domestic regulations on entry into and the operation of, service trade policies. Broadly speaking, service of professional services have undermined competition and trade confronts two types of barriers: first, barriers constrained growth across the region. For instance, Kenya, that are directly aimed at limiting foreign participation Tanzania, and Uganda impose particularly strict restrictions on entry into engineering and legal services. Each in the provision of services (Box 2); and second, country has strict licensing and educational requirements. market failures, along with their potential unintended Certain activities require exclusive rights granted from the consequences. One finds many of the same market government, in addition to restrictions on prices and fees, failures in service trade that one would find in any advertising, and inter-professional cooperation. These types of restrictions vary regionally—Rwanda being an market. These are typically imperfect and asymmetric example of a less restrictive environment—but are still information, especially in such knowledge-intensive heavy in comparison with other emerging economies and sectors as professional and financial services, and/or Organisation for Economic Co-operation and Development a lack of competition or barriers to entry, particularly in (OECD) countries. sectors with significant network externalities such as Explicit trade barriers, regulatory requirements, and immigration policies restricting the movement of communications and transport. Often, however, the very persons across national borders further constrain trade policies and regulations that were designed to correct in professional services. With the variety of professional these distortions create their own unintentional barriers endowments across the region, easier movement of to trade. foreign professionals and firms could help meet demand in underdeveloped sectors across the region. Again, the Barriers to trade in services are more complex examples of Kenya, Tanzania, and Uganda in comparison than barriers to trade in goods. Understanding to Rwanda are enlightening. In the former three countries, them has required new tools, which is why the World foreign professionals represent less than 10 percent Bank has used its database on applied service trade of the total number of professionals in accounting and engineering. In Rwanda, however, foreign professionals policies and regulation to build a global Services account for more than 60 percent of the total number of Trade Restrictiveness Database (STRD) of over 100 professionals. economies, including 15 least-developed countries and In legal services, there are almost no foreign several regions including Africa, the Americas, Asia, and professionals working in East Africa. This is further reflected in terms of commercial presence, where, again, Europe.19 The STRD allows policymakers and interested there is a nearly complete absence of foreign legal services parties to evaluate the effects of policies and regulations providers. Foreign law firms are simply not permitted in implemented in ways that have proven economically Kenya or Tanzania. Accounting and auditing firms also face inefficient or cost-increasing. very strict prohibitions. These are but a few of the many regulatory limitations The STRD methodology defines five broad and constraints in the region, but they illustrate the categories of policy.20 These are determined according necessity of policy reform. Without reform, the professional to their level of restrictiveness and are given an service sector is unlikely to develop in a dynamic and associated score. The scores are on a scale of 0 to 100, competitive manner. The World Bank Group’s Africa trade team has been particularly active in working to reduce with 0 being the best and 100 the worst outcome. The constraints applied by these countries on the movement categories, and scores, are as follows: of people, the establishment of commercial presence, and the cross-border supply of professional services. Much 1. Completely open (0) work remains in the implementation of proposed regulatory 2. Virtually open, but with minor restrictions (25) changes. Regional cooperation will be especially important in this effort to overcome the regulatory heterogeneity of 3. Major restrictions (50) East Africa, and of sub-Saharan Africa as a whole. 4. Virtually closed, with limited opportunities to Note enter and operate (75) 1 Dihel et al. 2010. 5. Completely closed (100) Source: This box was adapted from the study “Reform and Regional Poorly designed regulatory policies can have Integration of Professional Services in East Africa.” See Dihel et al. 2010. two potentially negative effects on trade in services: escalating costs and restricting growth. Service trade costs are high relative to those for goods, to a large extent because of the impact of regulations. In 62 | The Africa Competitiveness Report 2015 2.2: Valuing Trade in Services in Africa fact, these costs can be as much as twice as high for Figure 10: Export performance and service trade policies services as for goods, according to some studies.21 Total value-added share of total exports (percent) Evidence also suggests the existence of complex links between policy choices and growth in services. 10a: Gross service exports This is the case experienced, for example, in Burkina Faso where the telecommunications sector has been 60 Less-developed countries in sub-Saharan Africa liberalized but its poor regulatory framework impedes its Other countries in sub-Saharan Africa North Africa growth. Rest of world The poor regulatory environment for service Mauritius 40 exports in much of Africa may be one explanation for Egypt its weak links within sectors and between markets. Senegal Ethiopia Countries with more restrictive regulations toward foreign service providers are associated with lower total service 20 Kenya Tunisia Zimbabwe exports on a value-added basis. This relationship is not as strong, however, for gross service export shares or direct value-added service export shares, which Nigeria suggests that the regulatory environment matters more 0 0 20 40 60 80 100 for other sectors seeking to use services as inputs for STRI score their exports than it does for direct service exports. Note: The Services Trade Restrictiveness Index (STRI) scale is 0 to 100. One can therefore conclude that a restrictive regulatory framework may likely both reduce service exports (and 10b: Direct value-added of service exports thus export diversification) and limit the competitiveness of other sectors of the economy (Figure 10). 60 Key sectors such as telecommunications, professional services, and transport services Mauritius are relatively restricted in many countries.22 In 40 Senegal Egypt Ethiopia, for example, telecommunications remains a Tunisia monopoly. Professional services—a key input for many Kenya productive activities—tends to have the highest level Zimbabwe Ethiopia of restrictiveness (above 30 percent) of any service 20 subsector in Africa. Scores for transport services are not much better, falling above 25 percent in most countries. Overall, based on the STRD classifications, Ethiopia Nigeria and Zimbabwe have the highest level of restrictiveness 0 0 20 40 60 80 100 across all sectors (Figure 10). By contrast, nine countries, STRI score fall between completely and virtually open.23 Note: The Services Trade Restrictiveness Index (STRI) scale is 0 to 100. Are these barriers important? Research confirms that significant gains accrue 10c: Total value-added of service exports from liberalizing trade in services.24 Based on 80 analysis of the STRD, a study by Borchert et al. finds that restrictions on foreign acquisitions, discrimination in licensing, restrictions on the repatriation of earnings, 60 Mauritius Senegal and inadequate legal recourse all have a significant Tunisia negative effect on investment inflows into service 40 sectors.25 Restrictions, according to these authors, can Egypt Ethiopia reduce the expected value of sectoral foreign investment Kenya by US$2.2 billion over a seven-year period. Jensen 20 Zimbabwe et al. estimate that the welfare gains of full reform in Tanzania could amount to 5.3 percent and 16 percent Nigeria of Tanzanian consumption in the medium and long term, 0 0 20 40 60 80 100 respectively.26 The medium-term gains derive primarily STRI score from the removal of non-discriminatory and inefficient Notes: The total value-added includes an accurate accounting of forward linkages. The regulatory barriers against services providers, and the Services Trade Restrictiveness Index (STRI) scale is 0 to 100. removal of regulatory barriers against multinational service providers. Balistreri et al. find significant welfare Source: World Bank’s Export Value Added Database, http://data.worldbank.org/data-catalog/ gains in a similar study for Kenya.27 They estimate that export-value-added. The Africa Competitiveness Report 2015 | 63 2.2: Valuing Trade in Services in Africa and procedural guidelines, but also to decrees and Figure 11: Services policies and regulatory quality World Governance Indicators Regulatory Quality score actual laws. In addition, many of these countries do not have standard rule-making guidelines that mandate the publication of a law as a requirement for entry into force, 2.0 Africa or sufficient publicity mechanisms, such as an official 1.5 Rest of world gazette or a digital repository. Mapping regulation and 1.0 making it publicly available can help bridge important information gaps in the regulatory framework. Qualitative 0.5 assessments can be especially useful in identifying 0.0 further policies needed to improve the conditions for –0.5 service trade. –1.0 EXPANDING SERVICE TRADE IN AFRICA –1.5 Policymakers across Africa are increasingly aware of the importance of service trade in their economies, –2.0 0 20 40 60 80 100 and as a result the service agenda has never STRI score been higher on the list of government priorities. Sources: Borchert et al., 2012a; Borchert et al., 2012b; World Bank’s Worldwide Governance Indicators (WGI), http://info.worldbank.org/governance/wgi/index.aspx#home. But identifying strategies for stronger service trade Note: The Services Trade Restrictiveness Index (STRI) scale is 0 to 100. The WGI scale for performance requires the consideration of a broad mix Regulatory Quality is –2.5 to +2.5. of factors.31 There are certain fundamental determinants to consider. These include a country’s basic factor a 50 percent reduction in non-discriminatory services endowments—land, labor, and capital. Human capital, in barriers and unilateral liberalization of all discriminatory particular, plays a very important role in the development service barriers would raise consumption by 10.3 of services, primarily via skills and entrepreneurial ability. percent. Infrastructure quality is also an important determinant, as Although reducing barriers to trade is a it provides and facilitates the delivery of services. necessary condition to promote low-cost and Regulatory policies affecting trade, investment, high-quality service markets, it is not sufficient. As and labor mobility are also important determinants discussed above, a poorly regulated sector can also act of service performance. Poor regulations may affect as de facto barrier to export competitiveness. Figure 11 market access and operations of both domestic and illustrates the relationship between restrictiveness and foreign suppliers of services and in turn increase the indicators of regulatory quality. A generally negative price and/or lower the quality of services provided. correlation exists between the two. However, the figure Service barriers are more akin to non-tariff barriers also shows that a similar level of restrictiveness can than to tariffs, and their impact will depend on how the occur with a similar level of regulatory quality. In other government regulation is designed and administered. words, reducing restrictiveness does not necessarily Regulations can affect competitiveness in numerous improve regulatory quality. Rather, to fully reap the ways, such those surrounding the creation and benefits of liberalization, governments must address both establishment of a business, operations of firms, and trade policies that impede service exports and those that regulations that are non-discriminatory versus those improve regulatory quality.28 that are discriminatory.32 Barriers can also result from A poor regulatory environment may arise from a lack of regulations, for instance, when there is a lack a poor institutional setting.29 In such instances, of competition or there are no regulations to protect government bodies and agencies responsible for consumers. regulating services often lack an adequate mandate to The impact of regulatory policies can have enforce policies. Without such authority, they struggle to far-reaching implications for service exports, resist pressures from other government bodies or private especially for foreign investment, the participation interests that seek to block reforms in these areas. of multinationals in service activities, and the Regulatory agencies also often lack adequate resources movement of individual service providers. The STRD to fully evaluate the complexity of the market and the data discussed above show the presence of significant impact of regulations. Many limitations on trade and policy restrictions on several service sectors currently investment in services therefore stem from weak and in place. This means that, from a policy perspective, ineffective governance. Recent regulatory assessments there is scope for reforming policies to enhance the conducted by the World Bank in several developing performance of services and their contribution to countries, including Burkina Faso and Liberia, confirm countries’ economic development. Many governments, these findings.30 The lack of public access to laws and including Ghana, Mauritius, and Rwanda, have regulations, as well as their lack of clarity, is the most implemented proactive policies aimed at creating a more frequent problem identified. This applies not only to enabling business environment for service providers. lower levels of regulation such as ministerial directives 64 | The Africa Competitiveness Report 2015 2.2: Valuing Trade in Services in Africa These usually include measures to streamline the trade policy reforms usually involve a large number of regulatory environment, improve access to necessary government agencies and private-sector representatives. infrastructure, and provide the private sector—national or Not only does the large number of actors create foreign—with incentives that promote service trade. But enormous coordination challenges, it also tends to not all of these policies have been successful. Policies increase the power of groups opposed to reform.38 The typically fail because governments lack the capacity to World Bank Group’s Africa trade team has been working implement them and/or those that benefit from trade on these issues extensively, providing support through barriers use their influence to keep them in place. analytical tools, technical assistance, and focused The successful development of service trade interventions (see Box 2). requires the adoption of policies at several levels. In many countries, for example, unilateral liberalization CONCLUSIONS of the telecommunications sector has developed not Today, trade in services is a critical component of only the use of mobile phones, but also a range of countries’ overall trade strategies. As technological services based on telecommunications infrastructure advances have facilitated the growth of service now offered by the private sector. This expansion tradability, countries are beginning to capitalize on these has required the development of a policy framework new opportunities. The performance of service exports capable of encompassing new and perhaps unforeseen from Côte d’Ivoire, Kenya, Mauritius, and Senegal developments in the sector. In Kenya, for example, are strong examples of seizing this potential. And as Safaricom’s M-PESA service became a global leader the data presented in this chapter show, the role of in mobile-based financial services in the span of just services goes well beyond direct exports. Access to a few years.33 The rapid development of the mobile low-cost, high-quality services helps countries achieve money platform has expanded access to financial social development objectives and allows them to services for millions, especially small traders and rural effectively participate in local, regional, and global communities. The mobile money platform has now gone value chains—in effect, a solid service sector helps to global, operating in countries as widespread as India connect countries to the global marketplace. As inputs and Romania, but it began in Kenya and neighboring to downstream activities, services also help increase the Tanzania. competitiveness and performance of other economic Regulatory policies that shape market sectors—especially in agricultural, food processing, and integration also play a significant role in the manufacturing activities, such as textile and apparel development of service trade.34 Despite the significant exports. progress on regional integration made in Africa in recent More research needs to be done to better evaluate years, barriers to service trade are still in place. These the complex roles that service exports play in African continue to limit the expansion of services because economies. The sector has been understudied and service providers are unable to expand their activities received too little attention in the region. The service to neighboring countries. But, as services such as agenda must be better defined, and it must also be M-PESA are proving, global markets are providing tailored to meet the social and economic development new opportunities. Professional service providers in goals of each country. Doing so will require addressing Kenya now export to as many as 40 different countries. the very significant gaps in data and analysis, and Distance has never before been as easy an obstacle building on the best available tools and techniques, as to overcome—consider the fact that South African evidenced in this chapter. More fully understanding these professionals now provide health services in Canada, roles will allow policymakers to design the necessary New Zealand, and the United Kingdom.35 reforms—both those specific to the service sector and Evidence shows that in many markets where those complementary to it—that can best position a adequate regulatory reforms were not implemented country to increase service trade and boost overall in a coordinated and complementary manner, economic competitiveness. service reforms did not produce their expected benefits.36 For example, in Zambia—despite the NOTES liberalization of the telecommunications market—a 1 Baldwin 2011, 2012. See also Feenstra 2010; Grossman and Rossi-Hansberg 2008; Helpman 2011; and Jones 2000 for an de facto monopoly still exists in fixed-line telephony analysis of defragmentation, trade in tasks, and offshoring. although there is competition in mobile telephony. In 2 See Francois and Woerz 2008; for the positive link between trade transport, important restrictions still affect international liberalization of the service sectors and manufacturing productivity, and domestic competition. In the case of the financial see Arnold et al. 2007; Arnold et al. 2008. sector, the liberalization was not complemented with 3 van der Marel 2011a, 2011b. the strong prudential regulations necessary to maintain 4 See Triplett and Bosworth 2004; Inklaar et al. 2007; Arnold et the soundness and stability of the financial markets.37 al. 2008; Inklaar et al. 2008; World Bank 2011; Hoekman and Kostecki 2009. Such incomplete reforms often occur as a result of the 5 See Brenton et al. 2013. complex political economy of service reforms. Service The Africa Competitiveness Report 2015 | 65 2.2: Valuing Trade in Services in Africa 6 Francois et al. 2013; Francois and Woertz 2008; Sáez et al. 2014; 28 Molinuevo and Sáez 2014. see also Appendix A. The dataset is based on the Global Trade Analysis Project (GTAP). The GTAP database represents the 29 Molinuevo and Sáez 2014. most comprehensive, convenient, and internationally comparable 30 These assessments followed the methodology outlined in source of sector-specific data across countries. Of the 129 regions Molinuevo and Sáez 2014. in GTAP version 8, 112 represent individual countries and 17 represent composite regions. In the case of individual countries, 31 See Goswami et al. 2012 for a more detailed analysis of the social accounting matrix (SAM) for each country relies on the determinants of trade in services. most recent input-output data available from national sources for each country (see the regional input-output data in Aguilar and 32 Molinuevo and Sáez 2014. Walmsley 2012, available at https://www.gtap.agecon.purdue.edu/ 33 The Economist 2013. resources/download/6139.pdf). These are harmonized in the GTAP database to a standard 57-sector format for ease of comparison. 34 World Bank 2011. Limitations of the GTAP data include the infrequency of updates (the most recent GTAP 9 pre-release takes the data only to 2011) 35 Stern 2008; Cattaneo et al. 2010. and the fact that some input-output data may be adjusted to 36 Mattoo and Payton 2007; World Bank 2011. provide consistency with merchandise trade and macroeconomic data also used in the SAM. Therefore, results should be 37 Mattoo and Payton 2007. interpreted cautiously and should be seen as a first attempt to understand trade performance in developing countries. 38 Brenton and Hoffman 2015. 7 The data come from the World Bank’s Export of Value Added Database, which covers only 25 countries in Africa. REFERENCES 8 Gross exports is the transaction value of a sector’s exports. This Aguilar, A. and T. 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Global Value Chains, Economic Upgrading, and Gender: Case Studies of the Horticulture, Tourism, and Call Center Industries. Washington, DC: World Bank. Stern, M. 2008. “Moving Medics: A Case Study of South Africa.” A paper prepared for the Overseas Development Institute. Development Network Africa. The Africa Competitiveness Report 2015 | 67 2.2: Valuing Trade in Services in Africa Appendix A: Valuing Services As mentioned in the chapter, reliable trade data in Africa • Total value-added of exports: This measure adds are lacking. However, the World Bank’s Export Value the value-added of inputs produced domestically Added Database uses input-output data from the Global to the direct value-added of exports. It captures Trade Analysis Project (GTAP) to construct country- the indirect contribution through value chain links specific measures of the direct and indirect contribution with other export activities, expressed in terms of of services to the value-added contained in a given forward or backward linkages. This measure is country’s domestic production and exports. Specifically, increasingly important in an environment where the database contains two matrices: a domestic global production is fragmented across production value-added table and an export value-added table, sharing networks. which together identify the value-added contribution • Forward linkages: This measures the value-added of particular inputs to sectors that either sell the final when considering the contribution of a particular good to the domestic market or export it. The cross- sector as an input to other sectors’ exports. This country database covers about 100 countries and 27 treats that particular sector as an upstream activity. sectors (nine commercial service sectors, three primary To continue with the above example, this measure sectors, and fourteen manufacturing sectors) spanning captures the value-added contributions of the intermittent years from 1997 to 2011. telecommunications sector to all sectors’ exports, Exports (of both goods and services) can be including BPO services. In other words, forward measured as: linkages show how important telecommunications • Gross exports: This is the transaction value of services are as inputs to other export activities. a sector’s exports. The gross exports measure • Backward linkages: This measures the value- captures both the value-added embodied in the added when considering the contribution of all other production of the export along with all domestic sectors to that particular sector’s exports. Backward and imported intermediate inputs. Gross measures linkages treat the particular sector as a downstream of trade statistics are registered in customs or activity. To continue with the above example, this balance of payments, usually at the transaction measure captures the value-added contributions value—that is, the price actually paid or payable for of all domestic inputs to the BPO sector’s exports, the goods and services. For example, a business including telecommunications services (but not process outsourcing (BPO) service from India the value of foreign-owned satellite input). In other contains telecommunications services, from both words, backward linkages show how important local providers and foreign owners of satellites. BPO services are to other sectors’ value-added India’s gross exports of BPO services measure their exports. delivery price, which accounts for the value-added generated by BPO exports as well as the cost of telecommunications services inputs. • Direct value-added of exports: This is the amount of a sector’s domestic value-added embodied in its own exports, measured as gross exports less domestic and foreign inputs. This measure captures the true sector-specific, or the direct, value-added contribution of exports. To continue with the above example, this measure nets out domestic and foreign inputs and captures the direct value-added generated by BPO exports in India. 68 | The Africa Competitiveness Report 2015 2.2: Valuing Trade in Services in Africa Appendix B: ISIC Mapping of Service Sectors The International Standard Industrial Classification (ISIC) is the international reference classification of production activities. The list here shows areas of production according to ISIC classification. Water: Water and Other Utility Services Communication: Post and Communications ISIC 401 Production, collection and distribution of Services electricity ISIC 64 Post and telecommunications ISIC 402 Manufacture of gas; distribution of gaseous fuels through mains Finance: Financial Services ISIC 403 Steam and hot water supply ISIC 65 Financial intermediation, except insurance ISIC 41 Collection, purification and distribution of and pension funding water ISIC 67 Activities auxiliary to financial intermediation Construction: Construction Insurance: Insurance Services ISIC 45 Construction ISIC 66 Insurance and pension funding, except compulsory social security Distribution: Trade and Distribution Services ISIC 50 Sales, maintenance and repair of motor OBSICT: Other Business and ICT Services vehicles and motorcycles; retail sale of ISIC 70 Real estate activities automotive fuel ISIC 711 Renting of transport equipment ISIC 51 Wholesale trade and commission trade, ISIC 712 Renting of other machinery and equipment except of motor vehicles and motorcycles ISIC 713 Renting of personal and household goods ISIC 521 Non-specialized retail trade in stores ISIC 72 Computer and related activities ISIC 522 Retail sale of food, beverages and tobacco ISIC 73 Research and development in specialized stores ISIC 74 Other business activities ISIC 523 Other retail trade of new goods in specialized stores Consumer: Other Consumer Services ISIC 524 Retail sale of second-hand goods in stores ISIC 92 Recreational, cultural and sporting activities ISIC 525 Retail trade not in stores ISIC 93 Other service activities ISIC 526 Repair of personal and household goods ISIC 95 Private households with employed persons ISIC 55 Hotels and restaurants Other Commercial Services: Public Services, Transport: Transport Services Dwellings ISIC 60 Land transport; transport via pipelines ISIC 75 Public administration and defense; ISIC 63 Supporting and auxiliary transport activities; compulsory social security activities of travel agencies ISIC 80 Education ISIC 61 Water transport ISIC 85 Health and social work ISIC 62 Air transport ISIC 90 Sewage and refuse disposal, sanitation and similar activities ISIC 91 Activities of membership organizations ISIC 99 Extra-territorial organizations and bodies Source: United Nations, Department of Economic and Social Affairs, 2008. The Africa Competitiveness Report 2015 | 69 CHAPTER 2.3 Africa’s economic performance over the last 15 years has improved considerably. After two decades of negative per capita growth, GDP growth has averaged 5 Tapping the Potential of percent per year and GDP per capita has increased by 30 percent since 2000. Yet important competitiveness Global Value Chains for challenges remain—as explored in Chapter 1.1 of this Report. African countries would benefit from more Africa intense trade and investment linkages, including higher intra-regional trade. The region’s participation in global CARLOS CONDE trade and investment flows remains low when compared PHILIPP HEINRIGS with other regions.1 While the numbers remain low in ANTHONY O’SULLIVAN absolute terms—trade in sub-Saharan Africa stands at 2 Organisation for Economic Co-operation and percent of total world trade—developments are pointing Development in a positive direction. At US$60 billion, foreign direct investment (FDI) into the region is five times the level in 2000, and trade flows have expanded by 10 percent per year over that same period. These positive developments are taking place within a context of expanding participation in global value chains (GVCs).2 There is growing interest in assessing what determines engagement in GVCs, what the effects of such engagement may be, and what the implications are for policymaking. These questions are particularly relevant for many African countries where business environments are generally less competitive and where policy challenges need to be confronted with more limited public resources. They also highlight the importance of the ongoing debate about the extent and desirability of integrating into regional and GVCs and the benefits associated with wider participation for developing countries.3 Recent research shows that many developing countries are increasingly involved in GVCs, and that this participation generally brings economic benefits in terms of enhanced productivity as well as greater sophistication and diversification of exports.4 Yet the gains from value chain participation vary significantly between countries, and African countries are no exception. The objectives of this chapter are to assess Africa’s progress in connecting to GVCs, to highlight the main challenges to further integration, and to outline ways in which African economies can deepen their integration into GVCs in order to enhance their economic performance and achieve prosperity for their citizens. GVCs offer opportunities to transform Africa’s economies by developing and expanding new activities and building dynamic and competitive manufacturing, agriculture, and service sectors. Regional (African) value chains can also play a significant role in offering local producers, including small- and medium-sized enterprises (SMEs), opportunities to access fast-growing and more easily accessible markets across Africa. However, as previous The authors gratefully acknowledge the very useful comments provided by Marcos Bonturi, Director, Global Relations Secretariat, OECD; Przemyslaw Kowalski and Javier Lopez Gonzalez from the Trade and Agricultural Directorate, OECD; Carole Biau, Karim Dahou, and Iza Lejarraga from the Directorate for Financial and Enterprise Affairs; and Henri-Bernard Solignac-Lecomte from the OECD Development Centre. The Africa Competitiveness Report 2015 | 71 2.3: Tapping the Potential of Global Value Chains for Africa chapters have shown, important competitiveness Table 1: Share of global value-added trade by region, percent (1995–2011) challenges remain and the productivity across all sectors of the region’s economy—agriculture, manufacturing, and Region 1995 2011 services—remains low. What is more, in the decades Europe 57.5 50.9 ahead, Africa’s unique demographic dynamics will East Asia 14.4 16.2 scale up the challenge of transforming the continent. North America 13.1 11.8 Africa’s workforce is expected to increase by 910 million Southeast Asia 6.0 6.8 between 2010 and 2050, of which 830 million will be in Latin America 3.2 4.2 sub-Saharan Africa.5 This unprecedented “demographic Middle East 2.0 3.0 dividend” also translates into a need for more jobs. Africa 1.4 2.2 Africa’s transformation therefore entails the double Russia and Central Asia 0.9 2.0 challenge of productivity growth and massive job creation. South Asia 0.7 1.7 Recommendations on the most desirable form Oceania 0.9 1.3 of GVC participation (whether backward or forward participation is preferable in a particular circumstance), Source: AfDB et al., 2014. how participation influences economic outcomes, and which segments of the value chain will be profitable depend on the characteristics of the production process Figure 1: Integration of world regions into GVCs, 2011 as well as on countries’ and firms’ characteristics, Share of total value-added exports (percent) such as relative skills and resource endowments. 80 More data and empirical studies are needed to fully ■ Backward integration assess the extent and determinants of the integration 70 ■ Forward integration of countries into GVCs, and the consequences these 60 have on development outcomes such as labor gains and 50 other social and environmental outcomes. Given these limitations, the following analysis offers a starting point 40 for policymakers to assess their countries’ participation 30 and policy options on ways to increase engagement in 20 GVCs with overall positive outcomes for society. The first part of this chapter presents data on 10 Africa’s participation in GVCs. The second section 0 examines factors driving and hampering African Europe South- Africa North East Russia Middle Latin South Oceania east Asia America Asia and East America Asia countries’ participation in GVCs. The third part discusses Central Asia policy options for governments to strengthen the integration of their economies into GVCs. The last Source: AfDB et al., 2014. section stresses the need for broad economic reform agendas to deepen African integration in value chain trade. Priority areas include trade facilitation, business Figure 2: African integration into GVCs, 2011 US$, billions climate, strengthening investment and financial services, regulatory reform, and stronger regional integration. 120 ■ Backward integration ■ Forward integration AFRICA’S GVC PARTICIPATION 100 The two main types of a country’s participation in GVC 80 trade are backward integration, when a country sources foreign inputs for its export production, and forward 60 integration, when a country provides inputs for another country’s export production. Combining backward and 40 forward integration gives a measure of a country’s total GVC participation. Although the desirable outcome— 20 boosting productivity and employment creation—is clear, a remaining question is whether participation in 0 Southern Africa North Africa West Africa East Africa Central Africa both backward and forward integration paves the way to these objectives or if one should be favored over the Source: AfDB et al., 2014. other. Recent research shows that increasing backward participation leads to higher per capita domestic value-added in exports.6 In other words, imports of intermediates are a way to access competitive inputs 72 | The Africa Competitiveness Report 2015 2.3: Tapping the Potential of Global Value Chains for Africa Figure 3: Global value chain participation in Africa, 2011 Share of total value-added exports (percent) 0.8 ■ Forward integration ■ Backward integration 0.7 0.6 0.5 0.4 0.3 0.2 0.1 0.0 Congo, Dem. Rep. Central African Rep. Seychelles Zimbabwe Tanzania Lesotho Swaziland Angola Congo Tunisia Botswana South Africa Zambia Morocco Ghana Algeria Mauritania African average Burundi Guinea Namibia Mauritius Rwanda Niger Togo Nigeria Sierra Leone Burkina Faso Cape Verde Chad Uganda Kenya Djibouti Gabon Liberia Libya Mozambique Ethiopia Eritrea Cameroon Egypt Madagascar Senegal Malawi Mali Sao Tome and Principe Côte d’Ivoire The Gambia Benin Sudan Somalia South Sudan Source: AfDB et al., 2014. and thus to enhance productivity and produce goods exports (in North and West Africa in particular) are that are more competitive for export. A higher share of still concentrated around commodities such as fuel backward participation is also linked to the production and mineral resources. Only East and Southern Africa of more-sophisticated export bundles and greater record increasing shares of processed intermediate diversification of exports over time.7 The benefits of exports. Backward participation, however, has been forward participation are less clear and depend heavily growing faster than forward participation, increasing by on the type of the forward linkages (e.g., raw materials 60 percent between 1995 and 2011.11 Africa’s imports versus research and design). reveal a high concentration in capital goods, suggesting Africa captures a small but growing share of a strong reliance on the foreign technology embedded global value-added trade and constitutes one of in imported capital goods. Concerning the imports of the most integrated regions in GVCs. Today over processed intermediates, Africa’s import intensity is 70 percent of global trade is in intermediate goods similar to that of other developing regions.12 and services and capital goods.8 Global trade remains Africa’s regional participation in GVCs is driven strongly clustered in and around the manufacturing hubs by Southern and North Africa, which together in Europe, North America, and East Asia. These three account for the lion’s share of the continent’s total regional blocs accounted for approximately 80 percent value chain trade—78 percent, while West Africa of global value-added trade in 2011. Africa captured a accounts for only 14 percent, East Africa for 5 percent, small but growing share of this trade in 2011: the continent and Central Africa for 3 percent. Southern Africa and accounts for 2.2 percent of total GVC trade—an increase North Africa both account for the continent’s largest of almost 60 percent since 1995 (Table 1).9 share of both forward and backward value chain Despite its low share of total GVC trade, the integration (Figure 2). Both regions have important natural continent’s value chains are among the most integrated resource sectors and a strong export specialization in in the world in terms of relative share of value-added mining activities. Southern Africa also accounts for 50 trade to total trade. More than half of Africa’s total percent of the continent’s total backward integration, exports involve either forward or backward integration. with intermediate inputs sourced mainly from the United Only Europe and Southeast Asia are more integrated States and China. than Africa into GVCs (see Figure 1).10 Large differences both in total participation Africa’s participation in GVCs is still dominated rates and shares of forward and backward by forward integration, although backward participation rates across African countries integration has been growing faster. As seen in prevail. Total participation rates range from 73 Figure 1, Africa’s forward integration comprises just percent in Seychelles to 20 percent in South Sudan over 60 percent of its participation in GVCs. African (Figure 3).13 The five African countries with the highest The Africa Competitiveness Report 2015 | 73 2.3: Tapping the Potential of Global Value Chains for Africa Figure 4: Africa’s participation in GVCs, 2011 4a: Destinations of Africa’s forward participation 4b: Sources of Africa’s backward participation (% total forward participation) (% total backward participation) 100 100 80 80 60 60 40 40 20 20 0 0 Southern East Central African West North East Southern Central African West North Africa Africa Africa average Africa Africa Africa Africa Africa average Africa Africa Africa Asia Middle East Africa Asia Middle East Europe North America Latin America Europe North America Latin America Source: AfDB et al., 2014. Source: AfDB et al., 2014. level of GVC participation are Lesotho, Seychelles, in value of imported intermediate inputs in Southern Swaziland, Tanzania, and Zimbabwe. Guinea, Algeria, Africa can be attributed in part to South Africa’s growing the Democratic Republic of Congo, South Africa, and role as a “headquarter economy” for countries in the Libya have the highest forward participation rates. Most region. Indeed, South Africa’s imports of intermediates African countries have seen their forward participation from other economies in the region increased ninefold rate increase between 1995 and 2011. South Sudan, between 1995 and 2011, from US$78 million to Djibouti, South Africa, Niger, Ethiopia, and Congo US$686 million. Its forward participation in other African have witnessed the most important relative increase economies increased fivefold over the same period, from in forward participation rates (above 40 percent) of all US$675 million to US$3,487 million.16 African countries. Overall, forward participation rates have increased by 20 percent in Africa since 1995.14 The FACTORS DRIVING AFRICA’S GVC PARTICIPATION continent’s backward participation increased by Empirical analysis shows that structural factors are 60 percent—three times faster—over the same period. the main determinants of a country’s participation The countries with the highest backward participation in GVCs.17 Understanding what determines GVC rate are Zimbabwe, Seychelles, Lesotho, and participation is crucial to identifying the scope that Tanzania.15 governments have to influence value chain participation The main destinations for African inputs into through policy. According to recent empirical analysis GVCs (forward integration) are Europe and Asia. by the Organisation for Economic Co-operation and Europe absorbs 61 percent of Africa’s total forward and Development (OECD), the role of policy in influencing 40 percent of its backward integration, followed by Asia, value chain participation remains limited when compared which accounts for 20 percent of forward integration and to structural factors such as the country’s domestic close to 30 percent of backward integration. Asia is the market size, distance to manufacturing hubs, level of main source in backward participation in East Africa and development, and level of industrialization.18 Central Africa, accounting for 36 percent and 35 percent • Domestic market size (proxied by GDP): of backward integration, respectively (Figures 4a and 4b). Controlling for other factors, the larger the size Although the regional component of African of the domestic market, the lower the backward value chain trade is low, backward integration is integration of a country and the higher the forward twice as important as forward integration within integration. One explanation for this is that countries the continent. Intra-continental trade flows account for with larger economies are able to draw on a larger only 6 percent of forward integration and 12 percent of array of domestic intermediate inputs and therefore backward integration. Inter-regional forward integration need to import less. The impact of market size on shares are highest in Southern Africa, with 11 percent, backward participation is more pronounced in low- and backward integration shares are most significant income countries than in middle- and high-income in East Africa and Southern Africa, at 25 percent and countries. In terms of forward participation, the size 16 percent, respectively. The high intra-African share 74 | The Africa Competitiveness Report 2015 2.3: Tapping the Potential of Global Value Chains for Africa Figure 5: Forward GVC participation ratio: Relative contribution of structural and policy factors, 2005 Share of exports 0.6 0.5 0.4 0.3 0.2 0.1 0.0 –0.1 –0.2 Central African Rep. Uganda Egypt Rwanda Mali Senegal Benin Mozambique Chad Togo Burundi Tunisia Kenya Burkina Faso Zambia Djibouti Madagascar Côte d'Ivoire Morocco Cameroon Mauritius Niger South Africa Angola Gabon Guinea Congo Nigeria Residual factors not accounted for in the model Trade policy Investment openness Non-policy & constant model term Actual forward participation Source: OECD, 2015a. of the market plays a smaller role in low-income potential for participation and provides additional countries, probably because of their stronger export incentives for specialization in primary sectors. concentration in natural resources. Overall, backward participation is better • Distance to manufacturing hubs: As mentioned understood than forward participation.19 Backward earlier, GVC trade exhibits strong regional participation captures the demand side of value chains concentration around the three main manufacturing and is more closely linked to countries’ structural hubs of Europe, Asia, and North America. Distance characteristics, such as the size of the country and to one of these hubs has a strong impact on its level of industrialization (see Figure 6). By contrast, backward engagement, signaling that there is forward participation captures the supply side of value a strong benefit of proximity to headquarter chains and is strongly correlated to a country’s natural economies. This is reinforced by the data, which endowments. For African countries, where forward show North Africa’s high share of intermediate participation is strongly related to export of natural imports sourced from Europe (and relative small resources, the ability to predict forward participation share from Asia), and Asia’s high share in East based on structural and policy characteristics is more Africa’s backward participation (see Figure 4b). difficult. The residual term in Figures 5 and 6 captures The impact of distance on forward participation is the difference between actual forward participation and insignificant. predicted participation, based on considered policy and non-policy characteristics.20 It identifies whether • Level of industrialization (proxied by share of countries are participating above or below what would manufacturing value-added in GDP): Larger be predicted by these characteristics as well as the role manufacturing sectors are positively related with of unobserved factors. For instance, countries such backward participation and negatively with forward as Nigeria, Congo, and Guinea participate significantly participation. However, the impact of the level of above the model predicted values, whereas Uganda, industrialization of the economy is significant only Egypt, Rwanda, and Mali participate significantly below in low-income countries. Backward linkages are (see Figure 5). In contrast, backward participation strongest in countries that engage in factory-type captures the demand side of value chains and is more activities, such as assembly, which dominate in early closely linked to countries’ structural characteristics, stages of industrialization. In many African countries, such as its size and level of industrialization. a relatively small manufacturing sector reduces the The Africa Competitiveness Report 2015 | 75 2.3: Tapping the Potential of Global Value Chains for Africa Figure 6: Backward GVC participation ratio: Relative contribution of structural and policy factors, 2005 Share of exports 0.4 0.3 0.2 0.1 0.0 –0.1 –0.2 Central African Rep. Chad Cameroon Nigeria Egypt Gabon Angola Burkina Faso Algeria Uganda Mali Congo Morocco Senegal Benin Zambia Burundi Rwanda Côte d'Ivoire Nigeria Madagascar Guinea Kenya Tunisia Mozambique Togo Mauritius Djibouti Residual factors not accounted for in the model Trade policy Investment openness Non-policy & constant model term Actual backward participation Source: OECD. 2015a. Notwithstanding the important role played The following section reviews some of the most by structural factors, a range of different policies important policy areas for determining a country’s contribute to GVC participation. In developing participation in GVCs, including trade and investment countries, institutional and legal frameworks as well as policy (including intellectual property rights), logistics infrastructure are important determinants of the level of and customs procedures, infrastructure, and access to GVC participation.21 These are areas in which the African finance (Figure 7). continent is lagging behind, as shown in Chapter 1.1. Services play an increasingly central role in Trade policy the actual operation of GVCs (see Chapter 2.2). The Although the overall impact of traditional trade fragmentation of production processes has increased policy on GVC participation in many African the demand for services to coordinate the production countries remains low, some countries can reap and distribution of goods and services. Services such as important benefits by removing tariff barriers to transport and infrastructure; logistics and warehousing; trade. Fragmented production processes inherent in trade facilitation; and business services, including GVC trade imply multiple border crossings, which can telecommunications, banking, insurance, and other amplify the effects of tariffs.24 In long and complex value professional services are required at every stage of chains—such as motor vehicles, basic metals, and the production process. The share of such services in textiles, leather, and footwear—these amplification effects manufacturing value-added trade is approximately 30 can be important. percent, with variations across sectors.22 Traditional Free trade agreements and regional trade trade policies—consisting mainly of tariffs and border agreements covering a large share of imports are measures—still matter, but tariffs are now much important to keep tariffs low and promote greater GVC lower, more transparent, and predictable. By contrast, participation. Developing regions such as Southeast inefficient customs and port procedures, unpredictable Asia, which have comprehensive free trade agreements, delays, and weak infrastructure can be far more costly also enjoy high levels of intra-regional GVC integration than tariffs for trade. In sum, the attractiveness of (Figures 8a and 8b).25 In Africa, although the East African production locations for value chain trade depends Community and the Southern African Development strongly on the availability of services and infrastructures Community have achieved strong reductions in barriers that can ensure reliable and efficient movement of goods to trade, tariffs remain relatively high for intra-regional and services across borders.23 trade, sometimes higher than they are between Africa 76 | The Africa Competitiveness Report 2015 2.3: Tapping the Potential of Global Value Chains for Africa Figure 7: The impact of broad policies on GVC integration Intellectual property protection (index) Infrastructure availability and quality Institutional quality Logistics Performance Index (customs) Broadband subscription (thousands) Quality of electricity supply (index) Access to loans (index) Technical occupations (share) Tertiary graduates (share of workforce) Tax rate (total) R&D expenditure Product market regulation Services Trade Restrictiveness Index FDI Restrictiveness Index (net) –0.15 –0.10 –0.05 0.00 0.05 0.10 0.15 Standardized coefficients Developing countries High-income countries Total Source: OECD, 2015a. and the rest of the world. For example, the United the Democratic Republic of Congo, Cameroon, Djibouti, Nations Conference on Trade and Development Rwanda, and Nigeria.27 In North African countries, trade (UNCTAD) estimated that an African firm exporting performance is mostly attributed to the relatively high to markets outside the continent faces an average coverage of imports and exports of intermediates by protection rate of 2.5 percent, while exporting the same regional trade agreements. Still, Morocco and Tunisia, good to an African market would face an average for example, could boost their GVC participation by applied protection rate of 8.7 percent.26 15 percent or more if they further liberalized their According to OECD estimates, African countries trade policies. However, in order to achieve the most that would benefit most from trade policy reform are impact, the reduction of tariff barriers would need to be Figure 8: Share of intra-regional participation in GVCs, percent of gross exports, 2011 8a: Backward participation 8b: Forward participation 25 25 Non-regional Non-regio 20 20 Regional Regional 15 15 10 10 5 5 0 0 Southeast Asia East and Southern Africa West and Central Africa Southeast Asia East and Southern Africa West and Central Africa Regional Non-regional Regional Non-regional Source: OECD, 2015a. Source: OECD, 2015a. The Africa Competitiveness Report 2015 | 77 2.3: Tapping the Potential of Global Value Chains for Africa Figure 9: Trade costs in Africa, 2010 250 200 150 100 50 0 Central African Rep. Chad Niger Equatorial Guinea Burundi Liberia Rwanda Uganda Burkina Faso Mauritius Gambia Mali Senegal Cameroon Malawi Ethiopia Côte d'Ivoire Tanzania Angola Togo Egypt Sudan Nigeria Ghana Morocco Mozambique Cape Verde Zimbabwe Tunisia Mauritania Zambia Algeria South Africa Southeast Asia average Source: OECD, 2015a. Notes: Bars show ad-valorem equivalents of trade costs. Values are trade-weighted values per country. For comparison, the Southeast Asia average is shown at the end of the graph. accompanied by other policy measures such as trade Factors such as road quality, quality of rolling and investment facilitation, competition policy, and stock, customs and port duties, delays, coordination intellectual property protection. issues, and bribes all contribute to high transport costs. In addition to the poor quality of transport Trade facilitation, logistics, and infrastructure infrastructure and services, high transport costs in Trade facilitation—including commercial, transport, Africa can be explained by the absence of competition regulatory, and financial procedures—complements and inefficient regulation of the freight logistics sector. trade policy as a priority policy direction that can This lack of competition contributes to the high profit enhance Africa’s integration into GVCs. Although margins of transporters, which exceed 150 percent tariffs are estimated to account for only 0–10 percent along certain corridors. The strong influence of transport of total trade costs, and physical trade costs another cartels on the quality and costs of logistics has been 10–30 percent, the remaining 60–90 percent is analyzed in West and Central Africa.30 In addition, comprised of non-tariff–related costs such as trade delays and unpredictability in GVCs can be just as procedures, maritime connectivity and services, regulatory strong an impediment to participation as costs. Global environment, currency fluctuations, and availability of production networks in many industries rely on just-in- communication services.28 The impact of trade facilitation time production and depend on the reliability of supply of on trade costs is even stronger on products with relatively intermediate inputs.31 low value and low value-to-weight ratios, in which some OECD analysis shows that sub-Saharan Africa African countries show strong comparative advantage. fares worse in trade facilitation performance The geographic isolation of many African countries than the average performance of 107 non-OECD is further aggravated by the poor quality and absence countries surveyed. The continent is weaker in areas of critical infrastructure (see Chapter 1.1). As a result, such as harmonizing and streamlining documents and firms in Africa face some of the highest trade costs in the advance rulings, as well as appeal procedures and world. For instance, the cost of exporting a standard 20- fees and charges.32 However, Southern Africa stands foot container is more than twelve times higher in Chad out from the rest on automation and is on par with the (US$6,600), six times higher in Rwanda (US$3,200), and average of countries covered outside the OECD in areas three times higher in South Africa (US$1,531) than it is in such as information availability, appeal procedures, and China (US$500).29 Landlocked countries, such as Chad, internal border agency cooperation (Figure 10). West Niger, and the Central African Republic, tend to face the and Central Africa and East Africa perform uniformly highest trade costs (Figure 9). below the overall average, and could draw considerable 78 | The Africa Competitiveness Report 2015 2.3: Tapping the Potential of Global Value Chains for Africa benefits in terms of trade volumes and trade costs Figure 10: Trade facilitation performance, 2013 from improvements in areas covering advance rulings, Scores (0.0–2.0) appeal procedures, fees and charges, harmonization Information availability and streamlining of documents, automation, and internal 2.0 Governance Involvement of border agency cooperation (Figure 10). African firms are and impartiality trade community 1.5 also hampered by inefficiencies of customs and port 1.0 procedures and by corruption. In many African countries, Border agency Advance rulings 0.5 trading across borders is burdensome and costly, cooperation: internal 0.0 although there is wide variation between countries. According to the World Bank Doing Business indicators, Formalities: Appeal procedures it takes 51 days and requires seven documents to export procedures a container from Zambia, 40 days and ten documents from Angola, and 26 days and six documents from Mali, Formalities: automation Fees and charges but only 10 days and four documents from Morocco.33 Formalities: documents The combined effects of the elements described above (inefficiencies, red tape, and corruption) on trade costs translate into the highest intra-regional trade   North Africa   Southern Africa costs in the world, constraining the scope and depth   East Africa   West and Central Africa of regional value chains (Figure 11).34 Intra-regional   Overall performance outside OECD area connections are still mostly absent. Infrastructure Source: OECD’s Trade Facilitation Indicators, available at http://www.oecd.org/tad/facilitation/ investments, in particular in intra-regional connections, indicators.htm. will be of particular importance in increasing participation Note: The figure shows the latest available data. The Trade Facilitation Indicators have scores ranging from 0.0 to 2.0 (best). in GVCs beyond the export of raw material and primary products. Investment policy level of investment openness on the continent, but In addition to trade policy and facilitation, investment with important differences between the most open policy is another vital factor that determines a (e.g., Zambia, South Africa) and the most closed (e.g., country’s capacity to participate in—and benefit Rwanda).36 Overall, the contribution of investment from—global production networks. FDI is a key openness to GVC participation in Africa is close to building block of GVCs and is driven by multinational the average contribution of investment openness in enterprises, which are sensitive to FDI restrictions and Southeast Asia. the protection of intellectual property rights. The exact More detailed regional comparisons, as well as contribution of investment policy depends on structural comparisons of specific restrictions, can indicate the country factors, the type of investment, and the nature of extent to which participation could be facilitated through links created with the host economy.35 appropriate FDI policies.37 The OECD FDI Regulatory West and Central African countries tend to have Restrictiveness Index evaluates FDI rules, which are the lowest FDI to GDP ratios in Africa, apart from a a critical determinant of a country’s attractiveness few outliers such as the Republic of the Congo, which to foreign investors. The index covers four types of is on par with average performers in Southeast Asia. measures: (1) foreign equity restrictions, (2) screening Countries in East and Southern Africa have the highest and prior approval requirements, (3) rules for key Figure 11: Region-by-region trade-weighted costs, 2010 Middle East and East and West and Regions North America Europe 27 North Africa Southeast Asia South Asia Southern Africa Central Africa North America 15 Europe 27 66 34 Middle East and North Africa 72 76 48 Southeast Asia 72 88 69 69 South Asia 89 95 61 104 92 East and Southern Africa 125 112 91 155 162 104 West and Central Africa 105 107 112 162 100 94 104 Source: OECD, 2015a. Notes: Figures show ad-valorem equivalents of trade costs. Data are the trade-weighted average cost of trade by region for the year 2010. Boxes with bolded values are intra-regional. The Africa Competitiveness Report 2015 | 79 2.3: Tapping the Potential of Global Value Chains for Africa to this new reality and promote business environments Figure 12: Barriers to entering value chains: Private- and public-sector views that make countries and firms more attractive and competitive for GVCs and facilitate upgrading Access to finance opportunities.43 The preceding analysis shows that Public sector developing countries no single field of policy can offer the entire solution Transport costs & capacity that allows a country’s firms to further integrate into Business environment global and firms Lead regional value chains, and that policies are Meeting standards interdependent. Promoting better integration into GVCs will require countryset a broad Developing of policy reforms, such as trade suppliers Supply chain governance facilitation including streamlining customs and border Inadequate ICT networks procedures; investments in public goods, notably transport infrastructure; improving the business climate, Customs procedures including boosting access to finance and improving Labor skills investment climate and competition; and deeper regional Public sector trade agreements. Many of these areas are part of a Import duties in developing countries broader reform agenda that may lead to economy-wide Lead firms Licensing requirements Developing-country suppliers benefits beyond GVC integration. The OECD can assist Power supply governments in some of these areas through policy reviews that inform and guide reforms at national and 0 10 20 30 40 50 60 70 80 subregional levels, through promoting adherence to selected instruments and building statistical capacity and Responses (percent) Source: OECD et al., 2014. by compiling better data. Trade facilitation focusing on connectivity personnel, and (4) other restrictions on the operation Policies should include measures that facilitate of foreign enterprises. Eight African countries are access to the most competitive inputs by addressing included in the index, with the four best-performing non-tariff barriers to trade and the quality of African countries—South Africa, Egypt, Mauritius, logistics and transport services.44 As we have seen, and Morocco—showing more open regulatory FDI engagement in value chains depends on the ease, environments than the OECD average.38 cost, and reliability of international flows of goods and services. African countries that are able to remove Access to finance the main non-tariff barriers and make trade facilitation Access to finance is one of the main obstacles processes faster and more reliable, and cost less, will to doing business in developing countries and is be more successful in entering GVCs.45 Governments thus an important factor in entering, establishing, can leverage policy indicators, such as the OECD’s trade or moving up value chains (Figure 12).39 Although facilitation indicators, to identify priority areas for action financial systems in Africa have evolved considerably and evaluate the implementation of reforms. over the past decades, particularly in countries such Equally important to non-tariff barriers is the as South Africa, they are still very limited and costly in quality of logistics and transport services. Improving a number of countries.40 African SMEs across all size the poor performance of the logistics and transport groups—small, medium, and large41—are generally less sector in Africa will depend on more efficient regulation likely to have access to loans than firms outside Africa, in the areas of licensing and standards as well as although there are a few exceptions. These include on increasing competition in the transport sector. South Africa, Burundi, and Mauritius, where over one- Governments should continue to reduce obstacles to third of firms have formal loans.42 Further diversification the movement of goods and people within countries and in Africa where firms advance from primary commodity- across the region. Many regional economic communities based value chain participation toward higher value- in Africa provide for the free movement of people, goods, added manufacturing and service-based participation and capital, but the application of existing legislation has will require significant investments that will, in many to be better enforced. countries, also depend on better-performing financial sectors. Infrastructure provision and financing The quality and availability of infrastructure is an POLICY OPTIONS FOR ENTERING AND EXPANDING important factor in determining the attractiveness PARTICIPATION IN GVCS of a location for GVC investment decisions.46 GVCs have profoundly transformed global production Improving transport performance in Africa, especially and are becoming increasingly influential in determining for intra-regional and coast-hinterland transport, will future trade and FDI patterns. Policies need to respond require large investments in new connections as well as 80 | The Africa Competitiveness Report 2015 2.3: Tapping the Potential of Global Value Chains for Africa up-grading existing infrastructure. Most infrastructure projects in Africa today are financed by public sources Box 1: Public goods provision: Improving and development partners; private investment in such taxation, GVCs, BEPS, and developing countries projects is limited. Part of the necessary financing could Global value chains (GVCs) present a particular challenge come from more effective tax collection (see Box 1). when it comes to taxation. National tax laws have not In addition, the massive upgrading of infrastructure always kept pace with the increasing interconnection of in Africa will require strengthening the regulatory global production and the movement of capital, driven framework for procurement and public-private by global corporations with aggressive tax planning strategies that exploit gaps in tax rules to shift profits to partnerships in infrastructure as well as building relevant locations with lower taxes. This phenomenon, known government capacity to manage these infrastructure as base erosion and profit shifting (BEPS), has been an contracts. Enhancing the economic regulation of important area of work for the OECD. Given the central transport infrastructure should also include entrusting role of multinational enterprises in structuring GVC trade and Africa’s strong reliance on corporate income tax, infrastructure price-setting to independent regulatory particularly from multinational enterprises, BEPS is of agencies, involving competition authorities in any major significance for countries in the region. Forums necessary unbundling of infrastructure services, and such as the OECD/G20 BEPS Project brings OECD and ensuring a level playing field between public and private non-OECD/G-20 countries and organizations, such as the operators active in infrastructure markets. When planning African Tax Administration Forum, to discuss and develop domestic and international instruments needed to address and designing infrastructure, particular attention should this challenge.1 also be placed on intra-regional connections and The result has been the OECD’s BEPS Action spatial planning. Increasing links between countries and Plan, published in 2013, which incorporates the specific between growth poles and growing secondary cities as concerns and context of developing countries in the development of solutions to counter BEPS. These have well as between urban and rural areas will unlock local been taken into account through regional consultations growth opportunities.47 with more than 80 developing countries. These inputs feed The OECD’s Principles for Public Governance of directly into the action steps of the BEPS Action Plan with Public-Private Partnerships and Principles for Private the following priority areas: Sector Participation in Infrastructure can be useful • limit base erosion via interest deductions and other tools to support African policymakers in attracting financial payments (addressed by Action 4 of the BEPS Action Plan), further private investment in infrastructure.48 The OECD guidelines noted above cover aspects ranging • prevent tax treaty abuse and the artificial avoidance of from institutional design, regulation, and competition Permanent Establishment status (Actions 6 and 7), to budgetary transparency and integrity at all levels • transfer pricing, in particular base-eroding payments of government. They provide concrete guidance on (Actions 8, 9, and 10), and how to enhance countries’ enabling environment for • transfer pricing documentation and country-by-country infrastructure investment while ensuring that new reporting (Action 13). infrastructure projects will provide value for money The identified measures will give countries the and benefits for infrastructure end-users, including tools they need to ensure that profits are taxed where businesses aiming to position themselves within GVCs.49 economic activities generating the profits are performed and where value is created, while at the same time providing businesses with greater certainty by reducing Investment and access to finance disputes over the application of international tax rules and Firms in developing countries rank access to standardizing requirements. The OECD, working with other finance, in particular trade finance, as the main international organizations and regional tax organizations, will also translate the BEPS Action Plan into practical obstacle preventing them from entering and moving support. up value chains (see Figure 12). A firm’s ability to export and import depends on financial costs. By Note broadening access and lowering costs, well-functioning 1 OECD 2013e. financial systems can increase the number of potential Source: OECD, 2013e. trading partners and the volume of trade.50 Improving access to finance, including export credits and trade finance as well as affordability for African SMEs and entrepreneurs, should be priority components of policymakers design appropriate strategies. For instance, government reform agendas to boost GVC integration. the OECD’s Financing SMEs and Entrepreneurs 2013: Financial system development strategies need to An OECD Scoreboard and the SME Policy Index provide encourage further competition in the banking sector and a comparative overview of where countries stand on introduce policies that help limit collateral requirements access to finance outcomes and policies.52 and reduce credit information gaps.51 Upgrading productive capacities also depends on The OECD’s work on SMEs and entrepreneurship attracting more and better investment, in particular FDI. financing provides some concrete tools that help For example, OECD Investment Policy Reviews and The Africa Competitiveness Report 2015 | 81 2.3: Tapping the Potential of Global Value Chains for Africa technical working group established by the African Union Box 2: Improving trade data: OECD-WTO TiVA: A to assess the compatibility of rules of origin across the new approach to measuring GVC trade three trading blocs (the Common Market for Eastern and Southern Africa, the East African Community, and the Global value chains (GVCs) and the sharp increase Southern African Development Community), should be of trade flows in intermediate inputs are leading to an increasingly distorted view of world trade based on supported further.57 conventional trade statistics. By measuring international The potential benefits from stronger intra-regional trade in gross terms, conventional trade statistics often integration appear particularly vital in Africa because of record intermediate inputs rather than inputs throughout the significance of structural factors in determining GVC the value chain. Measuring trade in value-added avoids this problem. However, data in trade in value-added have participation. Given the strong impact of market size, only recently started to be compiled. This work is being industrial structure, and level of development on GVC done by the joint Organisation for Economic Co-operation participation, many of the smaller economies with low and Development-World Trade Organization (OECD-WTO) levels of industrial development are likely to benefit from Trade in Value-Added (TiVA) database and the United Nations Conference on Trade and Development (UNCTAD) stronger links with the larger countries in the region.58 EORA database. Regional integration can also be a way of “learning The OECD-WTO TiVA database is a statistical by doing” for many African countries and a preparation approach used to estimate the source(s) of value-added for greater competition in global markets.59 In particular, (by country and industry) in producing goods and services for export (and import). Expanding GVCs imply that a domestic SMEs are more likely to succeed first in country’s exports increasingly rely on intermediate imports. regional markets, where they tend to have better market For example, a motor vehicle exported by country A may knowledge, be more familiar with standard requirements, require significant parts, such as engines, seats, and so and have better access to lead firms. Competitive on produced in other countries. These countries in turn will use intermediate inputs imported from other countries, pressures on some segments also tend to be lower on such as steel, rubber, and so on, to produce the parts regional markets than global markets. exported to country A. The trade in value-added approach traces the value added by each industry and country in the Policy dialogue and better data production chain and allocates the value-added to these Given the complexity and large range of issues source industries and countries. Work is currently underway to increase the policymakers must tackle to promote better integration geographic coverage of the OECD-WTO TiVA database, to into the global economy, the success of reform improve its timeliness, and to deepen its level of industry agendas will also depend on active dialogue among detail. Increasingly integrating more African economies key stakeholders through forums such as OECD would help in better understanding GVCs and development related outcomes. Committees, OECD Regional Programme Policy Networks, and the OECD Initiative for Policy Dialogue on GVCs, Production Transformation and Development.60 Such policy dialogue promotes knowledge-sharing and peer learning between countries to share good practices the OECD Policy Framework for Investment can help and increase policy impact. Countries advance in their identify priority policy reforms to improve the investment capacity to design and implement policies through trial climate.53 These Policy Reviews of African countries have and error, and learning from the experience of others highlighted intellectual property protection, competition, is an important enhancer of policy learning processes public governance, anti-corruption, and foreign exchange within countries.61 National and international public- transactions as particularly important in attracting further private dialogue mechanisms can also encourage greater investment. transparency and relevance in policy choices.62 In addition to effective policy dialogue, better Regional trade agreements and regional integration data are needed on African countries if they are to Different regional economic communities in Africa design the right policies for enhanced participation in have contributed to progress toward reducing GVCs. For instance, African countries could participate barriers to trade and boosting intra-regional trade further in initiatives such as the OECD-WTO TiVA flows.54 Yet intra-regional trade still suffers from relatively database (see Box 2). Including more African countries high tariffs, an incompatibility of rules of origin across the in other databases relevant to GVCs—such as the FDI different trading blocks, and implementation issues.55 Restrictiveness database, the SME and Entrepreneurship Comprehensive regional trade agreements with deep Financing Scoreboard database, and the Services Trade integration measures (WTO+), providing for non-tariff Restrictiveness Index database—would certainly help barriers to trade—including investment, competition inform better policymaking. policy, intellectual property protection, and dispute settlement—can support value chain integration, in CONCLUSIONS particular regional value chain integration.56 Some Participating in GVCs can accelerate African economic promising African initiatives in this area, such as the transformation, particularly through the gains associated 82 | The Africa Competitiveness Report 2015 2.3: Tapping the Potential of Global Value Chains for Africa with enhanced productivity, skills development, and 14 AfDB et al. 2014. diversification of exports. However, the gains from GVC 15 AfDB et al. 2014. participation are not automatic. They require a broad set 16 AfDB et al. 2014. of policies with a particular focus on trade facilitation, 17 This section is based on results of recent work at the OECD, in investment, transport infrastructure, and access to particular the Trade Policy Paper “Participation of Developing finance. Many of these policy areas should have Countries in Global Value Chains: Implications for Trade and Trade-Related Policies” (OECD 2015a). economy-wide benefits beyond GVC integration. 18 OECD 2015a. Accelerating the harmonization and implementation of regional trade agreements is another priority that 19 OECD 2015a. Country-specific characteristics account for 59 percent of the variation in a country’s backward participation should help African firms—in particular SMEs, which compared to 22 percent of a country’s forward participation. For face the greatest hurdles to GVC integration—develop a the detailed econometric specification and results, refer to OECD 2015a. greater capacity to compete on a global scale. 20 The explanatory variables considered in the benchmark Because the level of GVC integration varies econometric specification are grouped into three broad significantly with the level of economic development, categories: (1) non-policy factors: market size; the share of market size, factor endowments, and type of sector, manufacturing in GDP; distance to economic activity and distance to key manufacturing hubs; (2) core trade and investment policy- policies will need to be specifically tailored for each related factors: import tariffs charged on intermediate imports; country. Moreover, to fully capture the implications of import tariffs on intermediates faced in export markets; regional trade agreement coverage of intermediate’s imports and exports; GVCs for African countries it will be important to deepen revealed openness to inward FDI; (3) other policy-related factors: the analysis and understanding of GVCs and their impact because of uneven data coverage, the impact of policies such as logistics and border procedures, quality of transport infrastructure, on economic development. Further work is needed, in and intellectual property protection is investigated in a separate particular on GVC upgrading, on the link of GVCs with econometric specification. For a detailed description of the model specification, see OECD 2015a. jobs and skills, and on the connection between GVCs, investment, and technology transfer. 21 OECD 2015a; World Bank 2014. The OECD’s growing partnership with Africa spans 22 OECD 2015a. many research and policy areas that can help inform 23 OECD et al. 2014. policymaking to support Africa tapping the full potential 24 The amplification effect can occur via two channels: first, multiple of GVCs. The OECD stands ready to support African border crossings with intermediate inputs incur tariffs at each border crossing; and second, tariffs are levied on the gross value countries to further integrate into global and regional of imported goods, rather than on the value-added (OECD 2013b). value chains through its guidelines and instruments, 25 OECD 2015a. policy reviews, and comparative datasets. Through OECD 26 UNCTAD 2013. The low tariffs for exporting outside the continent Committees, Regional Policy Networks, and other relevant are largely the result of preferential agreements, such as the forums, countries can learn from each other to design and Everything but Arms initiative between the European Union and implement better policies, which should ultimately translate least-developed countries and the African Growth and Opportunity Act. into higher living standards for the African people. 27 OECD 2015a. NOTES 28 OECD 2014. 1 See, for instance, The Africa Competitiveness Report 2013 (World 29 World Bank 2015. Asian countries, especially China, are also Economic Forum et al. 2013). benefiting from economies of scale in shipping, which lowers trade costs; Asian governments have also invested heavily in 2 The interconnected production process that goods and services infrastructure. undergo from conception and design through production, marketing, and distribution is often referred to as a global 30 Teravaninthorn and Raballand 2008; AfDB 2012; OECD 2013. value chain or an international production network (Gereffi and Fernandez-Stark 2011; OECD 2013b). 31 Djankov et al. 2010. 3 OECD 2015a. 32 Moïsé et al. 2013. 4 OECD 2015a; AfDB et al. 2014. 33 World Bank 2015. 5 UN World Population Prospects, the 2012 Revision, available at 34 OECD 2015a. http://esa.un.org/wpp/. 35 OECD 2015a. 6 OECD 2015a; AfDB et al. 2014. 36 OECD 2015a. 7 OECD 2015a. 37 OECD 2015a. 8 OECD et al. 2014. 38 More information about the OECD FDI Regulatory Restrictiveness 9 AfDB et al. 2014. Index is available at http://www.oecd.org/investment/fdiindex.htm. 10 AfDB et al. 2014. 39 Access to finance is also cited as the most problematic factor in doing business more broadly; see Chapter 1.1, Figures 14a and 11 AEO 2014. 14b. See also OECD et al. 2014. 12 OECD 2015a. 40 Beck and Cull 2014. 13 Participation rate is calculated as a percentage of gross exports 41 Firms are considered small if they have fewer than 20 employees, and accounts both for the import content of exports and for medium if they have 20 to 99 employees, and large if they have exports of domestically produced intermediates used in third 100 employees or more. countries’ exports. 42 Beck and Cull 2014. The Africa Competitiveness Report 2015 | 83 2.3: Tapping the Potential of Global Value Chains for Africa 43 OECD et al. 2014. Gereffi, G. and K. Fernandez-Stark. 2011. “Global Value Chain Analysis: A Primer.” Durham, NC: Center of Globalization, Governance and 44 OECD 2015a. Competitiveness. 45 OECD/WTO 2014. Lesser, C. 2014. “African Economic Outlook 2014 Background Paper: 46 OECD et al, 2014; World Economic Forum et al. 2013. Implications of Global Value Chains for African Trade Policy.” Background paper, unpublished. 47 AfDB et al. 2015. Miroudot, S., D. Rouzet, and F. Spinelli. 2013. “Trade Policy Implications 48 OECD 2007; OECD 2012. of Global Value Chains: Case Studies.” OECD Trade Policy Paper No. 161. Paris: OECD Publishing. 49 OECD 2007; OECD 2012. Moïsé E., S. Sorescu, D. Hummels, and P. Minor. 2013. “Trade 50 OECD et.al 2014. Facilitation Indicators: The Potential Impact of Trade Facilitation on 51 OECD et al. 2014. Developing Countries Trade.” OECD Trade Policy Paper No. 144. Paris: OECD Publishing. 52 OECD 2013f. OECD (Organisation for Economic Co-operation and Development). 53 The OECD’s Policy Framework on Investment (PFI) is a 2007. OECD Principles for Private Sector Participation in comprehensive and systematic approach for improving investment Infrastructure. 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Interconnected Economies: Benefiting from Global Value plastics, and rubber. Chains: Synthesis Report. Paris: OECD Publishing. Available at 55 OECD 2015a. http://www.oecd.org/sti/ind/interconnected-economies-GVCs- synthesis.pdf. 56 OECD et al. 2014; OECD 2015a. ———. 2013c. Perspectives on Global Development 2013: Industrial 57 OECD 2015a. Policies in a Changing World. Paris: OECD Publishing. 58 AfDB 2014. ———. 2013d. OECD Investment Policy Reviews: Mozambique. Paris: OECD Publishing. 59 OECD 2015a. ———. 2013e. Action Plan on Base Erosion and Profit Shifting. 60 OECD et al. 2014. Paris: OECD Publishing. Available at http://dx.doi. 61 OECD 2013c. org/10.1787/9789264202719-en. 62 For instance, the Business and Industry Advisory Council is ———. 2013f. Financing SMEs and Entrepreneurs 2013: An OECD an independent international business association devoted to Scoreboard. 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The Africa Competitiveness Report 2015 | 85 Part 3 Competitiveness Profiles 3: Competitiveness Profiles How to Read the Competitiveness Profiles The Competitiveness Profiles section of The Africa Competitiveness Report 2015 presents a two-page Part 3: Competitiveness Profiles Algeria profile of the performance in the Global Competitiveness Key indicators, 2013 Population (millions) ..............................................37.9 GDP (PPP) per capita (int’l $), 1990–2013 Index (GCI) discussed in Chapter 1.1 for each of GDP (US$ billions)* .............................................212.5 15,000 Algeria Middle East, North Africa, and Pakistan GDP per capita (US$) ......................................5,605.6 GDP (PPP) as share (%) of world total ..................0.51 12,000 Sectoral value-added (% GDP), 2012 the 38 African economies covered in The Global Agriculture ..............................................................9.3 9,000 Industry ................................................................48.5 Services ...............................................................42.2 6,000 Competitiveness Report 2014–2015. To offer the most Human Development Index, 2013 3,000 Score, (0–1) best ..................................................0.72 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012 Rank (out of 187 economies)...................................93 Sources: IMF; UNFPA; UNDP; World Bank comprehensive picture of Africa possible, data for Benin Global Competitiveness Index Rank Score Stage of development and Liberia—based on The Global Competitiveness (out of 144) (1–7) GCI 2014–2015 .................................................. 79 ..... 4.1 Transition Transition GCI 2013–2014 (out of 148) ......................................... 100 ...... 3.8 1 1–2 2 2–3 3 GCI 2012–2013 (out of 144) ......................................... 110 ...... 3.7 Factor Efficiency Innovation Report 2013–2014—are also shown in these Profiles, driven driven driven Basic requirements (59.0%) ......................................... 65 ...... 4.6 Institutions Institutions .................................................................... 101 ...... 3.4 7 Infrastructure ................................................................ 106 ...... 3.1 Innovation Infrastructure 6 Macroeconomic environment ......................................... 11 ...... 6.4 although they were not included in the GCI 2014–2015. 5 Business Macroeconomic Health and primary education ......................................... 81 ...... 5.6 sophistication 4 environment 3 Efficiency enhancers (35.7%) .................................... 125 ...... 3.3 2 Health and Higher education and training ......................................... 98 ...... 3.7 Market size 1 primary Goods market efficiency .............................................. 136 ...... 3.5 education Labor market efficiency ................................................ 139 ...... 3.1 Financial market development ...................................... 137 ...... 2.7 Technological Higher education readiness and training Technological readiness ................................................ 129 ...... 2.6 PAGE 1 Market size ..................................................................... 47 ...... 4.4 Financial market Goods market development efficiency Innovation and sophistication factors (5.2%) ........... 133 ...... 2.9 Labor market efficiency Business sophistication ............................................... 131 ...... 3.2 Innovation ..................................................................... 128 ...... 2.6 Algeria Middle East, North Africa, and Pakistan   Key indicators The most problematic factors for doing business Access to financing ................................................................. 15.1 The first section presents a selection of key indicators for Corruption ............................................................................... 13.9 Inefficient government bureaucracy ......................................... 12.6 Tax rates.................................................................................... 9.4 Restrictive labor regulations ....................................................... 6.2 the economy under review: Inadequately educated workforce .............................................. 6.1 Inadequate supply of infrastructure ............................................ 5.8 Poor work ethic in national labor force....................................... 5.5 Tax regulations .......................................................................... 5.1 Policy instability ......................................................................... 4.7 Foreign currency regulations ...................................................... 4.3 • Population figures are sourced from the October Inflation ...................................................................................... 3.2 Government instability/coups .................................................... 2.9 Insufficient capacity to innovate ................................................. 2.2 Crime and theft ......................................................................... 1.9 2014 edition of the International Monetary Fund Poor public health ..................................................................... 1.1 0 5 10 15 20 25 30 Score (IMF)’s World Economic Outlook (WEO) Database. 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. 102 | The Africa Competitiveness Report 2015 • Gross domestic product (GDP) data come from the October 2014 edition of the IMF’s WEO 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 December 15, 2014). Africa, Afghanistan and Pakistan region (MENAP); • The Human Development Index (HDI) ranking is Sub-Saharan Africa; and Latin America and the computed by the United Nations Development Caribbean. Finally, advanced economies form a Programme (UNDP), available from the Human group of their own. For more information regarding Development Indices: Statistical Update 2014. the classification and the data, visit www.imf.org/weo. • The graph on the upper right-hand side displays   The Global Competitiveness Index the evolution of GDP per capita at purchasing This section of the profile details the economy’s power parity (PPP) from 1990 through 2013 (or performance on the various components of the GCI. The the period for which data are available) for the first column shows the country’s rank among the 144 economy under review (blue line). The gray line economies covered by the GCI, while the second column plots the GDP-weighted average of GDP per presents its score. The percentage contribution to the capita of the group of economies to which the overall GCI score of each subindex is reported next to the economy under review belongs. We draw on the subindex name. These weights vary depending on the IMF’s classification (as defined in the October 2014 country’s stage of development. For more information on edition of the WEO), which divides the world into the methodology of the GCI, refer to Chapter 1.1. six regions: Emerging and Developing Europe; the On the right-hand side, a chart shows the country’s Commonwealth of Independent States (CIS), which performance in the 12 pillars of the GCI (blue line) includes Georgia although it is not a CIS member; measured against the average scores across all the Emerging and Developing Asia; Middle East, North economies at the same stage of development (gray line). The Africa Competitiveness Report 2015 | 89 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 (cont’d.) problematic for doing business in their economy. The 1.01 1.02 1.03 1.04 Property rights ....................................................... 3.7 ............97 Intellectual property protection ............................... 2.9 ..........114 Diversion of public funds ........................................ 2.6 ..........112 Public trust in politicians ......................................... 2.8 ............80 6.06 6.07 6.08 6.09 No. procedures to start a business* ........................ 14 ..........139 No. days to start a business* ............................... 25.0 ..........101 Agricultural policy costs.......................................... 3.3 ..........114 Prevalence of trade barriers ................................... 3.7 ..........135 information is drawn from the 2014 edition of the World 1.05 Irregular payments and bribes ................................ 2.9 ..........120 6.10 Trade tariffs, % duty* ............................................ 14.5 ..........134 1.06 Judicial independence............................................ 3.5 ............85 6.11 Prevalence of foreign ownership............................. 3.2 ..........131 1.07 Favoritism in decisions of government officials ....... 3.0 ............77 6.12 Business impact of rules on FDI ............................. 3.3 ..........128 1.08 Wastefulness of government spending ................... 3.1 ............74 6.13 Burden of customs procedures .............................. 2.8 ..........137 1.09 Burden of government regulation ........................... 3.1 ..........104 6.14 Imports as a percentage of GDP* ........................ 31.7 ..........111 Economic Forum’s Executive Opinion Survey (the 1.10 Efficiency of legal framework in settling disputes .... 3.2 ..........108 6.15 Degree of customer orientation .............................. 3.6 ..........125 1.11 Efficiency of legal framework in challenging regs. ... 2.9 ..........104 6.16 Buyer sophistication ............................................... 3.0 ..........102 1.12 Transparency of government policymaking............. 3.6 ..........107 1.13 Business costs of terrorism .................................... 3.8 ..........129 7th pillar: Labor market efficiency 1.14 Business costs of crime and violence..................... 4.0 ............93 7.01 Cooperation in labor-employer relations ................. 3.6 ..........130 Survey).1 From a list of 16 factors, respondents were 1.15 Organized crime ..................................................... 4.3 ............94 7.02 Flexibility of wage determination ............................. 4.6 ..........104 1.16 Reliability of police services .................................... 4.1 ............74 7.03 Hiring and firing practices ....................................... 3.1 ..........122 1.17 Ethical behavior of firms ......................................... 3.7 ..........100 7.04 Redundancy costs, weeks of salary* .................... 17.3 ............83 1.18 Strength of auditing and reporting standards ......... 3.4 ..........134 7.05 Effect of taxation on incentives to work .................. 3.3 ............97 1.19 Efficacy of corporate boards .................................. 3.5 ..........137 7.06 Pay and productivity............................................... 3.3 ..........123 asked to select the five most problematic and rank 1.20 Protection of minority shareholders’ interests ......... 3.5 ..........113 7.07 Reliance on professional management ................... 2.6 ..........141 1.21 Strength of investor protection, 0–10 (best)* .......... 5.0 ............83 7.08 Country capacity to retain talent............................. 2.3 ..........133 7.09 Country capacity to attract talent ........................... 2.3 ..........133 2nd pillar: Infrastructure 7.10 Women in labor force, ratio to men* ..................... 0.21 ..........144 2.01 Quality of overall infrastructure ............................... 3.6 ..........102 them from 1 (most problematic) to 5. The results were 2.02 Quality of roads ...................................................... 3.1 ..........107 8th pillar: Financial market development 2.03 Quality of railroad infrastructure .............................. 2.7 ............65 8.01 Availability of financial services ............................... 3.0 ..........133 2.04 Quality of port infrastructure ................................... 2.8 ..........117 8.02 Affordability of financial services ............................. 3.1 ..........135 2.05 Quality of air transport infrastructure....................... 3.0 ..........128 8.03 Financing through local equity market .................... 2.1 ..........134 then tabulated and weighted according to the ranking 2.06 Available airline seat km/week, millions* ............. 177.3 ............69 8.04 Ease of access to loans ......................................... 2.8 ............72 2.07 Quality of electricity supply ..................................... 4.0 ............91 8.05 Venture capital availability ....................................... 2.2 ..........108 2.08 Mobile telephone subscriptions/100 pop.* ......... 102.0 ............91 8.06 Soundness of banks .............................................. 3.4 ..........133 2.09 Fixed telephone lines/100 pop.* ............................. 8.0 ............99 8.07 Regulation of securities exchanges ........................ 2.2 ..........136 8.08 Legal rights index, 0–10 (best)* ................................. 3 ..........113 assigned by respondents. 3rd pillar: Macroeconomic environment 3.01 Government budget balance, % GDP* ................... 0.1 ............20 9th pillar: Technological readiness 3.02 Gross national savings, % GDP* .......................... 51.1 ..............4 9.01 Availability of latest technologies ............................ 3.4 ..........136 3.03 Inflation, annual % change* .................................... 3.3 ............66 9.02 Firm-level technology absorption ............................ 3.4 ..........138 3.04 General government debt, % GDP* ....................... 9.2 ..............5 9.03 FDI and technology transfer ................................... 3.9 ..........115 3.05 Country credit rating, 0–100 (best)* ...................... 52.6 ............66 9.04 Individuals using Internet, %* ............................... 16.5 ..........108 9.05 Fixed broadband Internet subscriptions/100 pop.* . 3.3 ............87 4th pillar: Health and primary education 9.06 Int’l Internet bandwidth, kb/s per user* ................ 26.3 ............72 4.01 Malaria cases/100,000 pop.* ................................. 0.2 ............10 9.07 Mobile broadband subscriptions/100 pop.*............ 0.0 ..........133 4.02 Business impact of malaria .................................... 4.5 ............47 PAGE 2 4.03 Tuberculosis cases/100,000 pop.* ....................... 89.0 ............88 10th pillar: Market size 4.04 Business impact of tuberculosis ............................. 4.0 ..........131 10.01 Domestic market size index, 1–7 (best)*................. 4.2 ............45 4.05 HIV prevalence, % adult pop.* ............................... 0.1 ..............1 10.02 Foreign market size index, 1–7 (best)* .................... 4.9 ............52 4.06 Business impact of HIV/AIDS ................................. 4.3 ..........118 10.03 GDP (PPP$ billions)* .......................................... 285.5 ............45 4.07 Infant mortality, deaths/1,000 live births* .............. 17.2 ............83 10.04 Exports as a percentage of GDP* ........................ 33.8 ............84 4.08 Life expectancy, years*......................................... 70.9 ............90 4.09 Quality of primary education ................................... 2.8 ..........121 11th pillar: Business sophistication   The Global Competitiveness Index in detail 4.10 Primary education enrollment, net %* .................. 97.3 ............41 11.01 Local supplier quantity ........................................... 4.3 ..........102 11.02 Local supplier quality.............................................. 3.3 ..........136 5th pillar: Higher education and training 11.03 State of cluster development.................................. 3.3 ..........105 5.01 Secondary education enrollment, gross %* .......... 97.6 ............46 11.04 Nature of competitive advantage ............................ 3.1 ..........104 5.02 Tertiary education enrollment, gross %*................ 31.5 ............78 11.05 Value chain breadth................................................ 3.1 ..........126 This page details the country’s performance on each 5.03 Quality of the education system ............................. 3.0 ..........114 11.06 Control of international distribution ......................... 3.4 ..........127 5.04 Quality of math and science education .................. 3.2 ..........113 11.07 Production process sophistication.......................... 2.8 ..........131 5.05 Quality of management schools ............................. 3.5 ..........115 11.08 Extent of marketing ................................................ 2.8 ..........139 5.06 Internet access in schools ...................................... 2.4 ..........133 11.09 Willingness to delegate authority ............................ 3.1 ..........125 5.07 Availability of research and training services ........... 3.1 ..........126 of the indicators entering the composition of the Global 5.08 Extent of staff training ............................................ 3.4 ..........118 12th pillar: Innovation 12.01 Capacity for innovation........................................... 2.7 ..........143 6th pillar: Goods market efficiency 12.02 Quality of scientific research institutions ................. 2.6 ..........127 6.01 Intensity of local competition .................................. 3.8 ..........136 12.03 Company spending on R&D................................... 2.2 ..........138 Competitiveness Index 2014–2015 (GCI). Indicators are 6.02 Extent of market dominance .................................. 3.3 ..........108 12.04 University-industry collaboration in R&D ................. 2.3 ..........137 6.03 Effectiveness of anti-monopoly policy ..................... 3.3 ..........124 12.05 Gov’t procurement of advanced tech products ...... 3.1 ............99 6.04 Effect of taxation on incentives to invest................. 3.5 ............86 12.06 Availability of scientists and engineers .................... 4.2 ............61 6.05 Total tax rate, % profits* ....................................... 71.9 ..........137 12.07 PCT patents, applications/million pop.* .................. 0.2 ............97 organized by pillar. For indicators entering at the GCI in 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 89. The Africa Competitiveness Report 2015 | 103 two different pillars, only the first instance is shown on this page. • INDICATOR, UNITS: This column contains the title of each indicator and, where relevant, the units in which it is measured—for example, “days” or “% GDP.” Indicators that are not derived from the Survey are identified by an asterisk (*). Indicators derived from the Survey are always expressed as scores on a 1–7 scale, with 7 being the most desirable outcome. • VALUE: This column reports the country’s score on each of the variables that compose the GCI. • RANK/144: This column reports the country’s position among the 144 economies covered by the GCI 2014–2015. The following pages provide additional information and definitions on each of these indicators. THE ACR 2015 ONLINE In addition to the analysis presented in this Report, the ACR 2015’s portal—available at www.weforum.org/acr  — offers additional analysis and a number of visualization tools, including sortable rankings, scatter plots, bar charts, and maps. The portal also offers the option of downloading portions of the GCI dataset. 1 For more information regarding the Executive Opinion Survey, see Chapter 1.3 of The Global Competitiveness Report 2014–2015. 90 | The Africa Competitiveness Report 2015 3: Competitiveness Profiles Technical Notes and Sources This section provides detailed definitions and sources for Pillar 1: Institutions all the indicators that enter the Global Competitiveness 1.01 Property rights Index 2014–2015 (GCI). For further information on the In your country, how strong is the protection of property rights, GCI, see The Global Competitiveness Report 2014–2015. including financial assets? [1 = extremely weak; 7 = extremely Two types of data are used in the GCI: Executive strong] | 2013–14 weighted average Opinion Survey data and data from sources other Source: World Economic Forum, Executive Opinion Survey. For than the World Economic Forum (national authorities, more details, refer to Chapter 1.3 of The Global Competitiveness Report 2014–2015 international agencies, and private sources). The data used represent the best available estimates at the time 1.02 Intellectual property protection The Global Competitiveness Report 2014–2015 was In your country, how strong is the protection of intellectual property, including anti-counterfeiting measures? [1 = prepared. It is possible that some data will have been extremely weak; 7 = extremely strong] | 2013–14 weighted updated or revised by the sources after publication. average The title of each indicator appears on the first line, Source: World Economic Forum, Executive Opinion Survey. For preceded by its number to allow for quick reference. The more details, refer to Chapter 1.3 of The Global Competitiveness numbering refers to the data tables section in The Global Report 2014–2015 Competitiveness Report 2014–2015. Underneath the 1.03 Diversion of public funds indicator number and title is a description of the indicator In your country, how common is diversion of public funds or, in the case of the Executive Opinion Survey data, the to companies, individuals, or groups due to corruption? [1 = full question and the associated response. very commonly occurs; 7 = never occurs] | 2013–14 weighted average Key indicators Source: World Economic Forum, Executive Opinion Survey. For more details, refer to Chapter 1.3 of The Global Competitiveness Report 2014–2015 0.01 Gross domestic product Gross domestic product in billions of current US dollars | 2013 1.04 Public trust in politicians Sources: International Monetary Fund, World Economic Outlook In your country, how would you rate the ethical standards of Database (October 2014 edition); national sources politicians? [1 = extremely low; 7 = extremely high] | 2013–14 weighted average 0.02 Population Source: World Economic Forum, Executive Opinion Survey. For Total population in millions | 2013 more details, refer to Chapter 1.3 of The Global Competitiveness Sources: International Monetary Fund, World Economic Outlook Report 2014–2015 Database (October 2014 edition); national sources 1.05 Irregular payments and bribes 0.03 GDP per capita Average score across the five components of the following Gross domestic product per capita in current US dollars | 2013 Executive Opinion Survey question: In your country, how common is it for firms to make undocumented extra Sources: International Monetary Fund, World Economic Outlook payments or bribes connected with (a) imports and exports; Database (October 2014 edition); national sources (b) public utilities; (c) annual tax payments; (d) awarding of public contracts and licenses; (e) obtaining favorable judicial 0.04 GDP as a share of world GDP decisions? In each case, the answer ranges from 1 [very Gross domestic product based on purchasing power parity as common] to 7 [never occurs] | 2013–14 weighted average a percentage of world GDP | 2013 Source: World Economic Forum, Executive Opinion Survey. For Sources: International Monetary Fund, World Economic Outlook more details, refer to Chapter 1.3 of The Global Competitiveness Database (October 2014 edition); national sources Report 2014–2015 The Africa Competitiveness Report 2015 | 91 3: Competitiveness Profiles 1.06 Judicial independence 1.13 Business costs of terrorism In your country, to what extent is the judiciary independent In your country, to what extent does the threat of terrorism from influences of members of government, citizens, or firms? impose costs on businesses? [1 = to a great extent; 7 = not at [1 = heavily influenced; 7 = entirely independent] | 2013–14 all] | 2013–14 weighted average weighted average Source: World Economic Forum, Executive Opinion Survey. For Source: World Economic Forum, Executive Opinion Survey. For more details, refer to Chapter 1.3 of The Global Competitiveness more details, refer to Chapter 1.3 of The Global Competitiveness Report 2014–2015 Report 2014–2015 1.14 Business costs of crime and violence 1.07 Favoritism in decisions of government officials In your country, to what extent does the incidence of crime and In your country, to what extent do government officials show violence impose costs on businesses? [1 = to a great extent; 7 favoritism to well-connected firms and individuals when = not at all] | 2013–14 weighted average deciding upon policies and contracts? [1 = always show favoritism; 7 = never show favoritism] | 2013–14 weighted Source: World Economic Forum, Executive Opinion Survey. For average more details, refer to Chapter 1.3 of The Global Competitiveness Report 2014–2015 Source: World Economic Forum, Executive Opinion Survey. For more details, refer to Chapter 1.3 of The Global Competitiveness 1.15 Organized crime Report 2014–2015 In your country, to what extent does organized crime (mafia- oriented racketeering, extortion) impose costs on businesses? 1.08 Wastefulness of government spending [1 = to a great extent; 7 = not at all] | 2013–14 weighted In your country, how efficiently does the government spend average public revenue? [1 = extremely inefficient; 7 = extremely efficient in providing goods and services] | 2013–14 weighted Source: World Economic Forum, Executive Opinion Survey. For average more details, refer to Chapter 1.3 of The Global Competitiveness Report 2014–2015 Source: World Economic Forum, Executive Opinion Survey. For more details, refer to Chapter 1.3 of The Global Competitiveness 1.16 Reliability of police services Report 2014–2015 In your country, to what extent can police services be relied upon to enforce law and order? [1 = cannot be relied upon 1.09 Burden of government regulation at all; 7 = can be completely relied upon] | 2013–14 weighted In your country, how burdensome is it for businesses to comply average with governmental administrative requirements (e.g., permits, regulations, reporting)? [1 = extremely burdensome; 7 = not Source: World Economic Forum, Executive Opinion Survey. For burdensome at all] | 2013–14 weighted average more details, refer to Chapter 1.3 of The Global Competitiveness Report 2014–2015 Source: World Economic Forum, Executive Opinion Survey. For more details, refer to Chapter 1.3 of The Global Competitiveness 1.17 Ethical behavior of firms Report 2014–2015 In your country, how would you rate the corporate ethics of companies (ethical behavior in interactions with public officials, 1.10 Efficiency of legal framework in settling disputes politicians, and other firms)? [1 = extremely poor—among the In your country, how efficient is the legal framework for private worst in the world; 7 = excellent—among the best in the world] businesses in settling disputes? [1 = extremely inefficient; 7 = | 2013–14 weighted average extremely efficient] | 2013–14 weighted average Source: World Economic Forum, Executive Opinion Survey. For Source: World Economic Forum, Executive Opinion Survey. For more details, refer to Chapter 1.3 of The Global Competitiveness more details, refer to Chapter 1.3 of The Global Competitiveness Report 2014–2015 Report 2014–2015 1.18 Strength of auditing and reporting standards 1.11 Efficiency of legal framework in challenging regulations In your country, how strong are financial auditing and reporting In your country, how easy is it for private businesses to standards? [1 = extremely weak; 7 = extremely strong] | 2013– challenge government actions and/or regulations through the 14 weighted average legal system? [1 = extremely difficult; 7 = extremely easy] | 2013–14 weighted average Source: World Economic Forum, Executive Opinion Survey. For more details, refer to Chapter 1.3 of The Global Competitiveness Source: World Economic Forum, Executive Opinion Survey. For Report 2014–2015 more details, refer to Chapter 1.3 of The Global Competitiveness Report 2014–2015 1.19 Efficacy of corporate boards In your country, how would you characterize corporate 1.12 Transparency of government policymaking governance by investors and boards of directors? [1 = In your country, how easy is it for businesses to obtain management has little accountability to investors and boards; 7 information about changes in government policies and = management is highly accountable to investors and boards] | regulations affecting their activities? [1 = extremely difficult; 7 = 2013–14 weighted average extremely easy] | 2013–14 weighted average Source: World Economic Forum, Executive Opinion Survey. For Source: World Economic Forum, Executive Opinion Survey. For more details, refer to Chapter 1.3 of The Global Competitiveness more details, refer to Chapter 1.3 of The Global Competitiveness Report 2014–2015 Report 2014–2015 92 | The Africa Competitiveness Report 2015 3: Competitiveness Profiles 1.20 Protection of minority shareholders’ interests 2.05 Quality of air transport infrastructure In your country, to what extent are the interests of minority In your country, how would you assess the quality of air shareholders protected by the legal system? [1 = not protected transport infrastructure? [1 = extremely underdeveloped— at all; 7 = fully protected] | 2013–14 weighted average among the worst in the world; 7 = extensive and efficient— among the best in the world] | 2013–14 weighted average Source: World Economic Forum, Executive Opinion Survey. For more details, refer to Chapter 1.3 of The Global Competitiveness Source: World Economic Forum, Executive Opinion Survey. For Report 2014–2015 more details, refer to Chapter 1.3 of The Global Competitiveness Report 2014–2015 1.21 Strength of investor protection Strength of Investor Protection Index on a 0–10 (best) scale | 2.06 Available airline seat kilometers 2013 Airline seat kilometers (in millions) available on all flights This indicator is a combination of the Extent of disclosure (domestic and international service) originating in country per index (transparency of transactions), the Extent of director week (year average) | 2014 liability index (liability for self-dealing), and the Ease of This indicator measures the total passenger-carrying capacity shareholder suit index (shareholders’ ability to sue officers of all scheduled flights, including domestic flights, originating and directors for misconduct). For more details about the in a country. It is computed by multiplying the number of seats methodology employed and the assumptions made to available on each flight by the flight distance in kilometers and compute this indicator, visit http://www.doingbusiness.org/ summing the result across all scheduled flights in a week. The methodologysurveys/. final value represents the weekly average for the year (Jan–Dec), taking into account flights scheduled beforehand by airline Source: World Bank/International Finance Corporation, Doing companies. Business 2014: Understanding Regulations for Small and Medium-Size Enterprises Source: International Air Transport Association, SRS Analyser 2.07 Quality of electricity supply Pillar 2: Infrastructure In your country, how would you assess the reliability of the electricity supply (lack of interruptions and lack of voltage 2.01 Quality of overall infrastructure fluctuations)? [1 = not reliable at all; 7 = extremely reliable] | How would you assess general infrastructure (e.g., transport, 2013–14 weighted average telephony, and energy) in your country? [1 = extremely underdeveloped—among the worst in the world; 7 = extensive Source: World Economic Forum, Executive Opinion Survey. For and efficient—among the best in the world] | 2013–14 weighted more details, refer to Chapter 1.3 of The Global Competitiveness average Report 2014–2015 Source: World Economic Forum, Executive Opinion Survey. For 2.08 Mobile telephone subscriptions more details, refer to Chapter 1.3 of The Global Competitiveness Number of mobile telephone subscriptions per 100 population Report 2014–2015 | 2013 A mobile telephone subscription refers to a subscription to a 2.02 Quality of roads public mobile telephone service that provides access to the public In your country, how would you assess the quality of roads? [1 switched telephone network (PSTN) using cellular technology, = extremely underdeveloped—among the worst in the world; including the number of pre-paid SIM cards active during the last 7 = extensive and efficient—among the best in the world] | three months of the year under review. This includes both analog 2013–14 weighted average and digital cellular systems (IMT-2000, Third Generation, 3G) and Source: World Economic Forum, Executive Opinion Survey. For 4G subscriptions, but excludes mobile broadband subscriptions more details, refer to Chapter 1.3 of The Global Competitiveness via data cards or USB modems. Subscriptions to public mobile Report 2014–2015 data services, private trunked mobile radio, telepoint or radio paging, and telemetry services are also excluded. It includes all mobile cellular subscriptions that offer voice communications. 2.03 Quality of railroad infrastructure In your country, how would you assess the quality of the Source: International Telecommunication Union, ITU World railroad system? [1 = extremely underdeveloped—among the Telecommunication/ICT Indicators Database 2014 (June 2014 worst in the world; 7 = extensive and efficient—among the best edition) in the world] | 2013–14 weighted average. This indicator does not apply to economies where there is 2.09 Fixed telephone lines no regular train service or where the network covers only a Number of active fixed telephone lines per 100 population | negligible portion of the territory. Assessment of the existence 2013 of a network was conducted by the World Economic Forum A fixed telephone line is an active line connecting the subscriber’s based on various sources. terminal equipment to the public switched telephone network (PSTN) that has a dedicated port in the telephone exchange Source: World Economic Forum, Executive Opinion Survey. For equipment. Active lines are those that have registered an activity more details, refer to Chapter 1.3 of The Global Competitiveness in the last three months of the year under review. Report 2014–2015 Source: International Telecommunication Union, ITU World 2.04 Quality of port infrastructure Telecommunication/ICT Indicators Database 2014 (June 2014 In your country, how would you assess the quality of seaports? edition) (For landlocked countries: How accessible are seaport facilities?) [1 = extremely underdeveloped—among the worst in the world; 7 = extensive and efficient—among the best in the world] | 2013–14 weighted average Source: World Economic Forum, Executive Opinion Survey. For more details, refer to Chapter 1.3 of The Global Competitiveness Report 2014–2015 The Africa Competitiveness Report 2015 | 93 3: Competitiveness Profiles Pillar 3: Macroeconomic environment 3.05 Country credit rating Institutional Investor’s Country Credit Ratings™ assessing 3.01 Government budget balance the probability of sovereign debt default on a 0–100 (lowest General government budget balance as a percentage of GDP probability) scale | March 2014 | 2013 Institutional Investor’s Country Credit Ratings™ developed by General government budget balance is calculated as general Institutional Investor are based on information provided by senior government revenue minus total expenditure. This is a core economists and sovereign-debt analysts at leading global banks Government Finance Statistics (GFS) balance that measures the and money management and security firms. Twice a year, the extent to which the general government is either putting financial respondents grade each country on a scale of 0 to 100, with 100 resources at the disposal of other sectors in the economy and representing the least chance of default. nonresidents (net lending), or utilizing the financial resources Institutional Investor’s “Country Credit Ratings” is a trademark of generated by other sectors and nonresidents (net borrowing). This Institutional Investor, LLC. No further copying or transmission of balance may be viewed as an indicator of the financial impact this material is allowed without the express written permission of general government activity on the rest of the economy and of Institutional Investor’s publisher, who can be reached at nonresidents. Revenue consists of taxes, social contributions, publisher@institutionalinvestor.com. Copyright © Institutional grants receivable, and other revenue. Revenue increases a Investor, LLC 2014. government’s net worth, which is the difference between its Source: Institutional Investor assets and liabilities. General government total expenditure consists of total expenses and the net acquisition of nonfinancial assets. Pillar 4: Health and primary education Sources: International Monetary Fund, World Economic Outlook Database (April 2014 edition); national sources 4.01 Malaria incidence Estimated number of malaria cases per 100,000 population | 3.02 Gross national savings 2012 Gross national savings as a percentage of GDP | 2013 This indicator refers to the estimated number of new cases of malaria in the economy per 100,000 population. M.F. and S.L. Aggregate national savings is defined as public- and private- indicate respectively that the World Health Organization (WHO) sector savings as a percentage of nominal GDP. National savings has declared the area malaria-free (M.F.) or that it has included it equals gross domestic investment plus the current-account in the supplementary list (S.L.) of areas where malaria has never balance. existed or has disappeared without specific measures. Hong Sources: International Monetary Fund, World Economic Outlook Kong SAR and Puerto Rico have been considered malaria-free Database (April 2014 edition); World Bank, At-a-Glance Table; (M.F.) following the assessment by the US Centers for Disease Organisation for Economic Co-operation and Development Control and Prevention (CDC). (OECD), Economic Outlook 2014; national sources Sources: The World Health Organization, World Malaria Report 2013; United States Centers for Disease Control and Prevention 3.03 Inflation (CDC), Malaria Information and Prophylaxis information (accessed Annual percent change in consumer price index (year average) July 11, 2014) | 2013 For inflation rates between 0.5 and 2.9 percent, a country 4.02 Business impact of malaria receives the highest possible score of 7. Outside this range, How serious an impact do you consider malaria will have on scores decrease linearly as they move away from these values. your company in the next five years (e.g., death, disability, Sources: International Monetary Fund, World Economic Outlook medical and funeral expenses, productivity and absenteeism, Database (April 2014 edition); national sources recruitment and training expenses, revenues)? [1 = a serious impact; 7 = no impact at all] | 2013–14 weighted average 3.04 Government debt This indicator does not apply to economies considered free Gross general government debt as a percentage of GDP | 2013 of malaria or included in the World Health Organization’s supplementary list of areas where malaria has never existed or Gross debt consists of all liabilities that require payment or has disappeared without specific measures. payments of interest and/or principal by the debtor to the creditor at a date or dates in the future. This includes debt liabilities in Source: World Economic Forum, Executive Opinion Survey. For the form of special drawing rights, currency and deposits, debt more details, refer to Chapter 1.3 of The Global Competitiveness securities, loans, insurance, pensions and standardized guarantee Report 2014–2015 schemes, and other accounts payable. Thus, all liabilities in the Government Finance Statistics Manual (GFSM) 2001 system 4.03 Tuberculosis incidence are debt, except for equity and investment fund shares, financial Estimated number of tuberculosis cases per 100,000 derivatives, and employee stock options. For Australia, Belgium, population | 2013 Canada, Hong Kong SAR, Iceland, New Zealand, and Sweden, Incidence of tuberculosis is the estimated number of new government debt coverage also includes insurance technical pulmonary, smear positive, and extra-pulmonary tuberculosis reserves, following the GFSM 2001 definition. cases. Sources: International Monetary Fund, World Economic Outlook Sources: The World Bank, World Development Indicators Database (April 2014 edition) and Public Information Notices (accessed June 18, 2014); national sources (various issues); African Development Bank, Organisation for Economic Co-operation and Development (OECD), and United Nations Development Programme, African Economic Outlook 4.04 Business impact of tuberculosis 2014; national sources. How serious an impact do you consider tuberculosis will have on your company in the next five years (e.g., death, disability, medical and funeral expenses, productivity and absenteeism, recruitment and training expenses, revenues)? [1 = a serious impact; 7 = no impact at all] | 2013–14 weighted average Source: World Economic Forum, Executive Opinion Survey. For more details, refer to Chapter 1.3 of The Global Competitiveness Report 2014–2015 94 | The Africa Competitiveness Report 2015 3: Competitiveness Profiles 4.05 HIV prevalence Pillar 5: Higher education and training HIV prevalence as a percentage of adults aged 15–49 years | 2013 5.01 Secondary education enrollment rate HIV prevalence refers to the percentage of people aged 15–49 Gross secondary education enrollment rate | 2012 who are infected with HIV at a particular point in time, no matter The reported value corresponds to the ratio of total secondary when infection occurred. Economies with a prevalence rate enrollment, regardless of age, to the population of the age equal to or less than 0.2 percent are all ranked first and listed group that officially corresponds to the secondary education alphabetically. level. Secondary education (ISCED levels 2 and 3) completes the provision of basic education that began at the primary Sources: The World Bank, World Development Indicators level, and aims to lay the foundations for lifelong learning and (accessed June 18, 2014); UNAIDS, Global Report on the Global human development by offering more subject- or skills-oriented AIDS Epidemic (2008, 2010, 2012, and 2013 editions); national instruction using more specialized teachers. sources Sources: UNESCO Institute for Statistics, Data Centre (accessed 4.06 Business impact of HIV/AIDS May 21, 2014); Sistema de Información de tendencias Educativas How serious an impact do you consider HIV/AIDS will have de América Latina (SITEAL); national sources on your company in the next five years (e.g., death, disability, medical and funeral expenses, productivity and absenteeism, 5.02 Tertiary education enrollment rate recruitment and training expenses, revenues)? [1 = a serious Gross tertiary education enrollment rate | 2012 impact; 7 = no impact at all] | 2013–14 weighted average The reported value corresponds to the ratio of total tertiary enrollment, regardless of age, to the population of the age group Source: World Economic Forum, Executive Opinion Survey. For that officially corresponds to the tertiary education level. Tertiary more details, refer to Chapter 1.3 of The Global Competitiveness education (ISCED levels 5 and 6), whether or not leading to an Report 2014–2015 advanced research qualification, normally requires, as a minimum condition of admission, the successful completion of education at 4.07 Infant mortality the secondary level. Infant (children aged 0–12 months) mortality per 1,000 live births | 2013 Sources: UNESCO Institute for Statistics, Data Centre (accessed Infant mortality rate is the number of infants dying before reaching May 21, 2014); national sources one year of age per 1,000 live births in a given year. 5.03 Quality of the education system Sources: The World Bank, World Development Indicators How well does the education system in your country meet (accessed June 18, 2014); national sources the needs of a competitive economy? [1 = not well at all; 7 = extremely well] | 2013–14 weighted average 4.08 Life expectancy Life expectancy at birth (years) | 2013 Source: World Economic Forum, Executive Opinion Survey. For Life expectancy at birth indicates the number of years a newborn more details, refer to Chapter 1.3 of The Global Competitiveness infant would live if prevailing patterns of mortality at the time of its Report 2014–2015 birth were to stay the same throughout its life. 5.04 Quality of math and science education Sources: The World Bank, World Development Indicators In your country, how would you assess the quality of math and (accessed June 18, 2014); national sources science education? [1 = extremely poor—among the worst in the world; 7 = excellent—among the best in the world] | 2013– 4.09 Quality of primary education 14 weighted average In your country, how would you assess the quality of primary schools? [1 = extremely poor—among the worst in the world; 7 Source: World Economic Forum, Executive Opinion Survey. For = excellent—among the best in the world] | 2013–14 weighted more details, refer to Chapter 1.3 of The Global Competitiveness average Report 2014–2015 Source: World Economic Forum, Executive Opinion Survey. For 5.05 Quality of management schools more details, refer to Chapter 1.3 of The Global Competitiveness In your country, how would you assess the quality of business Report 2014–2015 schools? [1 = extremely poor—among the worst in the world; 7 = excellent—among the best in the world] | 2013–14 weighted 4.10 Primary education enrollment rate average Net primary education enrollment rate | 2012 The reported value corresponds to the ratio of children of Source: World Economic Forum, Executive Opinion Survey. For official primary school age (as defined by the national education more details, refer to Chapter 1.3 of The Global Competitiveness system) who are enrolled in primary school. Primary education Report 2014–2015 (ISCED level 1) provides children with basic reading, writing, and mathematics skills along with an elementary understanding 5.06 Internet access in schools of such subjects as history, geography, natural science, social In your country, how widespread is Internet access in schools? science, art, and music. [1 = nonexistent; 7 = extremely widespread] | 2013–14 weighted average Sources: UNESCO Institute for Statistics, Data Centre (accessed May 21, 2014); Organisation for Economic Co-operation and Source: World Economic Forum, Executive Opinion Survey. For Development (OECD), Education at a Glance 2013; Sistema more details, refer to Chapter 1.3 of The Global Competitiveness de Información de tendencias Educativas de América Latina Report 2014–2015 (SITEAL); national sources 5.07 Local availability of specialized research and training services In your country, to what extent are high-quality, specialized training services available? [1 = not available at all; 7 = widely available] | 2013–14 weighted average Source: World Economic Forum, Executive Opinion Survey. For more details, refer to Chapter 1.3 of The Global Competitiveness Report 2014–2015 The Africa Competitiveness Report 2015 | 95 3: Competitiveness Profiles 5.08 Extent of staff training 6.06 Number of procedures required to start a business In your country, to what extent do companies invest in training Number of procedures required to start a business | 2013 and employee development? [1 = not at all; 7 = to a great For details about the methodology employed and the extent] | 2013–14 weighted average assumptions made to compute this indicator, visit http://www. doingbusiness.org/methodologysurveys/. Source: World Economic Forum, Executive Opinion Survey. For more details, refer to Chapter 1.3 of The Global Competitiveness Source: World Bank/International Finance Corporation, Doing Report 2014–2015 Business 2014: Understanding Regulations for Small and Medium-Size Enterprises Pillar 6: Goods market efficiency 6.07 Time required to start a business Number of days required to start a business | 2013 6.01 Intensity of local competition For details about the methodology employed and the In your country, how intense is competition in the local assumptions made to compute this indicator, visit http://www. markets? [1 = not intense at all; 7 = extremely intense] | 2013– doingbusiness.org/methodologysurveys/. 14 weighted average Source: World Bank/International Finance Corporation, Doing Source: World Economic Forum, Executive Opinion Survey. For Business 2014: Understanding Regulations for Small and more details, refer to Chapter 1.3 of The Global Competitiveness Medium-Size Enterprises Report 2014–2015 6.08 Agricultural policy costs 6.02 Extent of market dominance In your country, how would you assess the agricultural policy? In your country, how would you characterize corporate activity? [1 = excessively burdensome for the economy; 7 = balances [1 = dominated by a few business groups; 7 = spread among well the interests of taxpayers, consumers and producers] | many firms] | 2013–14 weighted average 2013–14 weighted average Source: World Economic Forum, Executive Opinion Survey. For Source: World Economic Forum, Executive Opinion Survey. For more details, refer to Chapter 1.3 of The Global Competitiveness more details, refer to Chapter 1.3 of The Global Competitiveness Report 2014–2015 Report 2014–2015 6.03 Effectiveness of anti-monopoly policy 6.09 Prevalence of trade barriers In your country, to what extent does anti-monopoly policy In your country, to what extent do non-tariff barriers (e.g., promote competition? [1 = does not promote competition; 7 = health and product standards, technical and labeling effectively promotes competition] | 2013–14 weighted average requirements, etc.) limit the ability of imported goods to compete in the domestic market? [1 = strongly limit; 7 = do not Source: World Economic Forum, Executive Opinion Survey. For limit at all] | 2013–14 weighted average more details, refer to Chapter 1.3 of The Global Competitiveness Report 2014–2015 Source: World Economic Forum, Executive Opinion Survey. For more details, refer to Chapter 1.3 of The Global Competitiveness 6.04 Effect of taxation on incentives to invest Report 2014–2015 In your country, to what extent do taxes reduce the incentive to invest? [1 = significantly reduce the incentive to invest; 7 = 6.10 Trade tariffs do not reduce the incentive to invest at all] | 2013–14 weighted Trade-weighted average tariff rate | 2013 average An applied tariff is a customs duty that is levied on imports of Source: World Economic Forum, Executive Opinion Survey. For merchandise goods. This indicator is calculated as a weighted more details, refer to Chapter 1.3 of The Global Competitiveness average of all the applied tariff rates, including preferential rates Report 2014–2015 that a country applies to the rest of the world. The weights are the trade patterns of the importing country’s reference group (2012 data). 6.05 Total tax rate This indicator is a combination of profit tax (% of profits), Source: International Trade Centre, Trade Competitiveness Map labor tax and contribution (% of profits), and other taxes (% of Data profits) | 2013 The total tax rate measures the amount of taxes and mandatory 6.11 Prevalence of foreign ownership contributions payable by a business in the second year of In your country, how prevalent is foreign ownership of operation, expressed as a share of commercial profits. The companies? [1 = extremely rare; 7 = highly prevalent] | 2013–14 total amount of taxes is the sum of five different types of taxes weighted average and contributions payable after accounting for deductions and exemptions: profit or corporate income tax, social Source: World Economic Forum, Executive Opinion Survey. For contributions and labor taxes paid by the employer, property more details, refer to Chapter 1.3 of The Global Competitiveness taxes, turnover taxes, and other small taxes. For more details Report 2014–2015 about the methodology employed and the assumptions made to compute this indicator, visit http://www.doingbusiness.org/ 6.12 Business impact of rules on FDI methodologysurveys/. In your country, to what extent do rules and regulations encourage or discourage foreign direct investment (FDI)? [1 = Source: World Bank/International Finance Corporation, Doing strongly discourage FDI; 7 = strongly encourage FDI] | 2013–14 Business 2014: Understanding Regulations for Small and weighted average Medium-Size Enterprises Source: World Economic Forum, Executive Opinion Survey. For more details, refer to Chapter 1.3 of The Global Competitiveness Report 2014–2015 96 | The Africa Competitiveness Report 2015 3: Competitiveness Profiles 6.13 Burden of customs procedures 7.04 Redundancy costs In your country, how efficient are the customs procedures Redundancy costs in weeks of salary | 2013 (related to the entry and exit of merchandise)? [1 = not efficient This indicator estimates the cost of advance notice requirements, at all; 7 = extremely efficient] | 2013–14 weighted average severance payments, and penalties due when terminating a redundant worker, expressed in weekly wages. For more details Source: World Economic Forum, Executive Opinion Survey. For about the methodology employed and the assumptions made more details, refer to Chapter 1.3 of The Global Competitiveness to compute this indicator, visit http://www.doingbusiness.org/ Report 2014–2015 methodologysurveys/. 6.14 Imports as a percentage of GDP Sources: World Bank/International Finance Corporation, Doing Imports of goods and services as a percentage of gross Business 2014: Understanding Regulations for Small and domestic product | 2013 Medium-Size Enterprises; World Economic Forum’s calculations Total imports is the sum of total imports of merchandise and commercial services. 7.05 Effect of taxation on incentives to work In your country, to what extent do taxes reduce the incentive to Sources: World Trade Organization, Statistical Database: Time work? [1 = significantly reduce the incentive to work; 7 = do not Series on Merchandise and Commercial Services (accessed July reduce incentive to work at all] | 2013–14 weighted average 02, 2014); International Monetary Fund, World Economic Outlook Database (April 2014 edition); national sources Source: World Economic Forum, Executive Opinion Survey. For more details, refer to Chapter 1.3 of The Global Competitiveness 6.15 Degree of customer orientation Report 2014–2015 In your country, how well do companies treat customers? [1 = indifferent to customer satisfaction; 7 = highly responsive to 7.06 Pay and productivity customers and seek customer retention] | 2013–14 weighted In your country, to what extent is pay related to worker average productivity? [1 = not related to worker productivity; 7 = strongly related to worker productivity] | 2013–14 weighted Source: World Economic Forum, Executive Opinion Survey. For average more details, refer to Chapter 1.3 of The Global Competitiveness Report 2014–2015 Source: World Economic Forum, Executive Opinion Survey. For more details, refer to Chapter 1.3 of The Global Competitiveness 6.16 Buyer sophistication Report 2014–2015 In your country, how do buyers make purchasing decisions? [1 = based solely on the lowest price; 7 = based on a 7.07 Reliance on professional management sophisticated analysis of performance attributes] | 2013–14 In your country, who holds senior management positions? [1 = weighted average usually relatives or friends without regard to merit; 7 = mostly professional managers chosen for merit and qualifications] | Source: World Economic Forum, Executive Opinion Survey. For 2013–14 weighted average more details, refer to Chapter 1.3 of The Global Competitiveness Report 2014–2015 Source: World Economic Forum, Executive Opinion Survey. For more details, refer to Chapter 1.3 of The Global Competitiveness Report 2014–2015 Pillar 7: Labor market efficiency 7.08 Country capacity to retain talent 7.01 Cooperation in labor-employer relations Does your country retain talented people? [1 = the best and In your country, how would you characterize labor-employer brightest leave to pursue opportunities in other countries; 7 relations? [1 = generally confrontational; 7 = generally = the best and brightest stay and pursue opportunities in the cooperative] | 2013–14 weighted average country] | 2013–14 weighted average Source: World Economic Forum, Executive Opinion Survey. For Source: World Economic Forum, Executive Opinion Survey. For more details, refer to Chapter 1.3 of The Global Competitiveness more details, refer to Chapter 1.3 of The Global Competitiveness Report 2014–2015 Report 2014–2015 7.02 Flexibility of wage determination 7.09 Country capacity to attract talent In your country, how are wages generally set? [1 = by a Does your country attract talented people from abroad? [1 = centralized bargaining process; 7 = by each individual not at all; 7 = attracts the best and brightest from around the company] | 2013–14 weighted average world] | 2013–14 weighted average Source: World Economic Forum, Executive Opinion Survey. For Source: World Economic Forum, Executive Opinion Survey. For more details, refer to Chapter 1.3 of The Global Competitiveness more details, refer to Chapter 1.3 of The Global Competitiveness Report 2014–2015 Report 2014–2015 7.03 Hiring and firing practices 7.10 Female participation in the labor force In your country, how would you characterize the hiring and Ratio of women to men in the labor force | 2012 firing of workers? [1 = heavily impeded by regulations; 7 = This measure is the percentage of women aged 15–64 extremely flexible] | 2013–14 weighted average participating in the labor force divided by the percentage of men Source: World Economic Forum, Executive Opinion Survey. For aged 15–64 participating in the labor force. more details, refer to Chapter 1.3 of The Global Competitiveness Sources: International Labour Organization, Key Indicators of the Report 2014–2015 Labour Markets, 8th Edition; national sources The Africa Competitiveness Report 2015 | 97 3: Competitiveness Profiles Pillar 8: Financial market development 8.08 Legal rights index Degree of legal protection of borrowers’ and lenders’ rights on 8.01 Availability of financial services a 0–10 (best) scale | 2013 In your country, to what extent does the financial sector This index measures the degree to which collateral and provide a wide range of financial products and services to bankruptcy laws protect borrowers’ and lenders’ rights and businesses? [1 = not at all; 7 = provides a wide variety] | 2013– thus facilitate lending. For more details about the methodology 14 weighted average employed and the assumptions made to compute this indicator, visit http://www.doingbusiness.org/methodologysurveys/. Source: World Economic Forum, Executive Opinion Survey. For more details, refer to Chapter 1.3 of The Global Competitiveness Source: World Bank/International Finance Corporation, Doing Report 2014–2015 Business 2014: Understanding Regulations for Small and Medium-Size Enterprises 8.02 Affordability of financial services In your country, to what extent are financial services affordable Pillar 9: Technological readiness for businesses? [1 = not affordable at all; 7 = affordable] | 2013–14 weighted average 9.01 Availability of latest technologies Source: World Economic Forum, Executive Opinion Survey. For In your country, to what extent are the latest technologies more details, refer to Chapter 1.3 of The Global Competitiveness available? [1 = not available at all; 7 = widely available] | 2013– Report 2014–2015 14 weighted average Source: World Economic Forum, Executive Opinion Survey. For 8.03 Financing through local equity market more details, refer to Chapter 1.3 of The Global Competitiveness In your country, how easy is it for companies to raise money by Report 2014–2015 issuing shares on the stock market? [1 = extremely difficult; 7 = extremely easy] | 2013–14 weighted average 9.02 Firm-level technology absorption Source: World Economic Forum, Executive Opinion Survey. For In your country, to what extent do businesses adopt new more details, refer to Chapter 1.3 of The Global Competitiveness technology? [1 = not at all; 7 = adopt extensively] | 2013–14 Report 2014–2015 weighted average Source: World Economic Forum, Executive Opinion Survey. For 8.04 Ease of access to loans more details, refer to Chapter 1.3 of The Global Competitiveness In your country, how easy is it to obtain a bank loan with only a Report 2014–2015 good business plan and no collateral? [1 = extremely difficult; 7 = extremely easy] | 2013–14 weighted average 9.03 FDI and technology transfer Source: World Economic Forum, Executive Opinion Survey. For To what extent does foreign direct investment (FDI) bring new more details, refer to Chapter 1.3 of The Global Competitiveness technology into your country? [1 = not at all; 7 = to a great Report 2014–2015 extent—FDI is a key source of new technology] | 2013–14 weighted average 8.05 Venture capital availability Source: World Economic Forum, Executive Opinion Survey. For In your country, how easy is it for entrepreneurs with innovative more details, refer to Chapter 1.3 of The Global Competitiveness but risky projects to find venture capital? [1 = extremely Report 2014–2015 difficult; 7 = extremely easy] | 2013–14 weighted average Source: World Economic Forum, Executive Opinion Survey. For 9.04 Internet users more details, refer to Chapter 1.3 of The Global Competitiveness Percentage of individuals using the Internet | 2013 Report 2014–2015 Internet users refers to people using the Internet from any device (including mobile phones) during the year under review. 8.06 Soundness of banks Data are based on surveys generally carried out by national In your country, how would you assess the soundness of statistical offices or estimated based on the number of Internet banks? [1 = extremely low—banks may require recapitalization; subscriptions. 7 = extremely high—banks are generally healthy with sound Source: International Telecommunication Union, World balance sheets] | 2013–14 weighted average Telecommunication/ICT Indicators 2014 (June 2014 edition) Source: World Economic Forum, Executive Opinion Survey. For more details, refer to Chapter 1.3 of The Global Competitiveness 9.05 Fixed broadband Internet subscriptions Report 2014–2015 Fixed broadband Internet subscriptions per 100 population | 2013 8.07 Regulation of securities exchanges This refers to total fixed (wired) broadband Internet subscriptions In your country, how effective are the regulation and (that is, subscriptions to high-speed access to the public supervision of securities exchanges? [1 = not at all effective; 7 Internet—a TCP/IP connection—at downstream speeds equal to = extremely effective] | 2013–14 weighted average or greater than 256 kb/s). Source: International Telecommunication Union, World Source: World Economic Forum, Executive Opinion Survey. For Telecommunication/ICT Indicators 2014 (June 2014 edition) more details, refer to Chapter 1.3 of The Global Competitiveness Report 2014–2015 9.06 Internet bandwidth International Internet bandwidth (kb/s) per Internet user | 2013 International Internet bandwidth is the sum of capacity of all Internet exchanges offering international bandwidth measured in kilobits per second (kb/s). Source: International Telecommunication Union, World Telecommunication/ICT Indicators 2014 (June 2014 edition) 98 | The Africa Competitiveness Report 2015 3: Competitiveness Profiles 9.07 Mobile broadband subscriptions Pillar 11: Business sophistication Mobile broadband subscriptions per 100 population | 2013 or most recent year available 11.01 Local supplier quantity Mobile broadband subscriptions refers to active SIM cards In your country, how numerous are local suppliers? [1 = largely or, on CDMA networks, connections accessing the Internet nonexistent; 7 = extremely numerous] | 2013–14 weighted at consistent broadband speeds of over 512 kb/s, including average cellular technologies such as HSPA, EV-DO, and above. This includes connections being used in any type of device able to Source: World Economic Forum, Executive Opinion Survey. For access mobile broadband networks, including smartphones, more details, refer to Chapter 1.3 of The Global Competitiveness USB modems, mobile hotspots, and other mobile broadband– Report 2014–2015 connected devices. 11.02 Local supplier quality Source: International Telecommunication Union, World In your country, how would you assess the quality of local Telecommunication/ICT Indicators 2014 (June 2014 edition) suppliers? [1 = extremely poor quality; 7 = extremely high quality] | 2013–14 weighted average Pillar 10: Market size Source: World Economic Forum, Executive Opinion Survey. For more details, refer to Chapter 1.3 of The Global Competitiveness 10.01 Domestic market size index Report 2014–2015 Sum of gross domestic product plus value of imports of goods and services, minus value of exports of goods and services, 11.03 State of cluster development normalized on a 1–7 (best) scale | 2013 In your country, how widespread are well-developed and The size of the domestic market is calculated as the natural log deep clusters (geographic concentrations of firms, suppliers, of the sum of the gross domestic product valued at PPP plus producers of related products and services, and specialized the total value (PPP estimates) of imports of goods and services, institutions in a particular field)? [1 = nonexistent; 7 = minus the total value (PPP estimates) of exports of goods and widespread in many fields] | 2013–14 weighted average services. Data are then normalized on a 1–7 scale. PPP estimates of imports and exports are obtained by taking the product of Source: World Economic Forum, Executive Opinion Survey. For exports as a percentage of GDP and GDP valued at PPP. more details, refer to Chapter 1.3 of The Global Competitiveness Report 2014–2015 Source: World Economic Forum’s calculations. For more details, refer to Chapter 1.1, Appendix B, of The Global Competitiveness 11.04 Nature of competitive advantage Report 2014–2015 What is the competitive advantage of your country’s companies 10.02 Foreign market size index in international markets based upon? [1 = low-cost labor or natural resources; 7 = unique products and processes] | 2013– Value of exports of goods and services, normalized on a 1–7 14 weighted average (best) scale | 2013 The size of the foreign market is estimated as the natural log of Source: World Economic Forum, Executive Opinion Survey. For the total value (PPP estimates) of exports of goods and services, more details, refer to Chapter 1.3 of The Global Competitiveness normalized on a 1–7 scale. PPP estimates of exports are obtained Report 2014–2015 by taking the product of exports as a percentage of GDP and GDP valued at PPP. 11.05 Value chain breadth Source: World Economic Forum’s calculations. For more details, In your country, do companies have a narrow or broad refer to Chapter 1.1, Appendix B, of The Global Competitiveness presence in the value chain? [1 = narrow, primarily involved in Report 2014–2015 individual steps of the value chain (e.g., resource extraction or production); 7 = broad, present across the entire value chain 10.03 GDP (PPP) (e.g., including production and marketing, distribution, design, etc.)] | 2013–14 weighted average Gross domestic product valued at purchasing power parity in billions of international dollars | 2013 Source: World Economic Forum, Executive Opinion Survey. For more details, refer to Chapter 1.3 of The Global Competitiveness Sources: International Monetary Fund, World Economic Outlook Report 2014–2015 Database (April 2014 edition); national sources 11.06 Control of international distribution 10.04 Exports as a percentage of GDP To what extent are international distribution and marketing from Exports of goods and services as a percentage of gross your country owned and controlled by domestic companies? domestic product | 2013 [1 = not at all—they take place through foreign companies; 7 = Total exports is the sum of total exports of merchandise and to a great extent—they are primarily owned and controlled by commercial services. domestic companies] | 2013–14 weighted average Sources: World Trade Organization, Online Statistics Database Source: World Economic Forum, Executive Opinion Survey. For (accessed June 18, 2014); International Monetary Fund, World more details, refer to Chapter 1.3 of The Global Competitiveness Economic Outlook Database (April 2014 edition); national sources Report 2014–2015 11.07 Production process sophistication In your country, how sophisticated are production processes? [1 = not at all—production uses labor-intensive processes or old technology; 7 = highly—production uses sophisticated and knowledge-intensive processes] | 2013–14 weighted average Source: World Economic Forum, Executive Opinion Survey. For more details, refer to Chapter 1.3 of The Global Competitiveness Report 2014–2015 The Africa Competitiveness Report 2015 | 99 11.08 Extent of marketing 12.06 Availability of scientists and engineers In your country, to what extent do companies use sophisticated In your country, to what extent are scientists and engineers marketing tools and techniques? [1 = not at all; 7 = to a great available? [1 = not at all; 7 = widely available] | 2013–14 extent] | 2013–14 weighted average weighted average Source: World Economic Forum, Executive Opinion Survey. For Source: World Economic Forum, Executive Opinion Survey. For more details, refer to Chapter 1.3 of The Global Competitiveness more details, refer to Chapter 1.3 of The Global Competitiveness Report 2014–2015 Report 2014–2015 11.09 Willingness to delegate authority 12.07 PCT patent applications In your country, how do you assess the willingness to delegate Number of applications filed under the Patent Cooperation authority to subordinates? [1 = not willing at all—senior Treaty (PCT) per million population | 2010–2011 average management takes all important decisions; 7 = very willing— This indicator measures the total count of applications filed authority is mostly delegated to business unit heads and other under the Patent Cooperation Treaty (PCT), by priority date and lower-level managers] | 2013–14 weighted average inventor nationality, using fractional count if an application is filed by multiple inventors. The average count of applications filed in Source: World Economic Forum, Executive Opinion Survey. For 2010 and 2011 is divided by population figures for 2011. In the more details, refer to Chapter 1.3 of The Global Competitiveness absence of reliable data on PCT applications for Taiwan (China) Report 2014–2015 and Hong Kong SAR, two advanced economies that are not signatories of the Treaty, the number of applications is estimated as follows: first, we compute the average number of all utility Pillar 12: Innovation patent applications filed with the United States Patents and Trademarks Office (USPTO) for 2010 and 2011. We then compute 12.01 Capacity for innovation the average number of PCT applications for 2010 and 2011, In your country, to what extent do companies have the before computing the ratio of the two averages (1.59). For the capacity to innovate? [1 = not at all; 7 = to a great extent] | computation of the two averages, only economies with a two-year 2013–14 weighted average average number of at least 100 USPTO applications and 50 PCT applications are considered. Taiwan and Hong Kong are excluded Source: World Economic Forum, Executive Opinion Survey. For in both cases. We then divide the number of USPTO applications more details, refer to Chapter 1.3 of The Global Competitiveness filed by residents of Taiwan (19,892) and Hong Kong (1,024), Report 2014–2015 respectively, by the ratio above in order to produce estimates for PCT applications. As a final step, we compute the estimates 12.02 Quality of scientific research institutions per million population—that is, 537.2 for Taiwan and 90.3 for In your country, how would you assess the quality of scientific Hong Kong. The estimates are used in the computation of the research institutions? [1 = extremely poor—among the worst in respective Innovation pillar scores of the two economies. the world; 7 = extremely good—among the best in the world] | 2013–14 weighted average Sources: Organisation for Economic Co-operation and Development (OECD), Patent Database, (situation as of June Source: World Economic Forum, Executive Opinion Survey. For 2014); For population: International Monetary Fund, World more details, refer to Chapter 1.3 of The Global Competitiveness Economic Outlook Database (April 2014 edition); World Economic Report 2014–2015 Forum’s calculations 12.03 Company spending on R&D In your country, to what extent do companies spend on research and development (R&D)? [1 = do not spend on R&D; 7 = spend heavily on R&D] | 2013–14 weighted average Source: World Economic Forum, Executive Opinion Survey. For more details, refer to Chapter 1.3 of The Global Competitiveness Report 2014–2015 12.04 University-industry collaboration in R&D In your country, to what extent do business and universities collaborate on research and development (R&D)? [1 = do not collaborate at all; 7 = collaborate extensively] | 2013–14 weighted average Source: World Economic Forum, Executive Opinion Survey. For more details, refer to Chapter 1.3 of The Global Competitiveness Report 2014–2015 12.05 Government procurement of advanced technology products In your country, to what extent do government purchasing decisions foster innovation? [1 = not at all; 7 = to a great extent] | 2013–14 weighted average Source: World Economic Forum, Executive Opinion Survey. For more details, refer to Chapter 1.3 of The Global Competitiveness Report 2014–2015 3: Competitiveness Profiles List of Countries Country Page Country Page Country Page Algeria 102 Ghana 130 Nigeria 158 Angola 104 Guinea 132 Rwanda 160 Benin* 106 Kenya 134 Senegal 162 Botswana 108 Lesotho 136 Seychelles 164 Burkina Faso 110 Liberia* 138 Sierra Leone 166 Burundi 112 Libya 140 South Africa 168 Cameroon 114 Madagascar 142 Swaziland 170 Cape Verde 116 Malawi 144 Tanzania 172 Chad 118 Mali 146 Tunisia 174 Côte d’Ivoire 120 Mauritania 148 Uganda 176 Egypt 122 Mauritius 150 Zambia 178 Ethiopia 124 Morocco 152 Zimbabwe 180 Gabon 126 Mozambique 154 * Benin and Liberia data are based on the GCI 2013–2014. Gambia, The 128 Namibia 156 The Africa Competitiveness Report 2015 | 101 Part 3: Competitiveness Profiles Algeria Key indicators, 2013 Population (millions)...............................................37.9 GDP (PPP) per capita (int’l $), 1990–2013 GDP (US$ billions)*..............................................212.5 15,000  Algeria     Middle East, North Africa, and Pakistan GDP per capita (US$).......................................5,605.6 GDP (PPP) as share (%) of world total...................0.51 12,000 Sectoral value-added (% GDP), 2012 Agriculture...............................................................9.3 9,000 Industry.................................................................48.5 Services................................................................42.2 6,000 Human Development Index, 2013 3,000 Score, (0–1) best...................................................0.72 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012 Rank (out of 187 economies)....................................93 Sources: IMF; UNFPA; UNDP; World Bank Global Competitiveness Index Rank Score Stage of development (out of 144) (1–7) GCI 2014–2015................................................... 79...... 4.1 Transition Transition GCI 2013–2014 (out of 148).......................................... 100....... 3.8 1 1–2 2 2­­–3 3 GCI 2012–2013 (out of 144).......................................... 110....... 3.7 Factor Efficiency Innovation driven driven driven Basic requirements (59.0%).......................................... 65....... 4.6 Institutions Institutions..................................................................... 101....... 3.4 7 Infrastructure................................................................. 106....... 3.1 Innovation Infrastructure 6 Macroeconomic environment.......................................... 11....... 6.4 5 Business Macroeconomic Health and primary education.......................................... 81....... 5.6 sophistication 4 environment 3 Efficiency enhancers (35.7%)..................................... 125....... 3.3 2 Health and Higher education and training.......................................... 98....... 3.7 Market size 1 primary Goods market efficiency ............................................... 136....... 3.5 education Labor market efficiency................................................. 139....... 3.1 Financial market development....................................... 137....... 2.7 Technological Higher education readiness and training Technological readiness................................................. 129....... 2.6 Market size...................................................................... 47....... 4.4 Financial market Goods market development efficiency Innovation and sophistication factors (5.2%)............ 133....... 2.9 Labor market efficiency Business sophistication ................................................ 131....... 3.2 Innovation...................................................................... 128....... 2.6  Algeria     Middle East, North Africa, and Pakistan The most problematic factors for doing business Access to financing.................................................................. 15.1 Corruption................................................................................ 13.9 Inefficient government bureaucracy.......................................... 12.6 Tax rates..................................................................................... 9.4 Restrictive labor regulations........................................................ 6.2 Inadequately educated workforce............................................... 6.1 Inadequate supply of infrastructure............................................. 5.8 Poor work ethic in national labor force....................................... 5.5 Tax regulations........................................................................... 5.1 Policy instability.......................................................................... 4.7 Foreign currency regulations....................................................... 4.3 Inflation....................................................................................... 3.2 Government instability/coups..................................................... 2.9 Insufficient capacity to innovate.................................................. 2.2 Crime and theft.......................................................................... 1.9 Poor public health...................................................................... 1.1 0 5 10 15 20 25 30 Score 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. 102 | The Africa Competitiveness Report 2015 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 (cont’d.) 1.01 Property rights........................................................ 3.7.............97 6.06 No. procedures to start a business*......................... 14...........139 1.02 Intellectual property protection................................ 2.9...........114 6.07 No. days to start a business*................................ 25.0...........101 1.03 Diversion of public funds......................................... 2.6...........112 6.08 Agricultural policy costs.......................................... 3.3...........114 1.04 Public trust in politicians.......................................... 2.8.............80 6.09 Prevalence of trade barriers.................................... 3.7...........135 1.05 Irregular payments and bribes................................. 2.9...........120 6.10 Trade tariffs, % duty*............................................. 14.5...........134 1.06 Judicial independence............................................. 3.5.............85 6.11 Prevalence of foreign ownership.............................. 3.2...........131 1.07 Favoritism in decisions of government officials........ 3.0.............77 6.12 Business impact of rules on FDI.............................. 3.3...........128 1.08 Wastefulness of government spending.................... 3.1.............74 6.13 Burden of customs procedures............................... 2.8...........137 1.09 Burden of government regulation............................ 3.1...........104 6.14 Imports as a percentage of GDP*......................... 31.7...........111 1.10 Efficiency of legal framework in settling disputes..... 3.2...........108 6.15 Degree of customer orientation............................... 3.6...........125 1.11 Efficiency of legal framework in challenging regs..... 2.9...........104 6.16 Buyer sophistication................................................ 3.0...........102 1.12 Transparency of government policymaking.............. 3.6...........107 1.13 Business costs of terrorism..................................... 3.8...........129 7th pillar: Labor market efficiency 1.14 Business costs of crime and violence..................... 4.0.............93 7.01 Cooperation in labor-employer relations.................. 3.6...........130 1.15 Organized crime...................................................... 4.3.............94 7.02 Flexibility of wage determination.............................. 4.6...........104 1.16 Reliability of police services..................................... 4.1.............74 7.03 Hiring and firing practices........................................ 3.1...........122 1.17 Ethical behavior of firms.......................................... 3.7...........100 7.04 Redundancy costs, weeks of salary*..................... 17.3.............83 1.18 Strength of auditing and reporting standards.......... 3.4...........134 7.05 Effect of taxation on incentives to work................... 3.3.............97 1.19 Efficacy of corporate boards................................... 3.5...........137 7.06 Pay and productivity................................................ 3.3...........123 1.20 Protection of minority shareholders’ interests.......... 3.5...........113 7.07 Reliance on professional management.................... 2.6...........141 1.21 Strength of investor protection, 0–10 (best)*........... 5.0.............83 7.08 Country capacity to retain talent.............................. 2.3...........133 7.09 Country capacity to attract talent............................ 2.3...........133 2nd pillar: Infrastructure 7.10 Women in labor force, ratio to men*...................... 0.21...........144 2.01 Quality of overall infrastructure................................ 3.6...........102 2.02 Quality of roads....................................................... 3.1...........107 8th pillar: Financial market development 2.03 Quality of railroad infrastructure............................... 2.7.............65 8.01 Availability of financial services................................ 3.0...........133 2.04 Quality of port infrastructure.................................... 2.8...........117 8.02 Affordability of financial services.............................. 3.1...........135 2.05 Quality of air transport infrastructure....................... 3.0...........128 8.03 Financing through local equity market..................... 2.1...........134 2.06 Available airline seat km/week, millions*.............. 177.3.............69 8.04 Ease of access to loans.......................................... 2.8.............72 2.07 Quality of electricity supply...................................... 4.0.............91 8.05 Venture capital availability........................................ 2.2...........108 2.08 Mobile telephone subscriptions/100 pop.*.......... 102.0.............91 8.06 Soundness of banks............................................... 3.4...........133 2.09 Fixed telephone lines/100 pop.*.............................. 8.0.............99 8.07 Regulation of securities exchanges......................... 2.2...........136 8.08 Legal rights index, 0–10 (best)*.................................. 3...........113 3rd pillar: Macroeconomic environment 3.01 Government budget balance, % GDP*.................... 0.1.............20 9th pillar: Technological readiness 3.02 Gross national savings, % GDP*........................... 51.1...............4 9.01 Availability of latest technologies............................. 3.4...........136 3.03 Inflation, annual % change*..................................... 3.3.............66 9.02 Firm-level technology absorption............................. 3.4...........138 3.04 General government debt, % GDP*........................ 9.2...............5 9.03 FDI and technology transfer.................................... 3.9...........115 3.05 Country credit rating, 0–100 (best)*....................... 52.6.............66 9.04 Individuals using Internet, %*................................ 16.5...........108 9.05 Fixed broadband Internet subscriptions/100 pop.*.. 3.3.............87 4th pillar: Health and primary education 9.06 Int’l Internet bandwidth, kb/s per user*................. 26.3.............72 4.01 Malaria cases/100,000 pop.*.................................. 0.2.............10 9.07 Mobile broadband subscriptions/100 pop.*............ 0.0...........133 4.02 Business impact of malaria..................................... 4.5.............47 4.03 Tuberculosis cases/100,000 pop.*........................ 89.0.............88 10th pillar: Market size 4.04 Business impact of tuberculosis.............................. 4.0...........131 10.01 Domestic market size index, 1–7 (best)*.................. 4.2.............45 4.05 HIV prevalence, % adult pop.*................................ 0.1...............1 10.02 Foreign market size index, 1–7 (best)*..................... 4.9.............52 4.06 Business impact of HIV/AIDS.................................. 4.3...........118 10.03 GDP (PPP$ billions)*........................................... 285.5.............45 4.07 Infant mortality, deaths/1,000 live births*............... 17.2.............83 10.04 Exports as a percentage of GDP*......................... 33.8.............84 4.08 Life expectancy, years*.......................................... 70.9.............90 4.09 Quality of primary education.................................... 2.8...........121 11th pillar: Business sophistication 4.10 Primary education enrollment, net %*................... 97.3.............41 11.01 Local supplier quantity............................................ 4.3...........102 11.02 Local supplier quality............................................... 3.3...........136 5th pillar: Higher education and training 11.03 State of cluster development................................... 3.3...........105 5.01 Secondary education enrollment, gross %*........... 97.6.............46 11.04 Nature of competitive advantage............................. 3.1...........104 5.02 Tertiary education enrollment, gross %*................ 31.5.............78 11.05 Value chain breadth................................................. 3.1...........126 5.03 Quality of the education system.............................. 3.0...........114 11.06 Control of international distribution.......................... 3.4...........127 5.04 Quality of math and science education................... 3.2...........113 11.07 Production process sophistication........................... 2.8...........131 5.05 Quality of management schools.............................. 3.5...........115 11.08 Extent of marketing................................................. 2.8...........139 5.06 Internet access in schools....................................... 2.4...........133 11.09 Willingness to delegate authority............................. 3.1...........125 5.07 Availability of research and training services............ 3.1...........126 5.08 Extent of staff training............................................. 3.4...........118 12th pillar: Innovation 12.01 Capacity for innovation............................................ 2.7...........143 6th pillar: Goods market efficiency 12.02 Quality of scientific research institutions.................. 2.6...........127 6.01 Intensity of local competition................................... 3.8...........136 12.03 Company spending on R&D.................................... 2.2...........138 6.02 Extent of market dominance................................... 3.3...........108 12.04 University-industry collaboration in R&D.................. 2.3...........137 6.03 Effectiveness of anti-monopoly policy...................... 3.3...........124 12.05 Gov’t procurement of advanced tech products....... 3.1.............99 6.04 Effect of taxation on incentives to invest.................. 3.5.............86 12.06 Availability of scientists and engineers..................... 4.2.............61 6.05 Total tax rate, % profits*........................................ 71.9...........137 12.07 PCT patents, applications/million pop.*................... 0.2.............97 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 89. The Africa Competitiveness Report 2015 | 103 Part 3: Competitiveness Profiles Angola Key indicators, 2013 Population (millions)...............................................20.8 GDP (PPP) per capita (int’l $), 1990–2013 GDP (US$ billions)*..............................................124.2 8,000  Angola     Sub-Saharan Africa GDP per capita (US$).......................................5,964.5 7,000 GDP (PPP) as share (%) of world total...................0.16 6,000 Sectoral value-added (% GDP), 2013 5,000 Agriculture.............................................................10.8 4,000 Industry.................................................................57.0 Services................................................................32.2 3,000 2,000 Human Development Index, 2013 Score, (0–1) best...................................................0.53 1,000 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012 Rank (out of 187 economies)..................................149 Sources: IMF; UNFPA; UNDP; World Bank Global Competitiveness Index Rank Score Stage of development (out of 144) (1–7) GCI 2014–2015................................................. 140...... 3.0 Transition Transition GCI 2013–2014 (out of 148).......................................... 142....... 3.1 1 1–2 2 2­­–3 3 GCI 2012–2013 (out of 144)........................................... n/a....... n/a Factor Efficiency Innovation driven driven driven Basic requirements (59.3%)........................................ 137....... 3.2 Institutions Institutions..................................................................... 143....... 2.6 7 Infrastructure................................................................. 139....... 2.0 Innovation Infrastructure 6 Macroeconomic environment.......................................... 71....... 4.7 5 Business Macroeconomic Health and primary education........................................ 136....... 3.5 sophistication 4 environment 3 Efficiency enhancers (35.6%)..................................... 140....... 2.8 2 Health and Higher education and training........................................ 144....... 1.9 Market size 1 primary Goods market efficiency ............................................... 143....... 2.9 education Labor market efficiency................................................. 128....... 3.5 Financial market development....................................... 140....... 2.5 Technological Higher education readiness and training Technological readiness................................................. 140....... 2.3 Market size...................................................................... 65....... 3.8 Financial market Goods market development efficiency Innovation and sophistication factors (5.2%)............ 144....... 2.4 Labor market efficiency Business sophistication ................................................ 144....... 2.6 Innovation...................................................................... 142....... 2.1  Angola     Sub-Saharan Africa The most problematic factors for doing business Access to financing.................................................................. 19.6 Inadequately educated workforce............................................. 19.1 Inadequate supply of infrastructure........................................... 18.4 Corruption................................................................................ 16.5 Poor public health...................................................................... 6.4 Inefficient government bureaucracy............................................ 6.2 Poor work ethic in national labor force....................................... 3.6 Crime and theft.......................................................................... 3.1 Foreign currency regulations....................................................... 2.4 Inflation....................................................................................... 1.0 Government instability/coups..................................................... 0.9 Insufficient capacity to innovate.................................................. 0.9 Policy instability.......................................................................... 0.7 Restrictive labor regulations........................................................ 0.6 Tax rates..................................................................................... 0.6 Tax regulations........................................................................... 0.0 0 5 10 15 20 25 30 Score 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. 104 | The Africa Competitiveness Report 2015 Part 3: Competitiveness Profiles Angola The Global Competitiveness Index in detail INDICATOR VALUE RANK/144 INDICATOR VALUE RANK/144 1st pillar: Institutions 6th pillar: Goods market efficiency (cont’d.) 1.01 Property rights........................................................ 2.5...........141 6.06 No. procedures to start a business*........................... 8.............93 1.02 Intellectual property protection................................ 2.3...........138 6.07 No. days to start a business*................................ 66.0...........134 1.03 Diversion of public funds......................................... 1.8...........139 6.08 Agricultural policy costs.......................................... 3.2...........118 1.04 Public trust in politicians.......................................... 1.8...........135 6.09 Prevalence of trade barriers.................................... 2.9...........144 1.05 Irregular payments and bribes................................. 2.4...........136 6.10 Trade tariffs, % duty*............................................... 9.3...........100 1.06 Judicial independence............................................. 2.1...........137 6.11 Prevalence of foreign ownership.............................. 2.9...........138 1.07 Favoritism in decisions of government officials........ 2.0...........140 6.12 Business impact of rules on FDI.............................. 2.6...........141 1.08 Wastefulness of government spending.................... 2.8.............93 6.13 Burden of customs procedures............................... 1.8...........143 1.09 Burden of government regulation............................ 2.7...........128 6.14 Imports as a percentage of GDP*......................... 38.9.............92 1.10 Efficiency of legal framework in settling disputes..... 2.3...........140 6.15 Degree of customer orientation............................... 2.4...........144 1.11 Efficiency of legal framework in challenging regs..... 2.0...........141 6.16 Buyer sophistication................................................ 2.3...........138 1.12 Transparency of government policymaking.............. 2.9...........137 1.13 Business costs of terrorism..................................... 4.8.............96 7th pillar: Labor market efficiency 1.14 Business costs of crime and violence..................... 3.6...........114 7.01 Cooperation in labor-employer relations.................. 3.2...........142 1.15 Organized crime...................................................... 3.5...........128 7.02 Flexibility of wage determination.............................. 4.1...........122 1.16 Reliability of police services..................................... 2.8...........129 7.03 Hiring and firing practices........................................ 2.6...........137 1.17 Ethical behavior of firms.......................................... 2.6...........144 7.04 Redundancy costs, weeks of salary*..................... 31.0...........132 1.18 Strength of auditing and reporting standards.......... 2.6...........141 7.05 Effect of taxation on incentives to work................... 4.0.............41 1.19 Efficacy of corporate boards................................... 2.7...........143 7.06 Pay and productivity................................................ 2.5...........141 1.20 Protection of minority shareholders’ interests.......... 2.5...........142 7.07 Reliance on professional management.................... 2.2...........142 1.21 Strength of investor protection, 0–10 (best)*........... 5.3.............68 7.08 Country capacity to retain talent.............................. 3.7.............53 7.09 Country capacity to attract talent............................ 3.8.............50 2nd pillar: Infrastructure 7.10 Women in labor force, ratio to men*...................... 0.83.............66 2.01 Quality of overall infrastructure................................ 2.2...........141 2.02 Quality of roads....................................................... 2.3...........138 8th pillar: Financial market development 2.03 Quality of railroad infrastructure........................ N/Appl.............n/a 8.01 Availability of financial services................................ 2.3...........143 2.04 Quality of port infrastructure.................................... 2.7...........121 8.02 Affordability of financial services.............................. 3.2...........128 2.05 Quality of air transport infrastructure....................... 3.3...........117 8.03 Financing through local equity market..................... 1.4...........144 2.06 Available airline seat km/week, millions*.............. 130.5.............74 8.04 Ease of access to loans.......................................... 2.2...........122 2.07 Quality of electricity supply...................................... 1.7...........138 8.05 Venture capital availability........................................ 2.3.............98 2.08 Mobile telephone subscriptions/100 pop.*............ 61.9...........132 8.06 Soundness of banks............................................... 4.1...........115 2.09 Fixed telephone lines/100 pop.*.............................. 1.0...........126 8.07 Regulation of securities exchanges......................... 1.2...........144 8.08 Legal rights index, 0–10 (best)*.................................. 3...........113 3rd pillar: Macroeconomic environment 3.01 Government budget balance, % GDP*...................-1.5.............42 9th pillar: Technological readiness 3.02 Gross national savings, % GDP*........................... 18.2.............80 9.01 Availability of latest technologies............................. 3.2...........139 3.03 Inflation, annual % change*..................................... 8.8...........130 9.02 Firm-level technology absorption............................. 2.9...........143 3.04 General government debt, % GDP*...................... 26.6.............29 9.03 FDI and technology transfer.................................... 3.9...........117 3.05 Country credit rating, 0–100 (best)*....................... 35.8.............91 9.04 Individuals using Internet, %*................................ 19.1...........104 9.05 Fixed broadband Internet subscriptions/100 pop.*.. 0.2...........119 4th pillar: Health and primary education 9.06 Int’l Internet bandwidth, kb/s per user*................... 2.0...........140 4.01 Malaria cases/100,000 pop.*......................... 18,251.2.............61 9.07 Mobile broadband subscriptions/100 pop.*.......... 12.1.............94 4.02 Business impact of malaria..................................... 1.4.............76 4.03 Tuberculosis cases/100,000 pop.*...................... 316.0...........130 10th pillar: Market size 4.04 Business impact of tuberculosis.............................. 2.8...........143 10.01 Domestic market size index, 1–7 (best)*.................. 3.5.............69 4.05 HIV prevalence, % adult pop.*................................ 2.3...........125 10.02 Foreign market size index, 1–7 (best)*..................... 4.8.............56 4.06 Business impact of HIV/AIDS.................................. 2.5...........143 10.03 GDP (PPP$ billions)*........................................... 130.1.............63 4.07 Infant mortality, deaths/1,000 live births*............... 99.5...........143 10.04 Exports as a percentage of GDP*......................... 62.3.............32 4.08 Life expectancy, years*.......................................... 51.5...........137 4.09 Quality of primary education.................................... 2.0...........143 11th pillar: Business sophistication 4.10 Primary education enrollment, net %*................... 85.7...........115 11.01 Local supplier quantity............................................ 2.4...........144 11.02 Local supplier quality............................................... 2.2...........144 5th pillar: Higher education and training 11.03 State of cluster development................................... 2.6...........141 5.01 Secondary education enrollment, gross %*........... 31.5...........135 11.04 Nature of competitive advantage............................. 2.6...........135 5.02 Tertiary education enrollment, gross %*.................. 7.5...........121 11.05 Value chain breadth................................................. 2.6...........144 5.03 Quality of the education system.............................. 2.1...........142 11.06 Control of international distribution.......................... 3.5...........118 5.04 Quality of math and science education................... 1.9...........143 11.07 Production process sophistication........................... 2.4...........137 5.05 Quality of management schools.............................. 2.3...........140 11.08 Extent of marketing................................................. 2.9...........135 5.06 Internet access in schools....................................... 2.4...........132 11.09 Willingness to delegate authority............................. 2.4...........142 5.07 Availability of research and training services............ 2.5...........144 5.08 Extent of staff training............................................. 2.8...........141 12th pillar: Innovation 12.01 Capacity for innovation............................................ 2.7...........142 6th pillar: Goods market efficiency 12.02 Quality of scientific research institutions.................. 1.9...........142 6.01 Intensity of local competition................................... 2.6...........144 12.03 Company spending on R&D.................................... 2.1...........141 6.02 Extent of market dominance................................... 2.2...........144 12.04 University-industry collaboration in R&D.................. 2.0...........142 6.03 Effectiveness of anti-monopoly policy...................... 2.0...........144 12.05 Gov’t procurement of advanced tech products....... 2.6...........135 6.04 Effect of taxation on incentives to invest.................. 3.5.............89 12.06 Availability of scientists and engineers..................... 2.5...........144 6.05 Total tax rate, % profits*........................................ 52.1...........120 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 89. The Africa Competitiveness Report 2015 | 105 Part 3: Competitiveness Profiles Benin* Key indicators, 2013 Population (millions)...............................................10.3 GDP (PPP) per capita (int’l $), 1990–2013 GDP (US$ billions)*..................................................8.3  Benin     Sub-Saharan Africa GDP per capita (US$)..........................................805.1 4,000 GDP (PPP) as share (%) of world total...................0.02 3,500 Sectoral value-added (% GDP), 2010 3,000 Agriculture.............................................................32.4 2,500 Industry.................................................................13.2 2,000 Services................................................................54.3 1,500 Human Development Index, 2013 1,000 Score, (0–1) best...................................................0.48 500 Rank (out of 187 economies)..................................165 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012 Sources: IMF; UNFPA; UNDP; World Bank Global Competitiveness Index Rank Score Stage of development (out of 144) (1–7) GCI 2014–2015..................................................n/a......n/a Transition Transition GCI 2013–2014 (out of 148).......................................... 130....... 3.4 1 1–2 2 2­­–3 3 GCI 2012–2013 (out of 144).......................................... 119....... 3.6 Factor Efficiency Innovation driven driven driven Basic requirements (60.0%)........................................ 125....... 3.7 Institutions Institutions..................................................................... 108....... 3.4 7 Infrastructure................................................................. 129....... 2.4 Innovation Infrastructure 6 Macroeconomic environment.......................................... 99....... 4.3 5 Business Macroeconomic Health and primary education........................................ 117....... 4.5 sophistication 4 environment 3 Efficiency enhancers (35.0%)..................................... 134....... 3.2 2 Health and Higher education and training........................................ 123....... 3.0 Market size 1 primary Goods market efficiency ............................................... 139....... 3.5 education Labor market efficiency................................................... 94....... 4.1 Financial market development....................................... 125....... 3.3 Technological Higher education readiness and training Technological readiness................................................. 134....... 2.5 Market size.................................................................... 125....... 2.5 Financial market Goods market development efficiency Innovation and sophistication factors (5.0%)............ 123....... 3.0 Labor market efficiency Business sophistication ................................................ 132....... 3.2 Innovation...................................................................... 113....... 2.8  Benin     Sub-Saharan Africa *  Benin and Liberia were not included in the GCI 2014–2015. Therefore the data in this section refer to the GCI 2013–2014. The most problematic factors for doing business Corruption................................................................................ 21.4 Access to financing.................................................................. 20.1 Inefficient government bureaucracy.......................................... 12.2 Tax regulations......................................................................... 11.7 Tax rates..................................................................................... 9.9 Inadequate supply of infrastructure............................................. 6.2 Restrictive labor regulations........................................................ 3.5 Inadequately educated workforce............................................... 3.0 Inflation....................................................................................... 2.9 Insufficient capacity to innovate.................................................. 2.8 Policy instability.......................................................................... 2.2 Poor work ethic in national labor force....................................... 2.1 Crime and theft.......................................................................... 0.7 Foreign currency regulations....................................................... 0.7 Government instability/coups..................................................... 0.3 Poor public health...................................................................... 0.2 0 5 10 15 20 25 30 Score 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. Benin and Liberia were not included in the GCI 2014–2015. Therefore the most problematic factors for these countries are drawn from the 2013 edition of the World Economic Forum’s Executive Opinion Survey. 106 | The Africa Competitiveness Report 2015 Part 3: Competitiveness Profiles Benin The Global Competitiveness Index in detail INDICATOR VALUE RANK/148 INDICATOR VALUE RANK/144 1st pillar: Institutions 6th pillar: Goods market efficiency (cont’d.) 1.01 Property rights........................................................ 3.4...........118 6.06 No. procedures to start a business*........................... 5.............30 1.02 Intellectual property protection................................ 3.1...........101 6.07 No. days to start a business*................................ 26.0.............99 1.03 Diversion of public funds......................................... 2.4...........119 6.08 Agricultural policy costs.......................................... 2.8...........143 1.04 Public trust in politicians.......................................... 2.3...........107 6.09 Prevalence of trade barriers.................................... 3.4...........144 1.05 Irregular payments and bribes................................. 2.5...........140 6.10 Trade tariffs, % duty*............................................. 10.5...........112 1.06 Judicial independence............................................. 2.7...........116 6.11 Prevalence of foreign ownership.............................. 3.2...........138 1.07 Favoritism in decisions of government officials........ 2.8.............98 6.12 Business impact of rules on FDI.............................. 3.2...........138 1.08 Wastefulness of government spending.................... 3.2.............70 6.13 Burden of customs procedures............................... 3.0...........138 1.09 Burden of government regulation............................ 2.8...........124 6.14 Imports as a percentage of GDP*......................... 38.1.............96 1.10 Efficiency of legal framework in settling disputes..... 3.3...........104 6.15 Degree of customer orientation............................... 4.2...........107 1.11 Efficiency of legal framework in challenging regs..... 3.2.............91 6.16 Buyer sophistication................................................ 2.2...........144 1.12 Transparency of government policymaking.............. 3.6...........122 1.13 Business costs of terrorism..................................... 5.0...........103 7th pillar: Labor market efficiency 1.14 Business costs of crime and violence..................... 4.2.............98 7.01 Cooperation in labor-employer relations.................. 3.7...........127 1.15 Organized crime...................................................... 4.6.............92 7.02 Flexibility of wage determination.............................. 5.3.............46 1.16 Reliability of police services..................................... 4.4.............60 7.03 Hiring and firing practices........................................ 3.7.............89 1.17 Ethical behavior of firms.......................................... 3.7.............99 7.04 Redundancy costs, weeks of salary*..................... 11.6.............53 1.18 Strength of auditing and reporting standards.......... 3.8...........124 7.05 Effect of taxation on incentives to work................... 3.2...........110 1.19 Efficacy of corporate boards................................... 4.5.............77 7.06 Pay and productivity................................................ 3.0...........134 1.20 Protection of minority shareholders’ interests.......... 3.4...........127 7.07 Reliance on professional management.................... 3.1...........139 1.21 Strength of investor protection, 0–10 (best)*........... 3.3...........129 7.08 Country capacity to retain talent.............................. 2.5...........128 7.09 Country capacity to attract talent............................ 2.6...........114 2nd pillar: Infrastructure 7.10 Women in labor force, ratio to men*...................... 0.87.............42 2.01 Quality of overall infrastructure................................ 2.8...........135 2.02 Quality of roads....................................................... 2.8...........121 8th pillar: Financial market development 2.03 Quality of railroad infrastructure............................... 1.4...........115 8.01 Availability of financial services................................ 3.3...........134 2.04 Quality of port infrastructure.................................... 3.7.............95 8.02 Affordability of financial services.............................. 3.2...........132 2.05 Quality of air transport infrastructure....................... 3.0...........133 8.03 Financing through local equity market..................... 2.6...........114 2.06 Available airline seat km/week, millions*................ 20.2...........127 8.04 Ease of access to loans.......................................... 2.2...........117 2.07 Quality of electricity supply...................................... 2.2...........132 8.05 Venture capital availability........................................ 2.2...........113 2.08 Mobile telephone subscriptions/100 pop.*............ 89.9...........106 8.06 Soundness of banks............................................... 4.5.............96 2.09 Fixed telephone lines/100 pop.*.............................. 1.7...........123 8.07 Regulation of securities exchanges......................... 2.7...........132 8.08 Legal rights index, 0–10 (best)*.................................. 6.............65 3rd pillar: Macroeconomic environment 3.01 Government budget balance, % GDP*...................-0.8.............39 9th pillar: Technological readiness 3.02 Gross national savings, % GDP*............................. 8.2...........135 9.01 Availability of latest technologies............................. 3.8...........131 3.03 Inflation, annual % change*..................................... 6.7...........110 9.02 Firm-level technology absorption............................. 4.0...........122 3.04 General government debt, % GDP*...................... 32.5.............43 9.03 FDI and technology transfer.................................... 3.6...........136 3.05 Country credit rating, 0–100 (best)*....................... 24.2...........120 9.04 Individuals using Internet, %*.................................. 3.8...........136 9.05 Fixed broadband Internet subscriptions/100 pop.*.. 0.1...........133 4th pillar: Health and primary education 9.06 Int’l Internet bandwidth, kb/s per user*................... 3.5...........123 4.01 Malaria cases/100,000 pop.*......................... 28,228.7...........141 9.07 Mobile broadband subscriptions/100 pop.*............ 0.3...........125 4.02 Business impact of malaria..................................... 3.4...........132 4.03 Tuberculosis cases/100,000 pop.*........................ 70.0.............84 10th pillar: Market size 4.04 Business impact of tuberculosis.............................. 3.9...........130 10.01 Domestic market size index, 1–7 (best)*.................. 2.3...........124 4.05 HIV prevalence, % adult pop.*................................ 1.2...........116 10.02 Foreign market size index, 1–7 (best)*..................... 3.1...........130 4.06 Business impact of HIV/AIDS.................................. 3.9...........129 10.03 GDP (PPP$ billions)*............................................. 15.6...........123 4.07 Infant mortality, deaths/1,000 live births*............... 67.9...........135 10.04 Exports as a percentage of GDP*......................... 23.8...........127 4.08 Life expectancy, years*.......................................... 56.0...........128 4.09 Quality of primary education.................................... 3.3...........100 11th pillar: Business sophistication 4.10 Primary education enrollment, net %*................... 92.1.............92 11.01 Local supplier quantity............................................ 3.4...........142 11.02 Local supplier quality............................................... 3.5...........132 5th pillar: Higher education and training 11.03 State of cluster development................................... 2.9...........134 5.01 Secondary education enrollment, gross %*........... 51.4...........119 11.04 Nature of competitive advantage............................. 3.1...........101 5.02 Tertiary education enrollment, gross %*................ 10.6...........115 11.05 Value chain breadth................................................. 3.6.............80 5.03 Quality of the education system.............................. 3.2...........101 11.06 Control of international distribution.......................... 3.0...........144 5.04 Quality of math and science education................... 4.2.............66 11.07 Production process sophistication........................... 3.3...........108 5.05 Quality of management schools.............................. 4.3.............73 11.08 Extent of marketing................................................. 3.2...........126 5.06 Internet access in schools....................................... 2.0...........140 11.09 Willingness to delegate authority............................. 3.1...........132 5.07 Availability of research and training services............ 3.8.............95 5.08 Extent of staff training............................................. 3.1...........136 12th pillar: Innovation 12.01 Capacity for innovation............................................ 3.0...........114 6th pillar: Goods market efficiency 12.02 Quality of scientific research institutions.................. 2.9...........118 6.01 Intensity of local competition................................... 4.7.............89 12.03 Company spending on R&D.................................... 2.7...........118 6.02 Extent of market dominance................................... 3.4...........104 12.04 University-industry collaboration in R&D.................. 2.7...........131 6.03 Effectiveness of anti-monopoly policy...................... 3.2...........134 12.05 Gov’t procurement of advanced tech products....... 3.2...........100 6.04 Effect of taxation on incentives to invest.................. 2.5...........141 12.06 Availability of scientists and engineers..................... 4.3.............59 6.05 Total tax rate, % profits*........................................ 65.9...........135 12.07 PCT patents, applications/million pop.*................... 0.0...........112 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 89. Benin and Liberia were not included in the GCI 2014–2015. Therefore the data in this section refer to the GCI 2013–2014. The Africa Competitiveness Report 2015 | 107 Part 3: Competitiveness Profiles Botswana Key indicators, 2013 Population (millions).................................................2.1 GDP (PPP) per capita (int’l $), 1990–2013 GDP (US$ billions)*................................................14.8 20,000  Botswana     Sub-Saharan Africa GDP per capita (US$).......................................7,119.9 GDP (PPP) as share (%) of world total...................0.03 15,000 Sectoral value-added (% GDP), 2013 Agriculture...............................................................2.5 10,000 Industry.................................................................36.9 Services................................................................60.6 5,000 Human Development Index, 2013 0 Score, (0–1) best...................................................0.68 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012 Rank (out of 187 economies)..................................109 Sources: IMF; UNFPA; UNDP; World Bank Global Competitiveness Index Rank Score Stage of development (out of 144) (1–7) GCI 2014–2015................................................... 74...... 4.2 Transition Transition GCI 2013–2014 (out of 148)............................................ 74....... 4.1 1 1–2 2 2­­–3 3 GCI 2012–2013 (out of 144)............................................ 79....... 4.1 Factor Efficiency Innovation driven driven driven Basic requirements (50.2%).......................................... 72....... 4.5 Institutions Institutions....................................................................... 39....... 4.5 7 Infrastructure................................................................. 101....... 3.2 Innovation Infrastructure 6 Macroeconomic environment.......................................... 13....... 6.3 5 Business Macroeconomic Health and primary education........................................ 127....... 4.1 sophistication 4 environment 3 Efficiency enhancers (42.4%)....................................... 84....... 3.9 2 Health and Higher education and training........................................ 101....... 3.6 Market size 1 primary Goods market efficiency ................................................. 97....... 4.1 education Labor market efficiency................................................... 36....... 4.6 Financial market development......................................... 57....... 4.2 Technological Higher education readiness and training Technological readiness................................................... 76....... 3.6 Market size...................................................................... 97....... 3.1 Financial market Goods market development efficiency Innovation and sophistication factors (7.5%)............ 110....... 3.2 Labor market efficiency Business sophistication ................................................ 116....... 3.5 Innovation...................................................................... 102....... 3.0  Botswana     Sub-Saharan Africa The most problematic factors for doing business Poor work ethic in national labor force..................................... 18.5 Inadequately educated workforce............................................. 12.4 Inefficient government bureaucracy.......................................... 11.1 Inadequate supply of infrastructure........................................... 10.4 Restrictive labor regulations........................................................ 9.9 Access to financing.................................................................... 9.2 Insufficient capacity to innovate.................................................. 8.0 Corruption.................................................................................. 7.4 Crime and theft.......................................................................... 3.8 Inflation....................................................................................... 3.0 Poor public health...................................................................... 2.1 Policy instability.......................................................................... 1.7 Tax rates..................................................................................... 1.1 Foreign currency regulations....................................................... 0.6 Government instability/coups..................................................... 0.5 Tax regulations........................................................................... 0.4 0 5 10 15 20 25 30 Score 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. 108 | The Africa Competitiveness Report 2015 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 (cont’d.) 1.01 Property rights........................................................ 4.9.............39 6.06 No. procedures to start a business*........................... 9...........106 1.02 Intellectual property protection................................ 4.2.............42 6.07 No. days to start a business*................................ 60.0...........132 1.03 Diversion of public funds......................................... 4.3.............36 6.08 Agricultural policy costs.......................................... 4.0.............48 1.04 Public trust in politicians.......................................... 3.6.............39 6.09 Prevalence of trade barriers.................................... 4.4.............67 1.05 Irregular payments and bribes................................. 4.8.............40 6.10 Trade tariffs, % duty*............................................... 5.9.............75 1.06 Judicial independence............................................. 4.9.............35 6.11 Prevalence of foreign ownership.............................. 5.5.............16 1.07 Favoritism in decisions of government officials........ 3.5.............42 6.12 Business impact of rules on FDI.............................. 4.3.............83 1.08 Wastefulness of government spending.................... 4.1.............26 6.13 Burden of customs procedures............................... 4.2.............60 1.09 Burden of government regulation............................ 3.5.............67 6.14 Imports as a percentage of GDP*......................... 59.5.............43 1.10 Efficiency of legal framework in settling disputes..... 4.4.............32 6.15 Degree of customer orientation............................... 3.5...........132 1.11 Efficiency of legal framework in challenging regs..... 3.8.............41 6.16 Buyer sophistication................................................ 2.9...........112 1.12 Transparency of government policymaking.............. 4.3.............49 1.13 Business costs of terrorism..................................... 6.1.............20 7th pillar: Labor market efficiency 1.14 Business costs of crime and violence..................... 4.1.............90 7.01 Cooperation in labor-employer relations.................. 4.3.............69 1.15 Organized crime...................................................... 5.6.............38 7.02 Flexibility of wage determination.............................. 5.4.............42 1.16 Reliability of police services..................................... 4.3.............63 7.03 Hiring and firing practices........................................ 3.8.............82 1.17 Ethical behavior of firms.......................................... 4.5.............39 7.04 Redundancy costs, weeks of salary*..................... 21.7...........103 1.18 Strength of auditing and reporting standards.......... 5.2.............43 7.05 Effect of taxation on incentives to work................... 4.6.............14 1.19 Efficacy of corporate boards................................... 4.8.............57 7.06 Pay and productivity................................................ 3.8.............82 1.20 Protection of minority shareholders’ interests.......... 4.6.............43 7.07 Reliance on professional management.................... 4.8.............36 1.21 Strength of investor protection, 0–10 (best)*........... 6.0.............45 7.08 Country capacity to retain talent.............................. 3.5.............59 7.09 Country capacity to attract talent............................ 3.7.............51 2nd pillar: Infrastructure 7.10 Women in labor force, ratio to men*...................... 0.91.............28 2.01 Quality of overall infrastructure................................ 3.8.............89 2.02 Quality of roads....................................................... 4.0.............67 8th pillar: Financial market development 2.03 Quality of railroad infrastructure............................... 2.8.............62 8.01 Availability of financial services................................ 4.4.............72 2.04 Quality of port infrastructure.................................... 3.0...........114 8.02 Affordability of financial services.............................. 4.2.............67 2.05 Quality of air transport infrastructure....................... 3.7...........101 8.03 Financing through local equity market..................... 3.6.............56 2.06 Available airline seat km/week, millions*.................. 6.1...........139 8.04 Ease of access to loans.......................................... 3.0.............54 2.07 Quality of electricity supply...................................... 2.4...........127 8.05 Venture capital availability........................................ 2.7.............67 2.08 Mobile telephone subscriptions/100 pop.*.......... 160.6.............11 8.06 Soundness of banks............................................... 5.6.............43 2.09 Fixed telephone lines/100 pop.*.............................. 8.6.............95 8.07 Regulation of securities exchanges......................... 4.4.............57 8.08 Legal rights index, 0–10 (best)*.................................. 6.............63 3rd pillar: Macroeconomic environment 3.01 Government budget balance, % GDP*.................... 0.2.............18 9th pillar: Technological readiness 3.02 Gross national savings, % GDP*........................... 38.7.............12 9.01 Availability of latest technologies............................. 4.4.............92 3.03 Inflation, annual % change*..................................... 5.8...........103 9.02 Firm-level technology absorption............................. 4.3.............92 3.04 General government debt, % GDP*...................... 15.9.............14 9.03 FDI and technology transfer.................................... 4.2.............94 3.05 Country credit rating, 0–100 (best)*....................... 62.8.............45 9.04 Individuals using Internet, %*................................ 15.0...........116 9.05 Fixed broadband Internet subscriptions/100 pop.*.. 1.1...........104 4th pillar: Health and primary education 9.06 Int’l Internet bandwidth, kb/s per user*................... 6.6...........109 4.01 Malaria cases/100,000 pop.*................................ 29.9.............26 9.07 Mobile broadband subscriptions/100 pop.*.......... 74.1.............19 4.02 Business impact of malaria..................................... 4.8.............39 4.03 Tuberculosis cases/100,000 pop.*...................... 408.0...........133 10th pillar: Market size 4.04 Business impact of tuberculosis.............................. 3.7...........138 10.01 Domestic market size index, 1–7 (best)*.................. 2.9.............97 4.05 HIV prevalence, % adult pop.*.............................. 23.0...........141 10.02 Foreign market size index, 1–7 (best)*..................... 3.9.............97 4.06 Business impact of HIV/AIDS.................................. 3.2...........139 10.03 GDP (PPP$ billions)*............................................. 34.1.............99 4.07 Infant mortality, deaths/1,000 live births*............... 41.0...........112 10.04 Exports as a percentage of GDP*......................... 42.8.............62 4.08 Life expectancy, years*.......................................... 47.0...........143 4.09 Quality of primary education.................................... 3.7.............85 11th pillar: Business sophistication 4.10 Primary education enrollment, net %*................... 83.8...........122 11.01 Local supplier quantity............................................ 3.8...........129 11.02 Local supplier quality............................................... 3.5...........130 5th pillar: Higher education and training 11.03 State of cluster development................................... 3.3...........104 5.01 Secondary education enrollment, gross %*........... 81.7.............94 11.04 Nature of competitive advantage............................. 3.2.............92 5.02 Tertiary education enrollment, gross %*.................. 7.4...........123 11.05 Value chain breadth................................................. 3.3...........115 5.03 Quality of the education system.............................. 3.5.............82 11.06 Control of international distribution.......................... 3.2...........134 5.04 Quality of math and science education................... 3.6.............96 11.07 Production process sophistication........................... 3.3...........109 5.05 Quality of management schools.............................. 3.6...........112 11.08 Extent of marketing................................................. 3.6...........110 5.06 Internet access in schools....................................... 3.4...........108 11.09 Willingness to delegate authority............................. 3.4.............99 5.07 Availability of research and training services............ 3.4...........114 5.08 Extent of staff training............................................. 4.0.............68 12th pillar: Innovation 12.01 Capacity for innovation............................................ 3.3...........106 6th pillar: Goods market efficiency 12.02 Quality of scientific research institutions.................. 3.2...........100 6.01 Intensity of local competition................................... 4.7.............95 12.03 Company spending on R&D.................................... 2.6...........118 6.02 Extent of market dominance................................... 3.1...........121 12.04 University-industry collaboration in R&D.................. 3.1...........105 6.03 Effectiveness of anti-monopoly policy...................... 3.9.............75 12.05 Gov’t procurement of advanced tech products....... 3.7.............45 6.04 Effect of taxation on incentives to invest.................. 4.7.............14 12.06 Availability of scientists and engineers..................... 3.2...........120 6.05 Total tax rate, % profits*........................................ 25.4.............22 12.07 PCT patents, applications/million pop.*................... 0.2.............96 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 89. The Africa Competitiveness Report 2015 | 109 Part 3: Competitiveness Profiles Burkina Faso Key indicators, 2013 Population (millions)...............................................16.8 GDP (PPP) per capita (int’l $), 1990–2013 GDP (US$ billions)*................................................12.0 4,000  Burkina Faso     Sub-Saharan Africa GDP per capita (US$)..........................................711.0 3,500 GDP (PPP) as share (%) of world total...................0.03 3,000 Sectoral value-added (% GDP), 2012 2,500 Agriculture.............................................................35.3 2,000 Industry.................................................................26.2 Services................................................................38.5 1,500 1,000 Human Development Index, 2013 Score, (0–1) best...................................................0.39 500 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012 Rank (out of 187 economies)..................................181 Sources: IMF; UNFPA; UNDP; World Bank Global Competitiveness Index Rank Score Stage of development (out of 144) (1–7) GCI 2014–2015................................................. 135...... 3.2 Transition Transition GCI 2013–2014 (out of 148).......................................... 140....... 3.2 1 1–2 2 2­­–3 3 GCI 2012–2013 (out of 144).......................................... 133....... 3.3 Factor Efficiency Innovation driven driven driven Basic requirements (60.0%)........................................ 135....... 3.3 Institutions Institutions..................................................................... 117....... 3.3 7 Infrastructure................................................................. 141....... 2.0 Innovation Infrastructure 6 Macroeconomic environment.......................................... 83....... 4.5 5 Business Macroeconomic Health and primary education........................................ 141....... 3.2 sophistication 4 environment 3 Efficiency enhancers (35.0%)..................................... 132....... 3.2 2 Health and Higher education and training........................................ 136....... 2.4 Market size 1 primary Goods market efficiency ............................................... 127....... 3.8 education Labor market efficiency................................................... 70....... 4.2 Financial market development....................................... 127....... 3.1 Technological Higher education readiness and training Technological readiness................................................. 132....... 2.5 Market size.................................................................... 111....... 2.9 Financial market Goods market development efficiency Innovation and sophistication factors (5.0%)............ 128....... 2.9 Labor market efficiency Business sophistication ................................................ 136....... 3.0 Innovation...................................................................... 107....... 2.9  Burkina Faso     Sub-Saharan Africa The most problematic factors for doing business Access to financing.................................................................. 29.2 Corruption................................................................................ 23.6 Tax rates..................................................................................... 8.6 Inadequate supply of infrastructure............................................. 7.2 Inefficient government bureaucracy............................................ 5.6 Tax regulations........................................................................... 5.6 Inadequately educated workforce............................................... 5.2 Policy instability.......................................................................... 3.2 Insufficient capacity to innovate.................................................. 2.8 Poor work ethic in national labor force....................................... 2.8 Inflation....................................................................................... 2.2 Foreign currency regulations....................................................... 1.2 Restrictive labor regulations........................................................ 1.2 Crime and theft.......................................................................... 1.0 Poor public health...................................................................... 0.6 Government instability/coups..................................................... 0.0 0 5 10 15 20 25 30 Score 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. 110 | The Africa Competitiveness Report 2015 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 (cont’d.) 1.01 Property rights........................................................ 3.5...........109 6.06 No. procedures to start a business*........................... 3.............10 1.02 Intellectual property protection................................ 3.4.............85 6.07 No. days to start a business*................................ 13.0.............67 1.03 Diversion of public funds......................................... 2.1...........131 6.08 Agricultural policy costs.......................................... 3.7.............82 1.04 Public trust in politicians.......................................... 2.6.............92 6.09 Prevalence of trade barriers.................................... 4.3.............83 1.05 Irregular payments and bribes................................. 2.9...........121 6.10 Trade tariffs, % duty*............................................. 10.8...........112 1.06 Judicial independence............................................. 2.1...........136 6.11 Prevalence of foreign ownership.............................. 4.1...........105 1.07 Favoritism in decisions of government officials........ 2.8.............85 6.12 Business impact of rules on FDI.............................. 4.6.............53 1.08 Wastefulness of government spending.................... 2.8.............91 6.13 Burden of customs procedures............................... 3.6.............93 1.09 Burden of government regulation............................ 3.6.............56 6.14 Imports as a percentage of GDP*......................... 39.2.............90 1.10 Efficiency of legal framework in settling disputes..... 3.5.............81 6.15 Degree of customer orientation............................... 4.1...........101 1.11 Efficiency of legal framework in challenging regs..... 2.8...........107 6.16 Buyer sophistication................................................ 1.9...........144 1.12 Transparency of government policymaking.............. 3.3...........123 1.13 Business costs of terrorism..................................... 3.9...........128 7th pillar: Labor market efficiency 1.14 Business costs of crime and violence..................... 3.8...........103 7.01 Cooperation in labor-employer relations.................. 4.1.............94 1.15 Organized crime...................................................... 4.6.............84 7.02 Flexibility of wage determination.............................. 5.3.............50 1.16 Reliability of police services..................................... 4.0.............77 7.03 Hiring and firing practices........................................ 4.1.............53 1.17 Ethical behavior of firms.......................................... 3.4...........122 7.04 Redundancy costs, weeks of salary*..................... 10.5.............43 1.18 Strength of auditing and reporting standards.......... 4.3.............86 7.05 Effect of taxation on incentives to work................... 3.7.............63 1.19 Efficacy of corporate boards................................... 4.6.............65 7.06 Pay and productivity................................................ 3.1...........130 1.20 Protection of minority shareholders’ interests.......... 3.6...........102 7.07 Reliance on professional management.................... 2.9...........136 1.21 Strength of investor protection, 0–10 (best)*........... 3.7...........117 7.08 Country capacity to retain talent.............................. 3.0.............99 7.09 Country capacity to attract talent............................ 2.4...........125 2nd pillar: Infrastructure 7.10 Women in labor force, ratio to men*...................... 0.88.............39 2.01 Quality of overall infrastructure................................ 2.4...........137 2.02 Quality of roads....................................................... 2.5...........132 8th pillar: Financial market development 2.03 Quality of railroad infrastructure............................... 1.8.............93 8.01 Availability of financial services................................ 3.4...........130 2.04 Quality of port infrastructure.................................... 3.1...........111 8.02 Affordability of financial services.............................. 3.1...........134 2.05 Quality of air transport infrastructure....................... 3.0...........126 8.03 Financing through local equity market..................... 2.2...........127 2.06 Available airline seat km/week, millions*................ 15.8...........128 8.04 Ease of access to loans.......................................... 1.6...........138 2.07 Quality of electricity supply...................................... 1.7...........139 8.05 Venture capital availability........................................ 1.5...........144 2.08 Mobile telephone subscriptions/100 pop.*............ 66.4...........129 8.06 Soundness of banks............................................... 4.1...........116 2.09 Fixed telephone lines/100 pop.*.............................. 0.8...........127 8.07 Regulation of securities exchanges......................... 3.1...........122 8.08 Legal rights index, 0–10 (best)*.................................. 6.............63 3rd pillar: Macroeconomic environment 3.01 Government budget balance, % GDP*...................-3.0.............76 9th pillar: Technological readiness 3.02 Gross national savings, % GDP*........................... 15.4...........104 9.01 Availability of latest technologies............................. 3.5...........133 3.03 Inflation, annual % change*..................................... 2.0...............1 9.02 Firm-level technology absorption............................. 3.7...........132 3.04 General government debt, % GDP*...................... 33.3.............46 9.03 FDI and technology transfer.................................... 4.2.............92 3.05 Country credit rating, 0–100 (best)*....................... 21.0...........127 9.04 Individuals using Internet, %*.................................. 4.4...........133 9.05 Fixed broadband Internet subscriptions/100 pop.*.. 0.1...........129 4th pillar: Health and primary education 9.06 Int’l Internet bandwidth, kb/s per user*................... 3.1...........131 4.01 Malaria cases/100,000 pop.*......................... 34,021.6.............75 9.07 Mobile broadband subscriptions/100 pop.*............ 9.0.............99 4.02 Business impact of malaria..................................... 3.1.............70 4.03 Tuberculosis cases/100,000 pop.*........................ 54.0.............76 10th pillar: Market size 4.04 Business impact of tuberculosis.............................. 4.4...........107 10.01 Domestic market size index, 1–7 (best)*.................. 2.7...........104 4.05 HIV prevalence, % adult pop.*................................ 1.0...........109 10.02 Foreign market size index, 1–7 (best)*..................... 3.4...........119 4.06 Business impact of HIV/AIDS.................................. 4.3...........116 10.03 GDP (PPP$ billions)*............................................. 26.6...........108 4.07 Infant mortality, deaths/1,000 live births*............... 65.8...........135 10.04 Exports as a percentage of GDP*......................... 23.0...........121 4.08 Life expectancy, years*.......................................... 55.9...........130 4.09 Quality of primary education.................................... 3.1...........109 11th pillar: Business sophistication 4.10 Primary education enrollment, net %*................... 66.4...........137 11.01 Local supplier quantity............................................ 4.2...........105 11.02 Local supplier quality............................................... 4.1.............85 5th pillar: Higher education and training 11.03 State of cluster development................................... 2.9...........132 5.01 Secondary education enrollment, gross %*........... 25.9...........141 11.04 Nature of competitive advantage............................. 2.0...........144 5.02 Tertiary education enrollment, gross %*.................. 4.6...........130 11.05 Value chain breadth................................................. 3.0...........132 5.03 Quality of the education system.............................. 2.9...........120 11.06 Control of international distribution.......................... 3.0...........138 5.04 Quality of math and science education................... 3.8.............88 11.07 Production process sophistication........................... 2.4...........138 5.05 Quality of management schools.............................. 3.8.............97 11.08 Extent of marketing................................................. 3.1...........129 5.06 Internet access in schools....................................... 1.8...........140 11.09 Willingness to delegate authority............................. 2.1...........144 5.07 Availability of research and training services............ 3.5...........105 5.08 Extent of staff training............................................. 2.8...........140 12th pillar: Innovation 12.01 Capacity for innovation............................................ 3.4.............99 6th pillar: Goods market efficiency 12.02 Quality of scientific research institutions.................. 3.4.............90 6.01 Intensity of local competition................................... 4.6...........110 12.03 Company spending on R&D.................................... 2.3...........128 6.02 Extent of market dominance................................... 2.7...........138 12.04 University-industry collaboration in R&D.................. 3.2...........103 6.03 Effectiveness of anti-monopoly policy...................... 3.5...........113 12.05 Gov’t procurement of advanced tech products....... 3.2.............96 6.04 Effect of taxation on incentives to invest.................. 3.1...........119 12.06 Availability of scientists and engineers..................... 3.5...........107 6.05 Total tax rate, % profits*........................................ 43.9.............95 12.07 PCT patents, applications/million pop.*................... 0.0...........113 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 89. The Africa Competitiveness Report 2015 | 111 Part 3: Competitiveness Profiles Burundi Key indicators, 2013 Population (millions).................................................9.0 GDP (PPP) per capita (int’l $), 1990–2013 GDP (US$ billions)*..................................................2.7 4,000  Burundi     Sub-Saharan Africa GDP per capita (US$)..........................................303.0 3,500 GDP (PPP) as share (%) of world total...................0.01 3,000 Sectoral value-added (% GDP), 2012 2,500 Agriculture.............................................................40.6 2,000 Industry.................................................................16.9 Services................................................................42.5 1,500 1,000 Human Development Index, 2013 Score, (0–1) best...................................................0.39 500 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012 Rank (out of 187 economies)..................................180 Sources: IMF; UNFPA; UNDP; World Bank Global Competitiveness Index Rank Score Stage of development (out of 144) (1–7) GCI 2014–2015................................................. 139...... 3.1 Transition Transition GCI 2013–2014 (out of 148).......................................... 146....... 2.9 1 1–2 2 2­­–3 3 GCI 2012–2013 (out of 144).......................................... 144....... 2.8 Factor Efficiency Innovation driven driven driven Basic requirements (60.0%)........................................ 130....... 3.4 Institutions Institutions..................................................................... 132....... 2.9 7 Infrastructure................................................................. 140....... 2.0 Innovation Infrastructure 6 Macroeconomic environment........................................ 112....... 4.0 5 Business Macroeconomic Health and primary education........................................ 114....... 4.6 sophistication 4 environment 3 Efficiency enhancers (35.0%)..................................... 144....... 2.6 2 Health and Higher education and training........................................ 142....... 2.1 Market size 1 primary Goods market efficiency ............................................... 135....... 3.5 education Labor market efficiency................................................. 103....... 3.9 Financial market development....................................... 142....... 2.4 Technological Higher education readiness and training Technological readiness................................................. 142....... 2.1 Market size.................................................................... 141....... 1.7 Financial market Goods market development efficiency Innovation and sophistication factors (5.0%)............ 137....... 2.7 Labor market efficiency Business sophistication ................................................ 139....... 2.9 Innovation...................................................................... 133....... 2.5  Burundi     Sub-Saharan Africa The most problematic factors for doing business Corruption................................................................................ 26.0 Access to financing.................................................................. 20.8 Policy instability........................................................................ 14.3 Inflation..................................................................................... 10.0 Tax rates..................................................................................... 7.6 Inadequate supply of infrastructure............................................. 3.9 Insufficient capacity to innovate.................................................. 2.7 Inefficient government bureaucracy............................................ 2.4 Tax regulations........................................................................... 2.4 Inadequately educated workforce............................................... 2.4 Foreign currency regulations....................................................... 2.1 Government instability/coups..................................................... 2.1 Crime and theft.......................................................................... 1.8 Restrictive labor regulations........................................................ 0.9 Poor work ethic in national labor force....................................... 0.6 Poor public health...................................................................... 0.1 0 5 10 15 20 25 30 Score 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. 112 | The Africa Competitiveness Report 2015 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 (cont’d.) 1.01 Property rights........................................................ 2.8...........134 6.06 No. procedures to start a business*........................... 3.............10 1.02 Intellectual property protection................................ 2.6...........131 6.07 No. days to start a business*.................................. 5.0.............14 1.03 Diversion of public funds......................................... 2.2...........129 6.08 Agricultural policy costs.......................................... 2.8...........136 1.04 Public trust in politicians.......................................... 2.3...........104 6.09 Prevalence of trade barriers.................................... 3.5...........139 1.05 Irregular payments and bribes................................. 2.9...........125 6.10 Trade tariffs, % duty*............................................... 8.7.............95 1.06 Judicial independence............................................. 1.6...........143 6.11 Prevalence of foreign ownership.............................. 2.8...........139 1.07 Favoritism in decisions of government officials........ 2.4...........121 6.12 Business impact of rules on FDI.............................. 3.3...........129 1.08 Wastefulness of government spending.................... 2.3...........124 6.13 Burden of customs procedures............................... 2.9...........136 1.09 Burden of government regulation............................ 3.1.............97 6.14 Imports as a percentage of GDP*......................... 37.4.............97 1.10 Efficiency of legal framework in settling disputes..... 2.9...........121 6.15 Degree of customer orientation............................... 3.3...........139 1.11 Efficiency of legal framework in challenging regs..... 2.9...........100 6.16 Buyer sophistication................................................ 2.2...........141 1.12 Transparency of government policymaking.............. 3.2...........131 1.13 Business costs of terrorism..................................... 4.6...........106 7th pillar: Labor market efficiency 1.14 Business costs of crime and violence..................... 3.5...........115 7.01 Cooperation in labor-employer relations.................. 3.4...........138 1.15 Organized crime...................................................... 3.8...........122 7.02 Flexibility of wage determination.............................. 5.1.............61 1.16 Reliability of police services..................................... 2.2...........142 7.03 Hiring and firing practices........................................ 3.3...........118 1.17 Ethical behavior of firms.......................................... 3.1...........135 7.04 Redundancy costs, weeks of salary*..................... 15.9.............76 1.18 Strength of auditing and reporting standards.......... 3.6...........129 7.05 Effect of taxation on incentives to work................... 2.7...........133 1.19 Efficacy of corporate boards................................... 4.3.............91 7.06 Pay and productivity................................................ 2.6...........137 1.20 Protection of minority shareholders’ interests.......... 3.1...........131 7.07 Reliance on professional management.................... 2.8...........139 1.21 Strength of investor protection, 0–10 (best)*........... 6.3.............34 7.08 Country capacity to retain talent.............................. 2.0...........138 7.09 Country capacity to attract talent............................ 1.9...........138 2nd pillar: Infrastructure 7.10 Women in labor force, ratio to men*...................... 1.02...............4 2.01 Quality of overall infrastructure................................ 2.8...........131 2.02 Quality of roads....................................................... 3.2...........101 8th pillar: Financial market development 2.03 Quality of railroad infrastructure........................ N/Appl.............n/a 8.01 Availability of financial services................................ 2.8...........140 2.04 Quality of port infrastructure.................................... 2.8...........119 8.02 Affordability of financial services.............................. 2.7...........142 2.05 Quality of air transport infrastructure....................... 2.6...........135 8.03 Financing through local equity market..................... 1.8...........138 2.06 Available airline seat km/week, millions*.................. 1.8...........142 8.04 Ease of access to loans.......................................... 1.8...........131 2.07 Quality of electricity supply...................................... 2.1...........132 8.05 Venture capital availability........................................ 1.9...........129 2.08 Mobile telephone subscriptions/100 pop.*............ 25.0...........143 8.06 Soundness of banks............................................... 2.9...........140 2.09 Fixed telephone lines/100 pop.*.............................. 0.2...........141 8.07 Regulation of securities exchanges......................... 1.9...........141 8.08 Legal rights index, 0–10 (best)*.................................. 3...........113 3rd pillar: Macroeconomic environment 3.01 Government budget balance, % GDP*...................-1.9.............52 9th pillar: Technological readiness 3.02 Gross national savings, % GDP*............................-3.2...........142 9.01 Availability of latest technologies............................. 3.1...........141 3.03 Inflation, annual % change*..................................... 8.8...........131 9.02 Firm-level technology absorption............................. 3.2...........141 3.04 General government debt, % GDP*...................... 31.7.............40 9.03 FDI and technology transfer.................................... 3.3...........140 3.05 Country credit rating, 0–100 (best)*....................... 13.9...........139 9.04 Individuals using Internet, %*.................................. 1.3...........142 9.05 Fixed broadband Internet subscriptions/100 pop.*.. 0.0...........142 4th pillar: Health and primary education 9.06 Int’l Internet bandwidth, kb/s per user*................. 11.2.............95 4.01 Malaria cases/100,000 pop.*........................... 8,528.3.............57 9.07 Mobile broadband subscriptions/100 pop.*............ 0.0...........132 4.02 Business impact of malaria..................................... 3.3.............66 4.03 Tuberculosis cases/100,000 pop.*...................... 130.0...........101 10th pillar: Market size 4.04 Business impact of tuberculosis.............................. 3.9...........132 10.01 Domestic market size index, 1–7 (best)*.................. 1.8...........139 4.05 HIV prevalence, % adult pop.*................................ 1.3...........114 10.02 Foreign market size index, 1–7 (best)*..................... 1.7...........143 4.06 Business impact of HIV/AIDS.................................. 3.9...........127 10.03 GDP (PPP$ billions)*............................................... 5.8...........139 4.07 Infant mortality, deaths/1,000 live births*............... 66.9...........136 10.04 Exports as a percentage of GDP*........................... 6.0...........143 4.08 Life expectancy, years*.......................................... 53.6...........135 4.09 Quality of primary education.................................... 2.5...........131 11th pillar: Business sophistication 4.10 Primary education enrollment, net %*................... 94.0.............70 11.01 Local supplier quantity............................................ 3.6...........137 11.02 Local supplier quality............................................... 3.3...........135 5th pillar: Higher education and training 11.03 State of cluster development................................... 2.7...........138 5.01 Secondary education enrollment, gross %*........... 28.5...........137 11.04 Nature of competitive advantage............................. 2.7...........122 5.02 Tertiary education enrollment, gross %*.................. 3.2...........136 11.05 Value chain breadth................................................. 2.9...........136 5.03 Quality of the education system.............................. 2.6...........133 11.06 Control of international distribution.......................... 3.1...........135 5.04 Quality of math and science education................... 3.5...........100 11.07 Production process sophistication........................... 2.4...........140 5.05 Quality of management schools.............................. 2.6...........138 11.08 Extent of marketing................................................. 2.6...........142 5.06 Internet access in schools....................................... 1.7...........142 11.09 Willingness to delegate authority............................. 2.8...........137 5.07 Availability of research and training services............ 2.8...........138 5.08 Extent of staff training............................................. 2.9...........137 12th pillar: Innovation 12.01 Capacity for innovation............................................ 2.8...........140 6th pillar: Goods market efficiency 12.02 Quality of scientific research institutions.................. 2.4...........134 6.01 Intensity of local competition................................... 3.9...........134 12.03 Company spending on R&D.................................... 2.2...........137 6.02 Extent of market dominance................................... 3.4.............99 12.04 University-industry collaboration in R&D.................. 2.8...........122 6.03 Effectiveness of anti-monopoly policy...................... 3.1...........134 12.05 Gov’t procurement of advanced tech products....... 2.7...........128 6.04 Effect of taxation on incentives to invest.................. 2.6...........138 12.06 Availability of scientists and engineers..................... 3.3...........116 6.05 Total tax rate, % profits*........................................ 51.6...........118 12.07 PCT patents, applications/million pop.*................... 0.0...........124 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 89. The Africa Competitiveness Report 2015 | 113 Part 3: Competitiveness Profiles Cameroon Key indicators, 2013 Population (millions)...............................................22.0 GDP (PPP) per capita (int’l $), 1990–2013 GDP (US$ billions)*................................................29.3 4,000  Cameroon     Sub-Saharan Africa GDP per capita (US$).......................................1,330.7 GDP (PPP) as share (%) of world total...................0.06 3,500 3,000 Sectoral value-added (% GDP), 2007 Agriculture.............................................................19.7 2,500 Industry.................................................................31.0 2,000 Services................................................................49.3 1,500 Human Development Index, 2013 Score, (0–1) best...................................................0.50 1,000 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012 Rank (out of 187 economies)..................................152 Sources: IMF; UNFPA; UNDP; World Bank Global Competitiveness Index Rank Score Stage of development (out of 144) (1–7) GCI 2014–2015................................................. 116...... 3.7 Transition Transition GCI 2013–2014 (out of 148).......................................... 115....... 3.7 1 1–2 2 2­­–3 3 GCI 2012–2013 (out of 144).......................................... 112....... 3.7 Factor Efficiency Innovation driven driven driven Basic requirements (60.0%)........................................ 116....... 3.8 Institutions Institutions....................................................................... 91....... 3.5 7 Infrastructure................................................................. 126....... 2.5 Innovation Infrastructure 6 Macroeconomic environment.......................................... 90....... 4.4 5 Business Macroeconomic Health and primary education........................................ 112....... 4.7 sophistication 4 environment 3 Efficiency enhancers (35.0%)..................................... 113....... 3.5 2 Health and Higher education and training........................................ 117....... 3.2 Market size 1 primary Goods market efficiency ............................................... 113....... 4.0 education Labor market efficiency................................................... 81....... 4.1 Financial market development....................................... 108....... 3.5 Technological Higher education readiness and training Technological readiness................................................. 120....... 2.8 Market size...................................................................... 91....... 3.3 Financial market Goods market development efficiency Innovation and sophistication factors (5.0%).............. 84....... 3.5 Labor market efficiency Business sophistication .................................................. 98....... 3.7 Innovation........................................................................ 71....... 3.3  Cameroon     Sub-Saharan Africa The most problematic factors for doing business Corruption................................................................................ 18.6 Access to financing.................................................................. 17.9 Inadequate supply of infrastructure........................................... 12.5 Tax regulations........................................................................... 9.6 Tax rates..................................................................................... 8.6 Inefficient government bureaucracy............................................ 6.2 Poor work ethic in national labor force....................................... 5.5 Insufficient capacity to innovate.................................................. 3.8 Restrictive labor regulations........................................................ 3.6 Inadequately educated workforce............................................... 3.3 Inflation....................................................................................... 3.3 Policy instability.......................................................................... 1.9 Poor public health...................................................................... 1.6 Foreign currency regulations....................................................... 1.4 Crime and theft.......................................................................... 1.2 Government instability/coups..................................................... 1.0 0 5 10 15 20 25 30 Score 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. 114 | The Africa Competitiveness Report 2015 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 (cont’d.) 1.01 Property rights........................................................ 3.6.............99 6.06 No. procedures to start a business*........................... 5.............32 1.02 Intellectual property protection................................ 3.4.............87 6.07 No. days to start a business*................................ 15.0.............75 1.03 Diversion of public funds......................................... 2.4...........121 6.08 Agricultural policy costs.......................................... 3.3...........112 1.04 Public trust in politicians.......................................... 2.6.............87 6.09 Prevalence of trade barriers.................................... 3.9...........120 1.05 Irregular payments and bribes................................. 3.1...........115 6.10 Trade tariffs, % duty*............................................. 14.3...........132 1.06 Judicial independence............................................. 2.8...........113 6.11 Prevalence of foreign ownership.............................. 4.8.............61 1.07 Favoritism in decisions of government officials........ 2.8.............92 6.12 Business impact of rules on FDI.............................. 4.5.............69 1.08 Wastefulness of government spending.................... 2.8.............86 6.13 Burden of customs procedures............................... 3.6.............90 1.09 Burden of government regulation............................ 3.4.............79 6.14 Imports as a percentage of GDP*......................... 33.9...........104 1.10 Efficiency of legal framework in settling disputes..... 3.5.............78 6.15 Degree of customer orientation............................... 4.2.............96 1.11 Efficiency of legal framework in challenging regs..... 3.3.............74 6.16 Buyer sophistication................................................ 2.8...........123 1.12 Transparency of government policymaking.............. 4.0.............62 1.13 Business costs of terrorism..................................... 5.0.............87 7th pillar: Labor market efficiency 1.14 Business costs of crime and violence..................... 4.4.............72 7.01 Cooperation in labor-employer relations.................. 3.6...........128 1.15 Organized crime...................................................... 4.6.............79 7.02 Flexibility of wage determination.............................. 4.7.............98 1.16 Reliability of police services..................................... 4.3.............62 7.03 Hiring and firing practices........................................ 4.2.............38 1.17 Ethical behavior of firms.......................................... 3.7.............97 7.04 Redundancy costs, weeks of salary*..................... 15.3.............72 1.18 Strength of auditing and reporting standards.......... 3.9...........115 7.05 Effect of taxation on incentives to work................... 3.5.............84 1.19 Efficacy of corporate boards................................... 4.8.............54 7.06 Pay and productivity................................................ 3.4...........114 1.20 Protection of minority shareholders’ interests.......... 3.9.............86 7.07 Reliance on professional management.................... 3.6...........109 1.21 Strength of investor protection, 0–10 (best)*........... 4.3...........105 7.08 Country capacity to retain talent.............................. 3.0...........102 7.09 Country capacity to attract talent............................ 2.9...........101 2nd pillar: Infrastructure 7.10 Women in labor force, ratio to men*...................... 0.85.............55 2.01 Quality of overall infrastructure................................ 3.2...........116 2.02 Quality of roads....................................................... 2.9...........116 8th pillar: Financial market development 2.03 Quality of railroad infrastructure............................... 2.8.............63 8.01 Availability of financial services................................ 3.8...........106 2.04 Quality of port infrastructure.................................... 3.6.............95 8.02 Affordability of financial services.............................. 3.7...........109 2.05 Quality of air transport infrastructure....................... 3.3...........118 8.03 Financing through local equity market..................... 2.9...........101 2.06 Available airline seat km/week, millions*................ 51.4.............99 8.04 Ease of access to loans.......................................... 2.5.............92 2.07 Quality of electricity supply...................................... 2.4...........126 8.05 Venture capital availability........................................ 2.3...........102 2.08 Mobile telephone subscriptions/100 pop.*............ 70.4...........123 8.06 Soundness of banks............................................... 4.5.............92 2.09 Fixed telephone lines/100 pop.*.............................. 3.6...........109 8.07 Regulation of securities exchanges......................... 2.9...........126 8.08 Legal rights index, 0–10 (best)*.................................. 6.............63 3rd pillar: Macroeconomic environment 3.01 Government budget balance, % GDP*...................-4.2.............95 9th pillar: Technological readiness 3.02 Gross national savings, % GDP*........................... 16.2.............96 9.01 Availability of latest technologies............................. 4.1...........112 3.03 Inflation, annual % change*..................................... 2.1...............1 9.02 Firm-level technology absorption............................. 4.4.............84 3.04 General government debt, % GDP*...................... 18.6.............16 9.03 FDI and technology transfer.................................... 4.4.............83 3.05 Country credit rating, 0–100 (best)*....................... 25.9...........118 9.04 Individuals using Internet, %*.................................. 6.4...........127 9.05 Fixed broadband Internet subscriptions/100 pop.*.. 0.1...........130 4th pillar: Health and primary education 9.06 Int’l Internet bandwidth, kb/s per user*................... 3.2...........130 4.01 Malaria cases/100,000 pop.*......................... 17,051.0.............58 9.07 Mobile broadband subscriptions/100 pop.*............ 0.0...........133 4.02 Business impact of malaria..................................... 3.8.............59 4.03 Tuberculosis cases/100,000 pop.*...................... 238.0...........125 10th pillar: Market size 4.04 Business impact of tuberculosis.............................. 4.1...........127 10.01 Domestic market size index, 1–7 (best)*.................. 3.1.............85 4.05 HIV prevalence, % adult pop.*................................ 4.5...........131 10.02 Foreign market size index, 1–7 (best)*..................... 3.8.............99 4.06 Business impact of HIV/AIDS.................................. 4.0...........124 10.03 GDP (PPP$ billions)*............................................. 53.3.............88 4.07 Infant mortality, deaths/1,000 live births*............... 61.1...........131 10.04 Exports as a percentage of GDP*......................... 23.0...........124 4.08 Life expectancy, years*.......................................... 54.6...........134 4.09 Quality of primary education.................................... 3.7.............81 11th pillar: Business sophistication 4.10 Primary education enrollment, net %*................... 91.5.............93 11.01 Local supplier quantity............................................ 4.4.............93 11.02 Local supplier quality............................................... 3.9...........103 5th pillar: Higher education and training 11.03 State of cluster development................................... 3.5.............87 5.01 Secondary education enrollment, gross %*........... 50.4...........121 11.04 Nature of competitive advantage............................. 3.2.............97 5.02 Tertiary education enrollment, gross %*................ 11.9...........110 11.05 Value chain breadth................................................. 4.0.............48 5.03 Quality of the education system.............................. 3.8.............62 11.06 Control of international distribution.......................... 3.4...........125 5.04 Quality of math and science education................... 4.3.............65 11.07 Production process sophistication........................... 3.5.............93 5.05 Quality of management schools.............................. 4.4.............58 11.08 Extent of marketing................................................. 3.8.............98 5.06 Internet access in schools....................................... 2.7...........127 11.09 Willingness to delegate authority............................. 3.4...........108 5.07 Availability of research and training services............ 4.0.............77 5.08 Extent of staff training............................................. 4.0.............69 12th pillar: Innovation 12.01 Capacity for innovation............................................ 3.8.............64 6th pillar: Goods market efficiency 12.02 Quality of scientific research institutions.................. 3.5.............83 6.01 Intensity of local competition................................... 4.6...........109 12.03 Company spending on R&D.................................... 3.3.............53 6.02 Extent of market dominance................................... 3.8.............65 12.04 University-industry collaboration in R&D.................. 3.4.............82 6.03 Effectiveness of anti-monopoly policy...................... 3.9.............78 12.05 Gov’t procurement of advanced tech products....... 3.8.............41 6.04 Effect of taxation on incentives to invest.................. 3.4.............98 12.06 Availability of scientists and engineers..................... 4.1.............64 6.05 Total tax rate, % profits*........................................ 48.8...........108 12.07 PCT patents, applications/million pop.*................... 0.1...........107 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 89. The Africa Competitiveness Report 2015 | 115 Part 3: Competitiveness Profiles Cape Verde Key indicators, 2013 Population (millions).................................................0.5 GDP (PPP) per capita (int’l $), 1990–2013 GDP (US$ billions)*..................................................1.9 8,000  Cape Verde     Sub-Saharan Africa GDP per capita (US$).......................................3,633.1 7,000 GDP (PPP) as share (%) of world total...................0.00 6,000 Sectoral value-added (% GDP), 2012 5,000 Agriculture...............................................................8.1 4,000 Industry.................................................................17.0 Services................................................................74.9 3,000 2,000 Human Development Index, 2013 Score, (0–1) best...................................................0.64 1,000 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012 Rank (out of 187 economies)..................................123 Sources: IMF; UNFPA; UNDP; World Bank Global Competitiveness Index Rank Score Stage of development (out of 144) (1–7) GCI 2014–2015................................................. 114...... 3.7 Transition Transition GCI 2013–2014 (out of 148).......................................... 122....... 3.5 1 1–2 2 2­­–3 3 GCI 2012–2013 (out of 144).......................................... 122....... 3.5 Factor Efficiency Innovation driven driven driven Basic requirements (40.0%).......................................... 91....... 4.3 Institutions Institutions....................................................................... 66....... 3.9 7 Infrastructure................................................................. 104....... 3.1 Innovation Infrastructure 6 Macroeconomic environment........................................ 106....... 4.1 5 Business Macroeconomic Health and primary education.......................................... 57....... 6.0 sophistication 4 environment 3 Efficiency enhancers (50.0%)..................................... 127....... 3.3 2 Health and Higher education and training.......................................... 89....... 3.9 Market size 1 primary Goods market efficiency ............................................... 110....... 4.0 education Labor market efficiency................................................. 126....... 3.6 Financial market development....................................... 115....... 3.4 Technological Higher education readiness and training Technological readiness................................................... 80....... 3.5 Market size.................................................................... 144....... 1.3 Financial market Goods market development efficiency Innovation and sophistication factors (10.0%).......... 109....... 3.2 Labor market efficiency Business sophistication ................................................ 114....... 3.5 Innovation...................................................................... 101....... 3.0  Cape Verde     Sub-Saharan Africa The most problematic factors for doing business Access to financing.................................................................. 21.1 Tax rates................................................................................... 15.0 Inefficient government bureaucracy.......................................... 11.0 Inadequately educated workforce............................................... 9.1 Restrictive labor regulations........................................................ 9.1 Inadequate supply of infrastructure............................................. 6.0 Tax regulations........................................................................... 5.9 Poor work ethic in national labor force....................................... 4.4 Corruption.................................................................................. 4.3 Insufficient capacity to innovate.................................................. 4.3 Crime and theft.......................................................................... 3.0 Inflation....................................................................................... 3.0 Poor public health...................................................................... 1.7 Policy instability.......................................................................... 1.4 Foreign currency regulations....................................................... 0.5 Government instability/coups..................................................... 0.0 0 5 10 15 20 25 30 Score 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. 116 | The Africa Competitiveness Report 2015 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 (cont’d.) 1.01 Property rights........................................................ 3.8.............93 6.06 No. procedures to start a business*........................... 7.............78 1.02 Intellectual property protection................................ 3.2.............97 6.07 No. days to start a business*................................ 10.0.............52 1.03 Diversion of public funds......................................... 3.8.............48 6.08 Agricultural policy costs.......................................... 4.0.............53 1.04 Public trust in politicians.......................................... 3.6.............40 6.09 Prevalence of trade barriers.................................... 4.1...........101 1.05 Irregular payments and bribes................................. 4.4.............51 6.10 Trade tariffs, % duty*............................................. 10.3...........105 1.06 Judicial independence............................................. 4.2.............51 6.11 Prevalence of foreign ownership.............................. 4.5.............69 1.07 Favoritism in decisions of government officials........ 3.4.............50 6.12 Business impact of rules on FDI.............................. 4.3.............85 1.08 Wastefulness of government spending.................... 3.6.............42 6.13 Burden of customs procedures............................... 3.2...........120 1.09 Burden of government regulation............................ 3.6.............49 6.14 Imports as a percentage of GDP*......................... 51.0.............61 1.10 Efficiency of legal framework in settling disputes..... 3.6.............77 6.15 Degree of customer orientation............................... 3.6...........129 1.11 Efficiency of legal framework in challenging regs..... 3.4.............66 6.16 Buyer sophistication................................................ 2.9...........110 1.12 Transparency of government policymaking.............. 4.1.............60 1.13 Business costs of terrorism..................................... 5.2.............75 7th pillar: Labor market efficiency 1.14 Business costs of crime and violence..................... 3.8...........101 7.01 Cooperation in labor-employer relations.................. 3.9...........114 1.15 Organized crime...................................................... 4.3...........100 7.02 Flexibility of wage determination.............................. 4.9.............80 1.16 Reliability of police services..................................... 4.4.............56 7.03 Hiring and firing practices........................................ 3.4...........111 1.17 Ethical behavior of firms.......................................... 4.1.............60 7.04 Redundancy costs, weeks of salary*..................... 29.5...........127 1.18 Strength of auditing and reporting standards.......... 3.9...........112 7.05 Effect of taxation on incentives to work................... 3.4.............89 1.19 Efficacy of corporate boards................................... 4.1...........107 7.06 Pay and productivity................................................ 3.3...........118 1.20 Protection of minority shareholders’ interests.......... 3.7.............98 7.07 Reliance on professional management.................... 3.4...........121 1.21 Strength of investor protection, 0–10 (best)*........... 4.0...........113 7.08 Country capacity to retain talent.............................. 3.7.............54 7.09 Country capacity to attract talent............................ 3.6.............62 2nd pillar: Infrastructure 7.10 Women in labor force, ratio to men*...................... 0.64...........108 2.01 Quality of overall infrastructure................................ 3.7.............94 2.02 Quality of roads....................................................... 4.0.............64 8th pillar: Financial market development 2.03 Quality of railroad infrastructure........................ N/Appl.............n/a 8.01 Availability of financial services................................ 3.7...........119 2.04 Quality of port infrastructure.................................... 3.9.............84 8.02 Affordability of financial services.............................. 3.8...........100 2.05 Quality of air transport infrastructure....................... 3.8.............95 8.03 Financing through local equity market..................... 3.0.............94 2.06 Available airline seat km/week, millions*................ 40.4...........106 8.04 Ease of access to loans.......................................... 2.5...........100 2.07 Quality of electricity supply...................................... 2.7...........120 8.05 Venture capital availability........................................ 2.5.............91 2.08 Mobile telephone subscriptions/100 pop.*.......... 100.1.............94 8.06 Soundness of banks............................................... 4.4.............96 2.09 Fixed telephone lines/100 pop.*............................ 13.3.............80 8.07 Regulation of securities exchanges......................... 3.7.............96 8.08 Legal rights index, 0–10 (best)*.................................. 3...........113 3rd pillar: Macroeconomic environment 3.01 Government budget balance, % GDP*...................-7.7...........133 9th pillar: Technological readiness 3.02 Gross national savings, % GDP*........................... 34.6.............16 9.01 Availability of latest technologies............................. 4.7.............75 3.03 Inflation, annual % change*..................................... 1.5...............1 9.02 Firm-level technology absorption............................. 4.6.............69 3.04 General government debt, % GDP*...................... 95.0...........131 9.03 FDI and technology transfer.................................... 4.7.............61 3.05 Country credit rating, 0–100 (best)*....................... 31.9...........102 9.04 Individuals using Internet, %*................................ 37.5.............89 9.05 Fixed broadband Internet subscriptions/100 pop.*.. 4.3.............86 4th pillar: Health and primary education 9.06 Int’l Internet bandwidth, kb/s per user*................. 11.6.............94 4.01 Malaria cases/100,000 pop.*................................ 22.2.............21 9.07 Mobile broadband subscriptions/100 pop.*.......... 42.6.............48 4.02 Business impact of malaria..................................... 5.5.............20 4.03 Tuberculosis cases/100,000 pop.*...................... 144.0...........105 10th pillar: Market size 4.04 Business impact of tuberculosis.............................. 5.3.............82 10.01 Domestic market size index, 1–7 (best)*.................. 1.0...........144 4.05 HIV prevalence, % adult pop.*................................ 0.2...............1 10.02 Foreign market size index, 1–7 (best)*..................... 2.2...........142 4.06 Business impact of HIV/AIDS.................................. 5.4.............74 10.03 GDP (PPP$ billions)*............................................... 2.2...........144 4.07 Infant mortality, deaths/1,000 live births*............... 18.9.............90 10.04 Exports as a percentage of GDP*......................... 36.5.............75 4.08 Life expectancy, years*.......................................... 74.5.............63 4.09 Quality of primary education.................................... 4.0.............68 11th pillar: Business sophistication 4.10 Primary education enrollment, net %*................... 97.2.............43 11.01 Local supplier quantity............................................ 3.8...........128 11.02 Local supplier quality............................................... 3.7...........117 5th pillar: Higher education and training 11.03 State of cluster development................................... 3.4...........101 5.01 Secondary education enrollment, gross %*........... 92.7.............63 11.04 Nature of competitive advantage............................. 3.3.............89 5.02 Tertiary education enrollment, gross %*................ 20.6.............90 11.05 Value chain breadth................................................. 3.3...........114 5.03 Quality of the education system.............................. 3.9.............57 11.06 Control of international distribution.......................... 3.3...........130 5.04 Quality of math and science education................... 3.9.............86 11.07 Production process sophistication........................... 3.5.............94 5.05 Quality of management schools.............................. 3.7...........107 11.08 Extent of marketing................................................. 3.7...........108 5.06 Internet access in schools....................................... 3.8.............90 11.09 Willingness to delegate authority............................. 3.3...........110 5.07 Availability of research and training services............ 3.5...........108 5.08 Extent of staff training............................................. 3.7...........104 12th pillar: Innovation 12.01 Capacity for innovation............................................ 3.5.............97 6th pillar: Goods market efficiency 12.02 Quality of scientific research institutions.................. 3.1...........108 6.01 Intensity of local competition................................... 4.5...........117 12.03 Company spending on R&D.................................... 2.8...........107 6.02 Extent of market dominance................................... 3.9.............53 12.04 University-industry collaboration in R&D.................. 3.2.............97 6.03 Effectiveness of anti-monopoly policy...................... 3.8.............88 12.05 Gov’t procurement of advanced tech products....... 3.9.............36 6.04 Effect of taxation on incentives to invest.................. 3.2...........116 12.06 Availability of scientists and engineers..................... 3.3...........112 6.05 Total tax rate, % profits*........................................ 37.2.............70 12.07 PCT patents, applications/million pop.*................... 0.0...........124 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 89. The Africa Competitiveness Report 2015 | 117 Part 3: Competitiveness Profiles Chad Key indicators, 2013 Population (millions)...............................................11.0 GDP (PPP) per capita (int’l $), 1990–2013 GDP (US$ billions)*................................................13.4 4,000  Chad     Sub-Saharan Africa GDP per capita (US$).......................................1,218.3 3,500 GDP (PPP) as share (%) of world total...................0.03 3,000 Sectoral value-added (% GDP), 2012 2,500 Agriculture.............................................................55.8 2,000 Industry.................................................................12.7 Services................................................................31.5 1,500 1,000 Human Development Index, 2013 Score, (0–1) best...................................................0.37 500 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012 Rank (out of 187 economies)..................................184 Sources: IMF; UNFPA; UNDP; World Bank Global Competitiveness Index Rank Score Stage of development (out of 144) (1–7) GCI 2014–2015................................................. 143...... 2.8 Transition Transition GCI 2013–2014 (out of 148).......................................... 148....... 2.9 1 1–2 2 2­­–3 3 GCI 2012–2013 (out of 144).......................................... 139....... 3.1 Factor Efficiency Innovation driven driven driven Basic requirements (60.0%)........................................ 143....... 2.9 Institutions Institutions..................................................................... 140....... 2.7 7 Infrastructure................................................................. 144....... 1.7 Innovation Infrastructure 6 Macroeconomic environment.......................................... 73....... 4.7 5 Business Macroeconomic Health and primary education........................................ 144....... 2.7 sophistication 4 environment 3 Efficiency enhancers (35.0%)..................................... 142....... 2.7 2 Health and Higher education and training........................................ 143....... 2.0 Market size 1 primary Goods market efficiency ............................................... 142....... 2.9 education Labor market efficiency................................................. 120....... 3.7 Financial market development....................................... 136....... 2.7 Technological Higher education readiness and training Technological readiness................................................. 143....... 2.1 Market size.................................................................... 106....... 2.9 Financial market Goods market development efficiency Innovation and sophistication factors (5.0%)............ 141....... 2.6 Labor market efficiency Business sophistication ................................................ 143....... 2.8 Innovation...................................................................... 139....... 2.3  Chad     Sub-Saharan Africa The most problematic factors for doing business Access to financing.................................................................. 21.3 Corruption................................................................................ 14.2 Inadequate supply of infrastructure........................................... 10.3 Inadequately educated workforce............................................... 7.3 Inefficient government bureaucracy............................................ 6.5 Tax regulations........................................................................... 6.0 Tax rates..................................................................................... 5.6 Policy instability.......................................................................... 5.5 Restrictive labor regulations........................................................ 4.9 Insufficient capacity to innovate.................................................. 4.7 Poor work ethic in national labor force....................................... 4.0 Government instability/coups..................................................... 3.0 Crime and theft.......................................................................... 2.9 Poor public health...................................................................... 1.4 Foreign currency regulations....................................................... 1.3 Inflation....................................................................................... 1.2 0 5 10 15 20 25 30 Score 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. 118 | The Africa Competitiveness Report 2015 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 (cont’d.) 1.01 Property rights........................................................ 2.5...........140 6.06 No. procedures to start a business*........................... 9...........106 1.02 Intellectual property protection................................ 2.5...........134 6.07 No. days to start a business*................................ 62.0...........133 1.03 Diversion of public funds......................................... 1.8...........138 6.08 Agricultural policy costs.......................................... 3.4...........108 1.04 Public trust in politicians.......................................... 2.4...........103 6.09 Prevalence of trade barriers.................................... 3.2...........142 1.05 Irregular payments and bribes................................. 2.3...........138 6.10 Trade tariffs, % duty*............................................. 14.6...........135 1.06 Judicial independence............................................. 2.2...........133 6.11 Prevalence of foreign ownership.............................. 3.3...........128 1.07 Favoritism in decisions of government officials........ 2.1...........133 6.12 Business impact of rules on FDI.............................. 3.1...........131 1.08 Wastefulness of government spending.................... 2.6...........105 6.13 Burden of customs procedures............................... 2.1...........141 1.09 Burden of government regulation............................ 2.9...........113 6.14 Imports as a percentage of GDP*......................... 42.1.............81 1.10 Efficiency of legal framework in settling disputes..... 2.5...........133 6.15 Degree of customer orientation............................... 2.8...........143 1.11 Efficiency of legal framework in challenging regs..... 2.0...........142 6.16 Buyer sophistication................................................ 2.0...........142 1.12 Transparency of government policymaking.............. 2.8...........140 1.13 Business costs of terrorism..................................... 3.2...........134 7th pillar: Labor market efficiency 1.14 Business costs of crime and violence..................... 3.0...........126 7.01 Cooperation in labor-employer relations.................. 3.6...........127 1.15 Organized crime...................................................... 3.5...........131 7.02 Flexibility of wage determination.............................. 5.1.............66 1.16 Reliability of police services..................................... 2.6...........134 7.03 Hiring and firing practices........................................ 3.3...........114 1.17 Ethical behavior of firms.......................................... 3.2...........134 7.04 Redundancy costs, weeks of salary*..................... 13.0.............57 1.18 Strength of auditing and reporting standards.......... 3.2...........136 7.05 Effect of taxation on incentives to work................... 2.7...........134 1.19 Efficacy of corporate boards................................... 3.5...........139 7.06 Pay and productivity................................................ 2.8...........135 1.20 Protection of minority shareholders’ interests.......... 2.8...........140 7.07 Reliance on professional management.................... 2.1...........143 1.21 Strength of investor protection, 0–10 (best)*........... 3.3...........123 7.08 Country capacity to retain talent.............................. 2.4...........129 7.09 Country capacity to attract talent............................ 2.9.............99 2nd pillar: Infrastructure 7.10 Women in labor force, ratio to men*...................... 0.82.............68 2.01 Quality of overall infrastructure................................ 2.3...........139 2.02 Quality of roads....................................................... 2.6...........128 8th pillar: Financial market development 2.03 Quality of railroad infrastructure........................ N/Appl.............n/a 8.01 Availability of financial services................................ 2.6...........142 2.04 Quality of port infrastructure.................................... 1.8...........142 8.02 Affordability of financial services.............................. 2.9...........140 2.05 Quality of air transport infrastructure....................... 2.3...........142 8.03 Financing through local equity market..................... 1.8...........139 2.06 Available airline seat km/week, millions*................ 10.1...........135 8.04 Ease of access to loans.......................................... 2.1...........124 2.07 Quality of electricity supply...................................... 1.7...........140 8.05 Venture capital availability........................................ 1.9...........136 2.08 Mobile telephone subscriptions/100 pop.*............ 35.6...........140 8.06 Soundness of banks............................................... 3.2...........134 2.09 Fixed telephone lines/100 pop.*.............................. 0.2...........140 8.07 Regulation of securities exchanges......................... 1.8...........142 8.08 Legal rights index, 0–10 (best)*.................................. 6.............63 3rd pillar: Macroeconomic environment 3.01 Government budget balance, % GDP*...................-2.4.............61 9th pillar: Technological readiness 3.02 Gross national savings, % GDP*........................... 18.3.............79 9.01 Availability of latest technologies............................. 2.9...........143 3.03 Inflation, annual % change*..................................... 0.2.............65 9.02 Firm-level technology absorption............................. 3.3...........140 3.04 General government debt, % GDP*...................... 30.2.............36 9.03 FDI and technology transfer.................................... 3.4...........137 3.05 Country credit rating, 0–100 (best)*....................... 15.5...........138 9.04 Individuals using Internet, %*.................................. 2.3...........136 9.05 Fixed broadband Internet subscriptions/100 pop.*.. 0.1...........125 4th pillar: Health and primary education 9.06 Int’l Internet bandwidth, kb/s per user*................... 0.6...........142 4.01 Malaria cases/100,000 pop.*......................... 26,509.9.............67 9.07 Mobile broadband subscriptions/100 pop.*............ 0.0...........133 4.02 Business impact of malaria..................................... 2.8.............75 4.03 Tuberculosis cases/100,000 pop.*...................... 151.0...........107 10th pillar: Market size 4.04 Business impact of tuberculosis.............................. 3.4...........140 10.01 Domestic market size index, 1–7 (best)*.................. 2.7...........108 4.05 HIV prevalence, % adult pop.*................................ 2.7...........126 10.02 Foreign market size index, 1–7 (best)*..................... 3.7...........106 4.06 Business impact of HIV/AIDS.................................. 3.4...........138 10.03 GDP (PPP$ billions)*............................................. 28.0...........103 4.07 Infant mortality, deaths/1,000 live births*............... 89.4...........142 10.04 Exports as a percentage of GDP*......................... 37.3.............73 4.08 Life expectancy, years*.......................................... 50.7...........138 4.09 Quality of primary education.................................... 2.3...........134 11th pillar: Business sophistication 4.10 Primary education enrollment, net %*................... 63.1...........139 11.01 Local supplier quantity............................................ 4.0...........118 11.02 Local supplier quality............................................... 2.7...........143 5th pillar: Higher education and training 11.03 State of cluster development................................... 2.8...........136 5.01 Secondary education enrollment, gross %*........... 22.8...........144 11.04 Nature of competitive advantage............................. 2.7...........127 5.02 Tertiary education enrollment, gross %*.................. 2.3...........138 11.05 Value chain breadth................................................. 3.1...........125 5.03 Quality of the education system.............................. 2.5...........135 11.06 Control of international distribution.......................... 2.7...........144 5.04 Quality of math and science education................... 2.8...........127 11.07 Production process sophistication........................... 2.3...........143 5.05 Quality of management schools.............................. 2.7...........137 11.08 Extent of marketing................................................. 2.5...........144 5.06 Internet access in schools....................................... 1.5...........144 11.09 Willingness to delegate authority............................. 2.4...........140 5.07 Availability of research and training services............ 2.7...........142 5.08 Extent of staff training............................................. 2.8...........139 12th pillar: Innovation 12.01 Capacity for innovation............................................ 2.8...........139 6th pillar: Goods market efficiency 12.02 Quality of scientific research institutions.................. 2.2...........139 6.01 Intensity of local competition................................... 3.8...........137 12.03 Company spending on R&D.................................... 2.2...........136 6.02 Extent of market dominance................................... 2.7...........139 12.04 University-industry collaboration in R&D.................. 2.2...........139 6.03 Effectiveness of anti-monopoly policy...................... 2.7...........141 12.05 Gov’t procurement of advanced tech products....... 2.6...........133 6.04 Effect of taxation on incentives to invest.................. 2.4...........140 12.06 Availability of scientists and engineers..................... 3.2...........124 6.05 Total tax rate, % profits*........................................ 73.8...........138 12.07 PCT patents, applications/million pop.*................... 0.0...........124 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 89. The Africa Competitiveness Report 2015 | 119 Part 3: Competitiveness Profiles Côte d’Ivoire Key indicators, 2013 Population (millions)...............................................24.1 GDP (PPP) per capita (int’l $), 1990–2013 GDP (US$ billions)*................................................32.1 4,000  Côte d’Ivoire     Sub-Saharan Africa GDP per capita (US$).......................................1,332.1 GDP (PPP) as share (%) of world total...................0.06 3,500 3,000 Sectoral value-added (% GDP), 2012 Agriculture.............................................................26.9 2,500 Industry.................................................................25.9 2,000 Services................................................................47.2 1,500 Human Development Index, 2013 Score, (0–1) best...................................................0.45 1,000 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012 Rank (out of 187 economies)..................................171 Sources: IMF; UNFPA; UNDP; World Bank Global Competitiveness Index Rank Score Stage of development (out of 144) (1–7) GCI 2014–2015................................................. 115...... 3.7 Transition Transition GCI 2013–2014 (out of 148).......................................... 126....... 3.5 1 1–2 2 2­­–3 3 GCI 2012–2013 (out of 144).......................................... 131....... 3.4 Factor Efficiency Innovation driven driven driven Basic requirements (60.0%)........................................ 119....... 3.7 Institutions Institutions....................................................................... 86....... 3.6 7 Infrastructure................................................................... 93....... 3.4 Innovation Infrastructure 6 Macroeconomic environment.......................................... 68....... 4.7 5 Business Macroeconomic Health and primary education........................................ 140....... 3.2 sophistication 4 environment 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 ................................................. 82....... 4.2 education Labor market efficiency................................................... 73....... 4.2 Financial market development......................................... 78....... 3.9 Technological Higher education readiness and training Technological readiness................................................. 117....... 2.8 Market size...................................................................... 94....... 3.2 Financial market Goods market development efficiency Innovation and sophistication factors (5.0%).............. 86....... 3.5 Labor market efficiency Business sophistication ................................................ 100....... 3.7 Innovation........................................................................ 69....... 3.3  Côte d’Ivoire     Sub-Saharan Africa The most problematic factors for doing business Access to financing.................................................................. 32.3 Corruption................................................................................ 15.1 Tax rates................................................................................... 14.8 Inefficient government bureaucracy.......................................... 11.7 Inadequate supply of infrastructure........................................... 11.0 Inadequately educated workforce............................................... 8.0 Crime and theft.......................................................................... 2.7 Poor work ethic in national labor force....................................... 2.7 Foreign currency regulations....................................................... 0.4 Insufficient capacity to innovate.................................................. 0.4 Policy instability.......................................................................... 0.4 Government instability/coups..................................................... 0.3 Inflation....................................................................................... 0.2 Tax regulations........................................................................... 0.1 Poor public health...................................................................... 0.0 Restrictive labor regulations........................................................ 0.0 0 5 10 15 20 25 30 Score 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. 120 | The Africa Competitiveness Report 2015 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 (cont’d.) 1.01 Property rights........................................................ 3.5...........107 6.06 No. procedures to start a business*........................... 5.............32 1.02 Intellectual property protection................................ 3.1.............99 6.07 No. days to start a business*.................................. 8.0.............39 1.03 Diversion of public funds......................................... 3.2.............70 6.08 Agricultural policy costs.......................................... 4.2.............32 1.04 Public trust in politicians.......................................... 3.2.............60 6.09 Prevalence of trade barriers.................................... 4.2.............92 1.05 Irregular payments and bribes................................. 3.9.............71 6.10 Trade tariffs, % duty*............................................. 10.8...........114 1.06 Judicial independence............................................. 3.2.............95 6.11 Prevalence of foreign ownership.............................. 4.9.............55 1.07 Favoritism in decisions of government officials........ 3.2.............56 6.12 Business impact of rules on FDI.............................. 4.6.............54 1.08 Wastefulness of government spending.................... 3.7.............38 6.13 Burden of customs procedures............................... 3.3...........119 1.09 Burden of government regulation............................ 3.6.............50 6.14 Imports as a percentage of GDP*......................... 50.3.............64 1.10 Efficiency of legal framework in settling disputes..... 3.7.............67 6.15 Degree of customer orientation............................... 4.4.............86 1.11 Efficiency of legal framework in challenging regs..... 3.6.............48 6.16 Buyer sophistication................................................ 3.3.............82 1.12 Transparency of government policymaking.............. 3.8.............83 1.13 Business costs of terrorism..................................... 4.7...........103 7th pillar: Labor market efficiency 1.14 Business costs of crime and violence..................... 3.3...........120 7.01 Cooperation in labor-employer relations.................. 4.7.............40 1.15 Organized crime...................................................... 4.2...........104 7.02 Flexibility of wage determination.............................. 4.7.............95 1.16 Reliability of police services..................................... 3.8.............92 7.03 Hiring and firing practices........................................ 4.4.............29 1.17 Ethical behavior of firms.......................................... 3.7.............93 7.04 Redundancy costs, weeks of salary*..................... 13.1.............60 1.18 Strength of auditing and reporting standards.......... 4.5.............80 7.05 Effect of taxation on incentives to work................... 3.7.............66 1.19 Efficacy of corporate boards................................... 4.5.............72 7.06 Pay and productivity................................................ 4.1.............54 1.20 Protection of minority shareholders’ interests.......... 4.3.............65 7.07 Reliance on professional management.................... 4.0.............83 1.21 Strength of investor protection, 0–10 (best)*........... 3.3...........123 7.08 Country capacity to retain talent.............................. 3.8.............49 7.09 Country capacity to attract talent............................ 3.9.............41 2nd pillar: Infrastructure 7.10 Women in labor force, ratio to men*...................... 0.65...........107 2.01 Quality of overall infrastructure................................ 4.0.............77 2.02 Quality of roads....................................................... 3.9.............73 8th pillar: Financial market development 2.03 Quality of railroad infrastructure............................... 2.8.............60 8.01 Availability of financial services................................ 3.7...........113 2.04 Quality of port infrastructure.................................... 5.1.............34 8.02 Affordability of financial services.............................. 3.9.............93 2.05 Quality of air transport infrastructure....................... 4.8.............53 8.03 Financing through local equity market..................... 3.3.............75 2.06 Available airline seat km/week, millions*................ 48.5...........102 8.04 Ease of access to loans.......................................... 3.1.............44 2.07 Quality of electricity supply...................................... 3.9.............96 8.05 Venture capital availability........................................ 2.8.............55 2.08 Mobile telephone subscriptions/100 pop.*............ 95.4...........103 8.06 Soundness of banks............................................... 4.8.............77 2.09 Fixed telephone lines/100 pop.*.............................. 1.3...........121 8.07 Regulation of securities exchanges......................... 3.6...........100 8.08 Legal rights index, 0–10 (best)*.................................. 6.............63 3rd pillar: Macroeconomic environment 3.01 Government budget balance, % GDP*...................-2.5.............63 9th pillar: Technological readiness 3.02 Gross national savings, % GDP*........................... 16.0.............99 9.01 Availability of latest technologies............................. 4.5.............88 3.03 Inflation, annual % change*..................................... 2.6...............1 9.02 Firm-level technology absorption............................. 4.6.............73 3.04 General government debt, % GDP*...................... 43.2.............72 9.03 FDI and technology transfer.................................... 3.8...........120 3.05 Country credit rating, 0–100 (best)*....................... 27.2...........114 9.04 Individuals using Internet, %*.................................. 2.6...........135 9.05 Fixed broadband Internet subscriptions/100 pop.*.. 0.3...........116 4th pillar: Health and primary education 9.06 Int’l Internet bandwidth, kb/s per user*................. 22.7.............78 4.01 Malaria cases/100,000 pop.*......................... 20,665.6.............64 9.07 Mobile broadband subscriptions/100 pop.*............ 0.0...........133 4.02 Business impact of malaria..................................... 4.6.............41 4.03 Tuberculosis cases/100,000 pop.*...................... 172.0...........112 10th pillar: Market size 4.04 Business impact of tuberculosis.............................. 4.1...........125 10.01 Domestic market size index, 1–7 (best)*.................. 2.9.............94 4.05 HIV prevalence, % adult pop.*................................ 3.2...........129 10.02 Foreign market size index, 1–7 (best)*..................... 4.1.............85 4.06 Business impact of HIV/AIDS.................................. 4.5...........109 10.03 GDP (PPP$ billions)*............................................. 43.8.............91 4.07 Infant mortality, deaths/1,000 live births*............... 76.2...........139 10.04 Exports as a percentage of GDP*......................... 51.4.............45 4.08 Life expectancy, years*.......................................... 50.4...........139 4.09 Quality of primary education.................................... 3.2...........103 11th pillar: Business sophistication 4.10 Primary education enrollment, net %*................... 61.9...........140 11.01 Local supplier quantity............................................ 4.2...........104 11.02 Local supplier quality............................................... 4.2.............79 5th pillar: Higher education and training 11.03 State of cluster development................................... 3.3...........109 5.01 Secondary education enrollment, gross %*........... 24.3...........143 11.04 Nature of competitive advantage............................. 3.1...........100 5.02 Tertiary education enrollment, gross %*.................. 4.5...........131 11.05 Value chain breadth................................................. 3.5.............98 5.03 Quality of the education system.............................. 3.6.............80 11.06 Control of international distribution.......................... 3.4...........126 5.04 Quality of math and science education................... 5.1.............22 11.07 Production process sophistication........................... 3.4...........104 5.05 Quality of management schools.............................. 4.8.............37 11.08 Extent of marketing................................................. 4.0.............89 5.06 Internet access in schools....................................... 3.4...........110 11.09 Willingness to delegate authority............................. 3.6.............86 5.07 Availability of research and training services............ 4.3.............62 5.08 Extent of staff training............................................. 4.0.............70 12th pillar: Innovation 12.01 Capacity for innovation............................................ 3.5.............88 6th pillar: Goods market efficiency 12.02 Quality of scientific research institutions.................. 3.9.............62 6.01 Intensity of local competition................................... 4.6...........112 12.03 Company spending on R&D.................................... 3.2.............57 6.02 Extent of market dominance................................... 3.4.............97 12.04 University-industry collaboration in R&D.................. 3.3.............86 6.03 Effectiveness of anti-monopoly policy...................... 3.9.............82 12.05 Gov’t procurement of advanced tech products....... 3.8.............38 6.04 Effect of taxation on incentives to invest.................. 3.4...........100 12.06 Availability of scientists and engineers..................... 4.2.............60 6.05 Total tax rate, % profits*........................................ 46.4...........103 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 89. The Africa Competitiveness Report 2015 | 121 Part 3: Competitiveness Profiles Egypt Key indicators, 2013 Population (millions)...............................................84.2 GDP (PPP) per capita (int’l $), 1990–2013 GDP (US$ billions)*..............................................271.4 15,000  Egypt     Middle East, North Africa, and Pakistan GDP per capita (US$).......................................3,242.9 GDP (PPP) as share (%) of world total...................0.89 12,000 Sectoral value-added (% GDP), 2013 Agriculture.............................................................14.5 9,000 Industry.................................................................39.2 Services................................................................46.3 6,000 Human Development Index, 2013 3,000 Score, (0–1) best...................................................0.68 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012 Rank (out of 187 economies)..................................110 Sources: IMF; UNFPA; UNDP; World Bank Global Competitiveness Index Rank Score Stage of development (out of 144) (1–7) GCI 2014–2015................................................. 119...... 3.6 Transition Transition GCI 2013–2014 (out of 148).......................................... 118....... 3.6 1 1–2 2 2­­–3 3 GCI 2012–2013 (out of 144).......................................... 107....... 3.7 Factor Efficiency Innovation driven driven driven Basic requirements (40.0%)........................................ 121....... 3.7 Institutions Institutions..................................................................... 100....... 3.4 7 Infrastructure................................................................. 100....... 3.2 Innovation Infrastructure 6 Macroeconomic environment........................................ 141....... 3.0 5 Business Macroeconomic Health and primary education.......................................... 97....... 5.4 sophistication 4 environment 3 Efficiency enhancers (50.0%)..................................... 106....... 3.6 2 Health and Higher education and training........................................ 111....... 3.3 Market size 1 primary Goods market efficiency ............................................... 118....... 4.0 education Labor market efficiency................................................. 140....... 3.1 Financial market development....................................... 125....... 3.2 Technological Higher education readiness and training Technological readiness................................................... 95....... 3.2 Market size...................................................................... 29....... 4.8 Financial market Goods market development efficiency Innovation and sophistication factors (10.0%).......... 113....... 3.2 Labor market efficiency Business sophistication .................................................. 95....... 3.7 Innovation...................................................................... 124....... 2.7  Egypt     Sub-Saharan Africa The most problematic factors for doing business Policy instability........................................................................ 21.0 Government instability/coups................................................... 12.5 Access to financing.................................................................. 10.2 Foreign currency regulations....................................................... 8.4 Corruption.................................................................................. 7.7 Inadequate supply of infrastructure............................................. 5.5 Inadequately educated workforce............................................... 5.4 Poor work ethic in national labor force....................................... 5.4 Crime and theft.......................................................................... 4.3 Restrictive labor regulations........................................................ 4.1 Tax rates..................................................................................... 3.9 Inflation....................................................................................... 3.2 Tax regulations........................................................................... 3.1 Inefficient government bureaucracy............................................ 2.7 Insufficient capacity to innovate.................................................. 1.7 Poor public health...................................................................... 0.9 0 5 10 15 20 25 30 Score 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. 122 | The Africa Competitiveness Report 2015 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 (cont’d.) 1.01 Property rights........................................................ 3.6...........104 6.06 No. procedures to start a business*........................... 7.............78 1.02 Intellectual property protection................................ 2.9...........110 6.07 No. days to start a business*.................................. 8.0.............39 1.03 Diversion of public funds......................................... 2.7...........101 6.08 Agricultural policy costs.......................................... 3.1...........123 1.04 Public trust in politicians.......................................... 2.5.............93 6.09 Prevalence of trade barriers.................................... 3.9...........121 1.05 Irregular payments and bribes................................. 4.0.............65 6.10 Trade tariffs, % duty*............................................. 16.0...........136 1.06 Judicial independence............................................. 4.0.............57 6.11 Prevalence of foreign ownership.............................. 3.3...........126 1.07 Favoritism in decisions of government officials........ 3.7.............36 6.12 Business impact of rules on FDI.............................. 3.6...........124 1.08 Wastefulness of government spending.................... 2.2...........130 6.13 Burden of customs procedures............................... 3.8.............81 1.09 Burden of government regulation............................ 3.7.............46 6.14 Imports as a percentage of GDP*......................... 27.5...........124 1.10 Efficiency of legal framework in settling disputes..... 3.3...........105 6.15 Degree of customer orientation............................... 5.1.............36 1.11 Efficiency of legal framework in challenging regs..... 3.2.............82 6.16 Buyer sophistication................................................ 2.6...........131 1.12 Transparency of government policymaking.............. 3.9.............72 1.13 Business costs of terrorism..................................... 2.4...........143 7th pillar: Labor market efficiency 1.14 Business costs of crime and violence..................... 2.5...........137 7.01 Cooperation in labor-employer relations.................. 4.0.............95 1.15 Organized crime...................................................... 3.5...........127 7.02 Flexibility of wage determination.............................. 5.1.............67 1.16 Reliability of police services..................................... 3.3...........111 7.03 Hiring and firing practices........................................ 3.9.............69 1.17 Ethical behavior of firms.......................................... 3.9.............69 7.04 Redundancy costs, weeks of salary*..................... 36.8...........134 1.18 Strength of auditing and reporting standards.......... 3.8...........117 7.05 Effect of taxation on incentives to work................... 3.0...........117 1.19 Efficacy of corporate boards................................... 3.6...........136 7.06 Pay and productivity................................................ 3.0...........131 1.20 Protection of minority shareholders’ interests.......... 3.5...........109 7.07 Reliance on professional management.................... 3.1...........134 1.21 Strength of investor protection, 0–10 (best)*........... 3.7...........117 7.08 Country capacity to retain talent.............................. 2.9...........110 7.09 Country capacity to attract talent............................ 2.7...........108 2nd pillar: Infrastructure 7.10 Women in labor force, ratio to men*...................... 0.32...........139 2.01 Quality of overall infrastructure................................ 2.9...........125 2.02 Quality of roads....................................................... 2.9...........118 8th pillar: Financial market development 2.03 Quality of railroad infrastructure............................... 2.4.............78 8.01 Availability of financial services................................ 3.4...........129 2.04 Quality of port infrastructure.................................... 4.2.............66 8.02 Affordability of financial services.............................. 3.3...........126 2.05 Quality of air transport infrastructure....................... 4.6.............60 8.03 Financing through local equity market..................... 3.6.............60 2.06 Available airline seat km/week, millions*.............. 654.0.............34 8.04 Ease of access to loans.......................................... 1.9...........129 2.07 Quality of electricity supply...................................... 2.7...........121 8.05 Venture capital availability........................................ 2.3...........103 2.08 Mobile telephone subscriptions/100 pop.*.......... 121.5.............55 8.06 Soundness of banks............................................... 4.2...........110 2.09 Fixed telephone lines/100 pop.*.............................. 8.3.............97 8.07 Regulation of securities exchanges......................... 3.5...........107 8.08 Legal rights index, 0–10 (best)*.................................. 3...........113 3rd pillar: Macroeconomic environment 3.01 Government budget balance, % GDP*.................-14.1...........142 9th pillar: Technological readiness 3.02 Gross national savings, % GDP*........................... 12.1...........122 9.01 Availability of latest technologies............................. 3.8...........127 3.03 Inflation, annual % change*..................................... 6.9...........118 9.02 Firm-level technology absorption............................. 3.8...........126 3.04 General government debt, % GDP*...................... 89.2...........125 9.03 FDI and technology transfer.................................... 4.4.............85 3.05 Country credit rating, 0–100 (best)*....................... 28.8...........112 9.04 Individuals using Internet, %*................................ 49.6.............68 9.05 Fixed broadband Internet subscriptions/100 pop.*.. 3.3.............88 4th pillar: Health and primary education 9.06 Int’l Internet bandwidth, kb/s per user*................... 5.3...........115 4.01 Malaria cases/100,000 pop.*.................................. 0.0...............1 9.07 Mobile broadband subscriptions/100 pop.*.......... 31.1.............66 4.02 Business impact of malaria..................................... 6.8...............1 4.03 Tuberculosis cases/100,000 pop.*........................ 17.0.............40 10th pillar: Market size 4.04 Business impact of tuberculosis.............................. 6.7.............16 10.01 Domestic market size index, 1–7 (best)*.................. 4.7.............27 4.05 HIV prevalence, % adult pop.*................................ 0.1...............1 10.02 Foreign market size index, 1–7 (best)*..................... 4.9.............51 4.06 Business impact of HIV/AIDS.................................. 6.9...............1 10.03 GDP (PPP$ billions)*........................................... 553.6.............27 4.07 Infant mortality, deaths/1,000 live births*............... 17.9.............85 10.04 Exports as a percentage of GDP*......................... 17.4...........134 4.08 Life expectancy, years*.......................................... 70.9.............89 4.09 Quality of primary education.................................... 2.1...........141 11th pillar: Business sophistication 4.10 Primary education enrollment, net %*................... 95.1.............64 11.01 Local supplier quantity............................................ 4.6.............68 11.02 Local supplier quality............................................... 3.9...........106 5th pillar: Higher education and training 11.03 State of cluster development................................... 4.3.............38 5.01 Secondary education enrollment, gross %*........... 86.3.............81 11.04 Nature of competitive advantage............................. 3.2.............96 5.02 Tertiary education enrollment, gross %*................ 30.1.............80 11.05 Value chain breadth................................................. 3.7.............81 5.03 Quality of the education system.............................. 2.2...........141 11.06 Control of international distribution.......................... 3.3...........131 5.04 Quality of math and science education................... 2.4...........136 11.07 Production process sophistication........................... 3.1...........120 5.05 Quality of management schools.............................. 2.0...........144 11.08 Extent of marketing................................................. 3.5...........118 5.06 Internet access in schools....................................... 2.5...........131 11.09 Willingness to delegate authority............................. 4.2.............35 5.07 Availability of research and training services............ 3.2...........124 5.08 Extent of staff training............................................. 2.8...........142 12th pillar: Innovation 12.01 Capacity for innovation............................................ 2.9...........132 6th pillar: Goods market efficiency 12.02 Quality of scientific research institutions.................. 2.4...........135 6.01 Intensity of local competition................................... 4.0...........133 12.03 Company spending on R&D.................................... 2.3...........133 6.02 Extent of market dominance................................... 3.1...........123 12.04 University-industry collaboration in R&D.................. 2.4...........133 6.03 Effectiveness of anti-monopoly policy...................... 3.5...........111 12.05 Gov’t procurement of advanced tech products....... 3.0...........113 6.04 Effect of taxation on incentives to invest.................. 3.6.............79 12.06 Availability of scientists and engineers..................... 4.4.............41 6.05 Total tax rate, % profits*........................................ 42.6.............90 12.07 PCT patents, applications/million pop.*................... 0.6.............77 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 89. The Africa Competitiveness Report 2015 | 123 Part 3: Competitiveness Profiles Ethiopia Key indicators, 2013 Population (millions)...............................................88.9 GDP (PPP) per capita (int’l $), 1990–2013 GDP (US$ billions)*................................................46.0 4,000  Ethiopia     Sub-Saharan Africa GDP per capita (US$)..........................................517.7 3,500 GDP (PPP) as share (%) of world total...................0.12 3,000 Sectoral value-added (% GDP), 2012 2,500 Agriculture.............................................................48.6 2,000 Industry.................................................................10.4 1,500 Services................................................................41.0 1,000 500 Human Development Index, 2013 Score, (0–1) best...................................................0.44 0 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012 Rank (out of 187 economies)..................................173 Sources: IMF; UNFPA; UNDP; World Bank Global Competitiveness Index Rank Score Stage of development (out of 144) (1–7) GCI 2014–2015................................................. 118...... 3.6 Transition Transition GCI 2013–2014 (out of 148).......................................... 127....... 3.5 1 1–2 2 2­­–3 3 GCI 2012–2013 (out of 144).......................................... 121....... 3.6 Factor Efficiency Innovation driven driven driven Basic requirements (60.0%)........................................ 117....... 3.8 Institutions Institutions....................................................................... 96....... 3.5 7 Infrastructure................................................................. 125....... 2.5 Innovation Infrastructure 6 Macroeconomic environment.......................................... 95....... 4.4 5 Business Macroeconomic Health and primary education........................................ 110....... 4.8 sophistication 4 environment 3 Efficiency enhancers (35.0%)..................................... 120....... 3.4 2 Health and Higher education and training........................................ 131....... 2.6 Market size 1 primary Goods market efficiency ............................................... 124....... 3.8 education Labor market efficiency................................................... 78....... 4.1 Financial market development....................................... 120....... 3.3 Technological Higher education readiness and training Technological readiness................................................. 133....... 2.5 Market size...................................................................... 66....... 3.8 Financial market Goods market development efficiency Innovation and sophistication factors (5.0%)............ 119....... 3.1 Labor market efficiency Business sophistication ................................................ 127....... 3.3 Innovation...................................................................... 109....... 2.9  Ethiopia     Sub-Saharan Africa The most problematic factors for doing business Inefficient government bureaucracy.......................................... 14.1 Foreign currency regulations..................................................... 13.8 Access to financing.................................................................. 12.5 Corruption................................................................................ 12.4 Inadequate supply of infrastructure............................................. 7.6 Inflation....................................................................................... 7.1 Tax rates..................................................................................... 6.9 Poor work ethic in national labor force....................................... 6.0 Tax regulations........................................................................... 5.9 Policy instability.......................................................................... 4.0 Inadequately educated workforce............................................... 3.4 Restrictive labor regulations........................................................ 2.0 Insufficient capacity to innovate.................................................. 1.7 Poor public health...................................................................... 1.0 Government instability/coups..................................................... 1.0 Crime and theft.......................................................................... 0.5 0 5 10 15 20 25 30 Score 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 2015 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 (cont’d.) 1.01 Property rights........................................................ 3.4...........115 6.06 No. procedures to start a business*........................... 9...........106 1.02 Intellectual property protection................................ 3.1.............98 6.07 No. days to start a business*................................ 15.0.............75 1.03 Diversion of public funds......................................... 3.2.............69 6.08 Agricultural policy costs.......................................... 4.1.............42 1.04 Public trust in politicians.......................................... 2.9.............77 6.09 Prevalence of trade barriers.................................... 4.0...........113 1.05 Irregular payments and bribes................................. 3.1...........112 6.10 Trade tariffs, % duty*............................................. 12.7...........126 1.06 Judicial independence............................................. 2.9...........110 6.11 Prevalence of foreign ownership.............................. 3.2...........132 1.07 Favoritism in decisions of government officials........ 2.8.............86 6.12 Business impact of rules on FDI.............................. 4.2.............94 1.08 Wastefulness of government spending.................... 3.4.............54 6.13 Burden of customs procedures............................... 2.9...........135 1.09 Burden of government regulation............................ 3.3.............90 6.14 Imports as a percentage of GDP*......................... 36.4.............99 1.10 Efficiency of legal framework in settling disputes..... 3.3.............97 6.15 Degree of customer orientation............................... 3.7...........124 1.11 Efficiency of legal framework in challenging regs..... 2.4...........125 6.16 Buyer sophistication................................................ 2.7...........125 1.12 Transparency of government policymaking.............. 3.3...........125 1.13 Business costs of terrorism..................................... 4.9.............90 7th pillar: Labor market efficiency 1.14 Business costs of crime and violence..................... 5.0.............44 7.01 Cooperation in labor-employer relations.................. 4.0.............97 1.15 Organized crime...................................................... 5.4.............48 7.02 Flexibility of wage determination.............................. 5.0.............74 1.16 Reliability of police services..................................... 3.8.............93 7.03 Hiring and firing practices........................................ 3.8.............78 1.17 Ethical behavior of firms.......................................... 3.3...........129 7.04 Redundancy costs, weeks of salary*..................... 19.1.............91 1.18 Strength of auditing and reporting standards.......... 4.0...........108 7.05 Effect of taxation on incentives to work................... 3.2...........106 1.19 Efficacy of corporate boards................................... 4.0...........117 7.06 Pay and productivity................................................ 3.6.............99 1.20 Protection of minority shareholders’ interests.......... 3.9.............85 7.07 Reliance on professional management.................... 3.4...........124 1.21 Strength of investor protection, 0–10 (best)*........... 3.3...........123 7.08 Country capacity to retain talent.............................. 3.1.............88 7.09 Country capacity to attract talent............................ 2.8...........105 2nd pillar: Infrastructure 7.10 Women in labor force, ratio to men*...................... 0.90.............33 2.01 Quality of overall infrastructure................................ 3.2...........115 2.02 Quality of roads....................................................... 3.8.............77 8th pillar: Financial market development 2.03 Quality of railroad infrastructure............................... 1.6.............97 8.01 Availability of financial services................................ 3.7...........117 2.04 Quality of port infrastructure.................................... 2.6...........126 8.02 Affordability of financial services.............................. 3.6...........112 2.05 Quality of air transport infrastructure....................... 5.3.............38 8.03 Financing through local equity market..................... 3.0.............98 2.06 Available airline seat km/week, millions*.............. 288.7.............54 8.04 Ease of access to loans.......................................... 2.1...........123 2.07 Quality of electricity supply...................................... 2.8...........118 8.05 Venture capital availability........................................ 2.2...........110 2.08 Mobile telephone subscriptions/100 pop.*............ 27.3...........142 8.06 Soundness of banks............................................... 4.3...........102 2.09 Fixed telephone lines/100 pop.*.............................. 0.8...........128 8.07 Regulation of securities exchanges......................... 3.5...........105 8.08 Legal rights index, 0–10 (best)*.................................. 4.............96 3rd pillar: Macroeconomic environment 3.01 Government budget balance, % GDP*...................-3.4.............82 9th pillar: Technological readiness 3.02 Gross national savings, % GDP*........................... 22.2.............54 9.01 Availability of latest technologies............................. 4.0...........119 3.03 Inflation, annual % change*..................................... 8.0...........126 9.02 Firm-level technology absorption............................. 3.8...........128 3.04 General government debt, % GDP*...................... 22.2.............21 9.03 FDI and technology transfer.................................... 4.0...........111 3.05 Country credit rating, 0–100 (best)*....................... 18.2...........135 9.04 Individuals using Internet, %*.................................. 1.9...........139 9.05 Fixed broadband Internet subscriptions/100 pop.*.. 0.3...........118 4th pillar: Health and primary education 9.06 Int’l Internet bandwidth, kb/s per user*................... 6.7...........108 4.01 Malaria cases/100,000 pop.*........................... 4,578.7.............50 9.07 Mobile broadband subscriptions/100 pop.*............ 4.8...........109 4.02 Business impact of malaria..................................... 5.0.............33 4.03 Tuberculosis cases/100,000 pop.*...................... 247.0...........126 10th pillar: Market size 4.04 Business impact of tuberculosis.............................. 4.3...........119 10.01 Domestic market size index, 1–7 (best)*.................. 3.8.............58 4.05 HIV prevalence, % adult pop.*................................ 1.3...........114 10.02 Foreign market size index, 1–7 (best)*..................... 3.9.............94 4.06 Business impact of HIV/AIDS.................................. 4.2...........121 10.03 GDP (PPP$ billions)*........................................... 121.4.............64 4.07 Infant mortality, deaths/1,000 live births*............... 46.5...........120 10.04 Exports as a percentage of GDP*......................... 12.9...........138 4.08 Life expectancy, years*.......................................... 63.0...........118 4.09 Quality of primary education.................................... 3.5.............95 11th pillar: Business sophistication 4.10 Primary education enrollment, net %*................... 85.4...........117 11.01 Local supplier quantity............................................ 4.1...........116 11.02 Local supplier quality............................................... 3.7...........116 5th pillar: Higher education and training 11.03 State of cluster development................................... 3.0...........127 5.01 Secondary education enrollment, gross %*........... 28.9...........136 11.04 Nature of competitive advantage............................. 2.4...........140 5.02 Tertiary education enrollment, gross %*.................. 5.4...........127 11.05 Value chain breadth................................................. 3.1...........124 5.03 Quality of the education system.............................. 3.6.............74 11.06 Control of international distribution.......................... 4.1.............62 5.04 Quality of math and science education................... 3.6.............94 11.07 Production process sophistication........................... 3.0...........126 5.05 Quality of management schools.............................. 3.8.............95 11.08 Extent of marketing................................................. 3.1...........132 5.06 Internet access in schools....................................... 3.2...........115 11.09 Willingness to delegate authority............................. 3.4...........109 5.07 Availability of research and training services............ 3.3...........122 5.08 Extent of staff training............................................. 3.4...........123 12th pillar: Innovation 12.01 Capacity for innovation............................................ 2.9...........134 6th pillar: Goods market efficiency 12.02 Quality of scientific research institutions.................. 3.1...........106 6.01 Intensity of local competition................................... 4.5...........113 12.03 Company spending on R&D.................................... 2.6...........122 6.02 Extent of market dominance................................... 3.0...........128 12.04 University-industry collaboration in R&D.................. 3.5.............78 6.03 Effectiveness of anti-monopoly policy...................... 3.8.............91 12.05 Gov’t procurement of advanced tech products....... 3.7.............52 6.04 Effect of taxation on incentives to invest.................. 3.2...........111 12.06 Availability of scientists and engineers..................... 3.3...........117 6.05 Total tax rate, % profits*........................................ 33.4.............51 12.07 PCT patents, applications/million pop.*................... 0.0...........123 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 89. The Africa Competitiveness Report 2015 | 125 Part 3: Competitiveness Profiles Gabon Key indicators, 2013 Population (millions).................................................1.6 GDP (PPP) per capita (int’l $), 1990–2013 GDP (US$ billions)*................................................19.3 25,000  Gabon     Sub-Saharan Africa GDP per capita (US$).....................................12,326.2 GDP (PPP) as share (%) of world total...................0.03 20,000 Sectoral value-added (% GDP), 2012 15,000 Agriculture...............................................................4.0 Industry.................................................................64.0 10,000 Services................................................................32.0 5,000 Human Development Index, 2013 0 Score, (0–1) best...................................................0.67 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012 Rank (out of 187 economies)..................................112 Sources: IMF; UNFPA; UNDP; World Bank Global Competitiveness Index Rank Score Stage of development (out of 144) (1–7) GCI 2014–2015................................................. 106...... 3.7 Transition Transition GCI 2013–2014 (out of 148).......................................... 112....... 3.7 1 1–2 2 2­­–3 3 GCI 2012–2013 (out of 144)............................................ 99....... 3.8 Factor Efficiency Innovation driven driven driven Basic requirements (51.5%).......................................... 95....... 4.2 Institutions Institutions....................................................................... 79....... 3.7 7 Infrastructure................................................................. 114....... 2.9 Innovation Infrastructure 6 Macroeconomic environment.......................................... 18....... 6.0 5 Business Macroeconomic Health and primary education........................................ 130....... 4.0 sophistication 4 environment 3 Efficiency enhancers (41.4%)..................................... 119....... 3.4 2 Health and Higher education and training........................................ 126....... 2.8 Market size 1 primary Goods market efficiency ............................................... 126....... 3.8 education Labor market efficiency................................................... 69....... 4.2 Financial market development....................................... 105....... 3.6 Technological Higher education readiness and training Technological readiness................................................. 108....... 3.0 Market size.................................................................... 109....... 2.9 Financial market Goods market development efficiency Innovation and sophistication factors (7.1%)............ 131....... 2.9 Labor market efficiency Business sophistication ................................................ 133....... 3.2 Innovation...................................................................... 122....... 2.7  Gabon     Sub-Saharan Africa The most problematic factors for doing business Access to financing.................................................................. 17.5 Inadequate supply of infrastructure........................................... 17.2 Inadequately educated workforce............................................. 15.9 Inefficient government bureaucracy.......................................... 10.3 Restrictive labor regulations...................................................... 10.3 Corruption.................................................................................. 8.5 Insufficient capacity to innovate.................................................. 4.1 Poor work ethic in national labor force....................................... 4.1 Tax regulations........................................................................... 4.1 Inflation....................................................................................... 2.7 Foreign currency regulations....................................................... 2.3 Tax rates..................................................................................... 1.4 Poor public health...................................................................... 1.1 Policy instability.......................................................................... 0.7 Crime and theft.......................................................................... 0.0 Government instability/coups..................................................... 0.0 0 5 10 15 20 25 30 Score 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 2015 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 (cont’d.) 1.01 Property rights........................................................ 3.9.............81 6.06 No. procedures to start a business*........................... 7.............78 1.02 Intellectual property protection................................ 2.8...........121 6.07 No. days to start a business*................................ 50.0...........131 1.03 Diversion of public funds......................................... 2.9.............87 6.08 Agricultural policy costs.......................................... 3.2...........121 1.04 Public trust in politicians.......................................... 3.0.............70 6.09 Prevalence of trade barriers.................................... 4.3.............86 1.05 Irregular payments and bribes................................. 4.1.............62 6.10 Trade tariffs, % duty*............................................. 14.3...........133 1.06 Judicial independence............................................. 2.9...........111 6.11 Prevalence of foreign ownership.............................. 5.4.............20 1.07 Favoritism in decisions of government officials........ 3.1.............65 6.12 Business impact of rules on FDI.............................. 4.2.............89 1.08 Wastefulness of government spending.................... 3.2.............65 6.13 Burden of customs procedures............................... 3.5...........101 1.09 Burden of government regulation............................ 3.4.............78 6.14 Imports as a percentage of GDP*......................... 34.1...........103 1.10 Efficiency of legal framework in settling disputes..... 3.5.............79 6.15 Degree of customer orientation............................... 4.0...........112 1.11 Efficiency of legal framework in challenging regs..... 3.0.............97 6.16 Buyer sophistication................................................ 2.8...........119 1.12 Transparency of government policymaking.............. 3.7.............93 1.13 Business costs of terrorism..................................... 5.5.............59 7th pillar: Labor market efficiency 1.14 Business costs of crime and violence..................... 4.4.............71 7.01 Cooperation in labor-employer relations.................. 3.9...........113 1.15 Organized crime...................................................... 4.6.............81 7.02 Flexibility of wage determination.............................. 4.5...........111 1.16 Reliability of police services..................................... 3.5...........107 7.03 Hiring and firing practices........................................ 3.4...........108 1.17 Ethical behavior of firms.......................................... 4.3.............50 7.04 Redundancy costs, weeks of salary*..................... 14.8.............68 1.18 Strength of auditing and reporting standards.......... 4.6.............74 7.05 Effect of taxation on incentives to work................... 4.2.............25 1.19 Efficacy of corporate boards................................... 4.9.............44 7.06 Pay and productivity................................................ 3.4...........112 1.20 Protection of minority shareholders’ interests.......... 4.1.............70 7.07 Reliance on professional management.................... 3.8...........102 1.21 Strength of investor protection, 0–10 (best)*........... 3.3...........123 7.08 Country capacity to retain talent.............................. 3.4.............66 7.09 Country capacity to attract talent............................ 3.6.............57 2nd pillar: Infrastructure 7.10 Women in labor force, ratio to men*...................... 0.86.............50 2.01 Quality of overall infrastructure................................ 2.9...........128 2.02 Quality of roads....................................................... 2.4...........135 8th pillar: Financial market development 2.03 Quality of railroad infrastructure............................... 2.4.............76 8.01 Availability of financial services................................ 3.5...........128 2.04 Quality of port infrastructure.................................... 3.1...........113 8.02 Affordability of financial services.............................. 3.3...........127 2.05 Quality of air transport infrastructure....................... 3.6...........109 8.03 Financing through local equity market..................... 2.9...........103 2.06 Available airline seat km/week, millions*................ 29.4...........110 8.04 Ease of access to loans.......................................... 2.7.............83 2.07 Quality of electricity supply...................................... 2.3...........129 8.05 Venture capital availability........................................ 2.0...........123 2.08 Mobile telephone subscriptions/100 pop.*.......... 214.8...............2 8.06 Soundness of banks............................................... 4.9.............70 2.09 Fixed telephone lines/100 pop.*.............................. 1.2...........122 8.07 Regulation of securities exchanges......................... 3.3...........111 8.08 Legal rights index, 0–10 (best)*.................................. 6.............63 3rd pillar: Macroeconomic environment 3.01 Government budget balance, % GDP*...................-1.7.............45 9th pillar: Technological readiness 3.02 Gross national savings, % GDP*........................... 41.3.............10 9.01 Availability of latest technologies............................. 4.0...........117 3.03 Inflation, annual % change*..................................... 0.5.............56 9.02 Firm-level technology absorption............................. 4.4.............86 3.04 General government debt, % GDP*...................... 22.9.............24 9.03 FDI and technology transfer.................................... 4.3.............86 3.05 Country credit rating, 0–100 (best)*....................... 43.1.............75 9.04 Individuals using Internet, %*.................................. 9.2...........124 9.05 Fixed broadband Internet subscriptions/100 pop.*.. 0.5...........114 4th pillar: Health and primary education 9.06 Int’l Internet bandwidth, kb/s per user*................. 18.1.............86 4.01 Malaria cases/100,000 pop.*......................... 25,113.7.............66 9.07 Mobile broadband subscriptions/100 pop.*............ 0.0...........133 4.02 Business impact of malaria..................................... 3.2.............69 4.03 Tuberculosis cases/100,000 pop.*...................... 428.0...........136 10th pillar: Market size 4.04 Business impact of tuberculosis.............................. 4.4...........110 10.01 Domestic market size index, 1–7 (best)*.................. 2.5...........116 4.05 HIV prevalence, % adult pop.*................................ 4.0...........130 10.02 Foreign market size index, 1–7 (best)*..................... 3.9.............92 4.06 Business impact of HIV/AIDS.................................. 4.1...........122 10.03 GDP (PPP$ billions)*............................................. 30.4...........100 4.07 Infant mortality, deaths/1,000 live births*............... 42.4...........114 10.04 Exports as a percentage of GDP*......................... 54.9.............39 4.08 Life expectancy, years*.......................................... 63.1...........117 4.09 Quality of primary education.................................... 3.3.............96 11th pillar: Business sophistication 4.10 Primary education enrollment, net %*..................... n/a............n/a 11.01 Local supplier quantity............................................ 3.4...........141 11.02 Local supplier quality............................................... 3.7...........121 5th pillar: Higher education and training 11.03 State of cluster development................................... 2.8...........137 5.01 Secondary education enrollment, gross %*........... 53.9...........117 11.04 Nature of competitive advantage............................. 3.1...........103 5.02 Tertiary education enrollment, gross %*.................. 8.5...........119 11.05 Value chain breadth................................................. 2.9...........141 5.03 Quality of the education system.............................. 2.9...........119 11.06 Control of international distribution.......................... 2.9...........142 5.04 Quality of math and science education................... 3.3...........110 11.07 Production process sophistication........................... 3.3...........108 5.05 Quality of management schools.............................. 3.5...........117 11.08 Extent of marketing................................................. 3.3...........128 5.06 Internet access in schools....................................... 2.2...........136 11.09 Willingness to delegate authority............................. 3.2...........122 5.07 Availability of research and training services............ 3.0...........134 5.08 Extent of staff training............................................. 3.7...........100 12th pillar: Innovation 12.01 Capacity for innovation............................................ 3.1...........126 6th pillar: Goods market efficiency 12.02 Quality of scientific research institutions.................. 3.2.............98 6.01 Intensity of local competition................................... 4.3...........124 12.03 Company spending on R&D.................................... 2.3...........132 6.02 Extent of market dominance................................... 3.1...........127 12.04 University-industry collaboration in R&D.................. 2.6...........129 6.03 Effectiveness of anti-monopoly policy...................... 3.5...........115 12.05 Gov’t procurement of advanced tech products....... 3.3.............85 6.04 Effect of taxation on incentives to invest.................. 3.9.............58 12.06 Availability of scientists and engineers..................... 3.2...........121 6.05 Total tax rate, % profits*........................................ 43.5.............93 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 89. The Africa Competitiveness Report 2015 | 127 Part 3: Competitiveness Profiles Gambia, The Key indicators, 2013 Population (millions).................................................1.9 GDP (PPP) per capita (int’l $), 1990–2013 GDP (US$ billions)*..................................................0.9 4,000   The Gambia     Sub-Saharan Africa GDP per capita (US$)..........................................453.1 3,500 GDP (PPP) as share (%) of world total...................0.00 3,000 Sectoral value-added (% GDP), 2012 2,500 Agriculture.............................................................20.3 2,000 Industry.................................................................12.9 Services................................................................66.8 1,500 1,000 Human Development Index, 2013 Score, (0–1) best...................................................0.44 500 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012 Rank (out of 187 economies)..................................172 Sources: IMF; UNFPA; UNDP; World Bank Global Competitiveness Index Rank Score Stage of development (out of 144) (1–7) GCI 2014–2015................................................. 125...... 3.5 Transition Transition GCI 2013–2014 (out of 148).......................................... 116....... 3.7 1 1–2 2 2­­–3 3 GCI 2012–2013 (out of 144)............................................ 98....... 3.8 Factor Efficiency Innovation driven driven driven Basic requirements (60.0%)........................................ 125....... 3.6 Institutions Institutions....................................................................... 44....... 4.3 7 Infrastructure................................................................... 95....... 3.3 Innovation Infrastructure 6 Macroeconomic environment........................................ 142....... 3.0 5 Business Macroeconomic Health and primary education........................................ 133....... 3.9 sophistication 4 environment 3 Efficiency enhancers (35.0%)..................................... 117....... 3.4 2 Health and Higher education and training........................................ 107....... 3.5 Market size 1 primary Goods market efficiency ............................................... 111....... 4.0 education Labor market efficiency................................................... 38....... 4.5 Financial market development......................................... 94....... 3.7 Technological Higher education readiness and training Technological readiness................................................. 103....... 3.0 Market size.................................................................... 142....... 1.6 Financial market Goods market development efficiency Innovation and sophistication factors (5.0%).............. 79....... 3.5 Labor market efficiency Business sophistication .................................................. 71....... 3.9 Innovation........................................................................ 89....... 3.1   The Gambia     Sub-Saharan Africa The most problematic factors for doing business Access to financing.................................................................. 24.7 Tax rates................................................................................... 18.8 Foreign currency regulations..................................................... 11.1 Inflation....................................................................................... 9.1 Inadequate supply of infrastructure............................................. 7.3 Insufficient capacity to innovate.................................................. 5.3 Poor work ethic in national labor force....................................... 5.1 Corruption.................................................................................. 4.1 Tax regulations........................................................................... 4.0 Inadequately educated workforce............................................... 3.4 Restrictive labor regulations........................................................ 1.9 Inefficient government bureaucracy............................................ 1.7 Crime and theft.......................................................................... 1.4 Policy instability.......................................................................... 1.1 Poor public health...................................................................... 0.6 Government instability/coups..................................................... 0.4 0 5 10 15 20 25 30 Score 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 2015 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 (cont’d.) 1.01 Property rights........................................................ 4.2.............63 6.06 No. procedures to start a business*........................... 8.............93 1.02 Intellectual property protection................................ 4.1.............46 6.07 No. days to start a business*................................ 27.0...........106 1.03 Diversion of public funds......................................... 4.2.............38 6.08 Agricultural policy costs.......................................... 4.8...............5 1.04 Public trust in politicians.......................................... 3.8.............32 6.09 Prevalence of trade barriers.................................... 4.5.............49 1.05 Irregular payments and bribes................................. 4.1.............60 6.10 Trade tariffs, % duty*............................................. 13.7...........130 1.06 Judicial independence............................................. 3.8.............66 6.11 Prevalence of foreign ownership.............................. 5.1.............37 1.07 Favoritism in decisions of government officials........ 3.9.............32 6.12 Business impact of rules on FDI.............................. 4.7.............48 1.08 Wastefulness of government spending.................... 4.0.............27 6.13 Burden of customs procedures............................... 4.6.............42 1.09 Burden of government regulation............................ 4.0.............25 6.14 Imports as a percentage of GDP*......................... 53.2.............57 1.10 Efficiency of legal framework in settling disputes..... 4.4.............35 6.15 Degree of customer orientation............................... 4.7.............53 1.11 Efficiency of legal framework in challenging regs..... 3.3.............76 6.16 Buyer sophistication................................................ 3.1.............99 1.12 Transparency of government policymaking.............. 4.4.............41 1.13 Business costs of terrorism..................................... 5.8.............44 7th pillar: Labor market efficiency 1.14 Business costs of crime and violence..................... 5.2.............40 7.01 Cooperation in labor-employer relations.................. 4.7.............38 1.15 Organized crime...................................................... 5.7.............32 7.02 Flexibility of wage determination.............................. 5.7.............23 1.16 Reliability of police services..................................... 4.6.............49 7.03 Hiring and firing practices........................................ 4.2.............37 1.17 Ethical behavior of firms.......................................... 4.5.............40 7.04 Redundancy costs, weeks of salary*..................... 26.0...........114 1.18 Strength of auditing and reporting standards.......... 4.7.............71 7.05 Effect of taxation on incentives to work................... 3.6.............77 1.19 Efficacy of corporate boards................................... 4.9.............46 7.06 Pay and productivity................................................ 4.3.............45 1.20 Protection of minority shareholders’ interests.......... 4.4.............48 7.07 Reliance on professional management.................... 4.9.............30 1.21 Strength of investor protection, 0–10 (best)*........... 2.7...........138 7.08 Country capacity to retain talent.............................. 3.4.............70 7.09 Country capacity to attract talent............................ 3.9.............42 2nd pillar: Infrastructure 7.10 Women in labor force, ratio to men*...................... 0.88.............38 2.01 Quality of overall infrastructure................................ 4.2.............71 2.02 Quality of roads....................................................... 4.1.............62 8th pillar: Financial market development 2.03 Quality of railroad infrastructure........................ N/Appl.............n/a 8.01 Availability of financial services................................ 4.1.............96 2.04 Quality of port infrastructure.................................... 4.2.............64 8.02 Affordability of financial services.............................. 4.0.............87 2.05 Quality of air transport infrastructure....................... 4.5.............66 8.03 Financing through local equity market..................... 3.1.............88 2.06 Available airline seat km/week, millions*.................. 7.7...........138 8.04 Ease of access to loans.......................................... 2.5.............95 2.07 Quality of electricity supply...................................... 3.3...........106 8.05 Venture capital availability........................................ 2.4.............93 2.08 Mobile telephone subscriptions/100 pop.*.......... 100.0.............95 8.06 Soundness of banks............................................... 4.9.............68 2.09 Fixed telephone lines/100 pop.*.............................. 3.5...........112 8.07 Regulation of securities exchanges......................... 3.9.............81 8.08 Legal rights index, 0–10 (best)*.................................. 5.............85 3rd pillar: Macroeconomic environment 3.01 Government budget balance, % GDP*...................-8.2...........135 9th pillar: Technological readiness 3.02 Gross national savings, % GDP*............................. 1.8...........137 9.01 Availability of latest technologies............................. 4.8.............73 3.03 Inflation, annual % change*..................................... 5.2.............95 9.02 Firm-level technology absorption............................. 4.5.............76 3.04 General government debt, % GDP*...................... 82.1...........121 9.03 FDI and technology transfer.................................... 4.5.............80 3.05 Country credit rating, 0–100 (best)*....................... 18.7...........133 9.04 Individuals using Internet, %*................................ 14.0...........117 9.05 Fixed broadband Internet subscriptions/100 pop.*.. 0.0...........136 4th pillar: Health and primary education 9.06 Int’l Internet bandwidth, kb/s per user*................... 7.2...........106 4.01 Malaria cases/100,000 pop.*......................... 29,030.4.............74 9.07 Mobile broadband subscriptions/100 pop.*............ 1.2...........122 4.02 Business impact of malaria..................................... 3.8.............58 4.03 Tuberculosis cases/100,000 pop.*...................... 284.0...........129 10th pillar: Market size 4.04 Business impact of tuberculosis.............................. 5.1.............88 10.01 Domestic market size index, 1–7 (best)*.................. 1.4...........142 4.05 HIV prevalence, % adult pop.*................................ 1.3...........114 10.02 Foreign market size index, 1–7 (best)*..................... 2.3...........141 4.06 Business impact of HIV/AIDS.................................. 5.3.............79 10.03 GDP (PPP$ billions)*............................................... 3.7...........142 4.07 Infant mortality, deaths/1,000 live births*............... 49.2...........125 10.04 Exports as a percentage of GDP*......................... 27.7...........106 4.08 Life expectancy, years*.......................................... 58.6...........126 4.09 Quality of primary education.................................... 4.1.............63 11th pillar: Business sophistication 4.10 Primary education enrollment, net %*................... 70.9...........134 11.01 Local supplier quantity............................................ 4.5.............89 11.02 Local supplier quality............................................... 4.3.............77 5th pillar: Higher education and training 11.03 State of cluster development................................... 3.8.............73 5.01 Secondary education enrollment, gross %*........... 57.5...........115 11.04 Nature of competitive advantage............................. 3.4.............70 5.02 Tertiary education enrollment, gross %*.................. 3.4...........135 11.05 Value chain breadth................................................. 3.7.............74 5.03 Quality of the education system.............................. 4.3.............39 11.06 Control of international distribution.......................... 3.9.............80 5.04 Quality of math and science education................... 3.6.............97 11.07 Production process sophistication........................... 3.4...........100 5.05 Quality of management schools.............................. 4.2.............75 11.08 Extent of marketing................................................. 3.9.............95 5.06 Internet access in schools....................................... 3.8.............86 11.09 Willingness to delegate authority............................. 3.9.............50 5.07 Availability of research and training services............ 4.0.............78 5.08 Extent of staff training............................................. 4.3.............42 12th pillar: Innovation 12.01 Capacity for innovation............................................ 3.7.............78 6th pillar: Goods market efficiency 12.02 Quality of scientific research institutions.................. 3.3.............95 6.01 Intensity of local competition................................... 4.9.............87 12.03 Company spending on R&D.................................... 2.9.............90 6.02 Extent of market dominance................................... 4.0.............51 12.04 University-industry collaboration in R&D.................. 3.3.............87 6.03 Effectiveness of anti-monopoly policy...................... 4.3.............53 12.05 Gov’t procurement of advanced tech products....... 3.9.............32 6.04 Effect of taxation on incentives to invest.................. 3.3...........104 12.06 Availability of scientists and engineers..................... 3.1...........129 6.05 Total tax rate, % profits*...................................... 283.2...........144 12.07 PCT patents, applications/million pop.*................... 0.0...........124 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 89. The Africa Competitiveness Report 2015 | 129 Part 3: Competitiveness Profiles Ghana Key indicators, 2013 Population (millions)...............................................25.6 GDP (PPP) per capita (int’l $), 1990–2013 GDP (US$ billions)*................................................47.8 5,000  Ghana     Sub-Saharan Africa GDP per capita (US$).......................................1,871.1 GDP (PPP) as share (%) of world total...................0.10 4,000 Sectoral value-added (% GDP), 2013 Agriculture.............................................................22.0 3,000 Industry.................................................................28.6 Services................................................................49.5 2,000 Human Development Index, 2013 Score, (0–1) best...................................................0.57 1,000 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012 Rank (out of 187 economies)..................................138 Sources: IMF; UNFPA; UNDP; World Bank Global Competitiveness Index Rank Score Stage of development (out of 144) (1–7) GCI 2014–2015................................................. 111...... 3.7 Transition Transition GCI 2013–2014 (out of 148).......................................... 114....... 3.7 1 1–2 2 2­­–3 3 GCI 2012–2013 (out of 144).......................................... 103....... 3.8 Factor Efficiency Innovation driven driven driven Basic requirements (60.0%)........................................ 123....... 3.7 Institutions Institutions....................................................................... 69....... 3.9 7 Infrastructure................................................................. 108....... 3.0 Innovation Infrastructure 6 Macroeconomic environment........................................ 133....... 3.4 5 Business Macroeconomic Health and primary education........................................ 121....... 4.5 sophistication 4 environment 3 Efficiency enhancers (35.0%)....................................... 89....... 3.8 2 Health and Higher education and training........................................ 106....... 3.5 Market size 1 primary Goods market efficiency ................................................. 67....... 4.3 education Labor market efficiency................................................... 98....... 3.9 Financial market development......................................... 62....... 4.1 Technological Higher education readiness and training Technological readiness................................................. 100....... 3.1 Market size...................................................................... 69....... 3.7 Financial market Goods market development efficiency Innovation and sophistication factors (5.0%).............. 68....... 3.6 Labor market efficiency Business sophistication .................................................. 70....... 3.9 Innovation........................................................................ 63....... 3.3  Ghana     Sub-Saharan Africa The most problematic factors for doing business Access to financing.................................................................. 20.2 Foreign currency regulations..................................................... 17.4 Tax rates................................................................................... 14.6 Inflation..................................................................................... 10.0 Corruption.................................................................................. 6.2 Poor work ethic in national labor force....................................... 5.6 Inefficient government bureaucracy............................................ 5.2 Tax regulations........................................................................... 4.9 Restrictive labor regulations........................................................ 4.4 Inadequately educated workforce............................................... 3.7 Inadequate supply of infrastructure............................................. 3.0 Crime and theft.......................................................................... 2.1 Policy instability.......................................................................... 1.9 Poor public health...................................................................... 0.7 Insufficient capacity to innovate.................................................. 0.1 Government instability/coups..................................................... 0.1 0 5 10 15 20 25 30 Score 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 2015 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 (cont’d.) 1.01 Property rights........................................................ 4.3.............60 6.06 No. procedures to start a business*........................... 8.............93 1.02 Intellectual property protection................................ 4.1.............45 6.07 No. days to start a business*................................ 14.0.............69 1.03 Diversion of public funds......................................... 3.4.............58 6.08 Agricultural policy costs.......................................... 3.6.............93 1.04 Public trust in politicians.......................................... 3.2.............55 6.09 Prevalence of trade barriers.................................... 3.9...........127 1.05 Irregular payments and bribes................................. 3.4.............98 6.10 Trade tariffs, % duty*............................................. 10.4...........106 1.06 Judicial independence............................................. 4.4.............48 6.11 Prevalence of foreign ownership.............................. 4.5.............72 1.07 Favoritism in decisions of government officials........ 3.0.............76 6.12 Business impact of rules on FDI.............................. 4.2.............87 1.08 Wastefulness of government spending.................... 3.5.............47 6.13 Burden of customs procedures............................... 3.4...........113 1.09 Burden of government regulation............................ 3.4.............74 6.14 Imports as a percentage of GDP*......................... 50.5.............63 1.10 Efficiency of legal framework in settling disputes..... 4.1.............45 6.15 Degree of customer orientation............................... 4.5.............73 1.11 Efficiency of legal framework in challenging regs..... 3.4.............64 6.16 Buyer sophistication................................................ 3.4.............69 1.12 Transparency of government policymaking.............. 3.9.............77 1.13 Business costs of terrorism..................................... 3.9...........126 7th pillar: Labor market efficiency 1.14 Business costs of crime and violence..................... 3.7...........104 7.01 Cooperation in labor-employer relations.................. 4.1.............85 1.15 Organized crime...................................................... 3.9...........118 7.02 Flexibility of wage determination.............................. 3.3...........137 1.16 Reliability of police services..................................... 4.1.............72 7.03 Hiring and firing practices........................................ 3.9.............72 1.17 Ethical behavior of firms.......................................... 3.9.............77 7.04 Redundancy costs, weeks of salary*..................... 49.8...........137 1.18 Strength of auditing and reporting standards.......... 4.2...........101 7.05 Effect of taxation on incentives to work................... 4.0.............38 1.19 Efficacy of corporate boards................................... 4.2...........100 7.06 Pay and productivity................................................ 4.0.............63 1.20 Protection of minority shareholders’ interests.......... 4.0.............78 7.07 Reliance on professional management.................... 4.4.............58 1.21 Strength of investor protection, 0–10 (best)*........... 6.3.............34 7.08 Country capacity to retain talent.............................. 3.6.............57 7.09 Country capacity to attract talent............................ 3.4.............69 2nd pillar: Infrastructure 7.10 Women in labor force, ratio to men*...................... 0.96.............10 2.01 Quality of overall infrastructure................................ 3.4...........110 2.02 Quality of roads....................................................... 3.7.............79 8th pillar: Financial market development 2.03 Quality of railroad infrastructure............................... 2.7.............66 8.01 Availability of financial services................................ 4.0.............99 2.04 Quality of port infrastructure.................................... 3.7.............92 8.02 Affordability of financial services.............................. 3.8.............97 2.05 Quality of air transport infrastructure....................... 4.1.............80 8.03 Financing through local equity market..................... 4.0.............38 2.06 Available airline seat km/week, millions*.............. 124.2.............77 8.04 Ease of access to loans.......................................... 2.9.............58 2.07 Quality of electricity supply...................................... 3.0...........112 8.05 Venture capital availability........................................ 3.2.............36 2.08 Mobile telephone subscriptions/100 pop.*.......... 108.2.............76 8.06 Soundness of banks............................................... 4.4.............97 2.09 Fixed telephone lines/100 pop.*.............................. 1.0...........124 8.07 Regulation of securities exchanges......................... 3.9.............80 8.08 Legal rights index, 0–10 (best)*.................................. 8.............29 3rd pillar: Macroeconomic environment 3.01 Government budget balance, % GDP*.................-10.8...........141 9th pillar: Technological readiness 3.02 Gross national savings, % GDP*........................... 20.2.............67 9.01 Availability of latest technologies............................. 4.3...........104 3.03 Inflation, annual % change*................................... 11.7...........140 9.02 Firm-level technology absorption............................. 4.3.............95 3.04 General government debt, % GDP*...................... 60.1...........100 9.03 FDI and technology transfer.................................... 4.2...........100 3.05 Country credit rating, 0–100 (best)*....................... 35.7.............92 9.04 Individuals using Internet, %*................................ 12.3...........121 9.05 Fixed broadband Internet subscriptions/100 pop.*.. 0.3...........117 4th pillar: Health and primary education 9.06 Int’l Internet bandwidth, kb/s per user*................... 5.2...........116 4.01 Malaria cases/100,000 pop.*......................... 27,201.3.............69 9.07 Mobile broadband subscriptions/100 pop.*.......... 39.9.............54 4.02 Business impact of malaria..................................... 3.7.............60 4.03 Tuberculosis cases/100,000 pop.*........................ 72.0.............83 10th pillar: Market size 4.04 Business impact of tuberculosis.............................. 4.6...........103 10.01 Domestic market size index, 1–7 (best)*.................. 3.5.............68 4.05 HIV prevalence, % adult pop.*................................ 1.4...........119 10.02 Foreign market size index, 1–7 (best)*..................... 4.3.............76 4.06 Business impact of HIV/AIDS.................................. 4.9.............92 10.03 GDP (PPP$ billions)*............................................. 88.5.............72 4.07 Infant mortality, deaths/1,000 live births*............... 48.6...........122 10.04 Exports as a percentage of GDP*......................... 36.7.............74 4.08 Life expectancy, years*.......................................... 60.9...........123 4.09 Quality of primary education.................................... 3.0...........112 11th pillar: Business sophistication 4.10 Primary education enrollment, net %*................... 87.1...........108 11.01 Local supplier quantity............................................ 4.2...........106 11.02 Local supplier quality............................................... 3.9...........107 5th pillar: Higher education and training 11.03 State of cluster development................................... 3.7.............77 5.01 Secondary education enrollment, gross %*........... 61.1...........112 11.04 Nature of competitive advantage............................. 3.9.............47 5.02 Tertiary education enrollment, gross %*................ 12.2...........106 11.05 Value chain breadth................................................. 3.9.............61 5.03 Quality of the education system.............................. 3.8.............59 11.06 Control of international distribution.......................... 4.0.............71 5.04 Quality of math and science education................... 4.4.............52 11.07 Production process sophistication........................... 3.9.............68 5.05 Quality of management schools.............................. 4.6.............50 11.08 Extent of marketing................................................. 4.0.............91 5.06 Internet access in schools....................................... 3.2...........113 11.09 Willingness to delegate authority............................. 3.9.............58 5.07 Availability of research and training services............ 3.8.............92 5.08 Extent of staff training............................................. 4.1.............61 12th pillar: Innovation 12.01 Capacity for innovation............................................ 4.0.............49 6th pillar: Goods market efficiency 12.02 Quality of scientific research institutions.................. 3.7.............73 6.01 Intensity of local competition................................... 4.4...........118 12.03 Company spending on R&D.................................... 3.5.............44 6.02 Extent of market dominance................................... 4.1.............42 12.04 University-industry collaboration in R&D.................. 3.5.............77 6.03 Effectiveness of anti-monopoly policy...................... 4.0.............70 12.05 Gov’t procurement of advanced tech products....... 3.5.............65 6.04 Effect of taxation on incentives to invest.................. 4.2.............32 12.06 Availability of scientists and engineers..................... 3.6.............95 6.05 Total tax rate, % profits*........................................ 22.9.............18 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 89. The Africa Competitiveness Report 2015 | 131 Part 3: Competitiveness Profiles Guinea Key indicators, 2013 Population (millions)...............................................11.1 GDP (PPP) per capita (int’l $), 1990–2013 GDP (US$ billions)*..................................................6.2 4,000  Guinea     Sub-Saharan Africa GDP per capita (US$)..........................................560.0 3,500 GDP (PPP) as share (%) of world total...................0.01 3,000 Sectoral value-added (% GDP), 2011 2,500 Agriculture.............................................................20.2 2,000 Industry.................................................................44.8 Services................................................................33.1 1,500 1,000 Human Development Index, 2013 Score, (0–1) best...................................................0.39 500 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012 Rank (out of 187 economies)..................................179 Sources: IMF; UNFPA; UNDP; World Bank Global Competitiveness Index Rank Score Stage of development (out of 144) (1–7) GCI 2014–2015................................................. 144...... 2.8 Transition Transition GCI 2013–2014 (out of 148).......................................... 147....... 2.9 1 1–2 2 2­­–3 3 GCI 2012–2013 (out of 144).......................................... 141....... 2.9 Factor Efficiency Innovation driven driven driven Basic requirements (60.0%)........................................ 144....... 2.8 Institutions Institutions..................................................................... 134....... 2.8 7 Infrastructure................................................................. 143....... 1.8 Innovation Infrastructure 6 Macroeconomic environment........................................ 138....... 3.2 5 Business Macroeconomic Health and primary education........................................ 139....... 3.3 sophistication 4 environment 3 Efficiency enhancers (35.0%)..................................... 138....... 2.9 2 Health and Higher education and training........................................ 140....... 2.2 Market size 1 primary Goods market efficiency ............................................... 137....... 3.4 education Labor market efficiency................................................... 89....... 4.0 Financial market development....................................... 134....... 2.8 Technological Higher education readiness and training Technological readiness................................................. 139....... 2.4 Market size.................................................................... 127....... 2.4 Financial market Goods market development efficiency Innovation and sophistication factors (5.0%)............ 142....... 2.6 Labor market efficiency Business sophistication ................................................ 141....... 2.9 Innovation...................................................................... 141....... 2.2  Guinea     Sub-Saharan Africa The most problematic factors for doing business Access to financing.................................................................. 20.9 Corruption................................................................................ 19.4 Inadequate supply of infrastructure........................................... 14.7 Policy instability.......................................................................... 8.7 Inadequately educated workforce............................................... 7.4 Inefficient government bureaucracy............................................ 6.8 Crime and theft.......................................................................... 5.2 Foreign currency regulations....................................................... 3.2 Poor work ethic in national labor force....................................... 3.0 Restrictive labor regulations........................................................ 2.9 Inflation....................................................................................... 2.8 Insufficient capacity to innovate.................................................. 2.0 Government instability/coups..................................................... 1.8 Tax regulations........................................................................... 0.5 Poor public health...................................................................... 0.4 Tax rates..................................................................................... 0.4 0 5 10 15 20 25 30 Score 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 2015 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 (cont’d.) 1.01 Property rights........................................................ 2.6...........137 6.06 No. procedures to start a business*........................... 5.............32 1.02 Intellectual property protection................................ 2.2...........140 6.07 No. days to start a business*................................ 16.0.............79 1.03 Diversion of public funds......................................... 2.0...........136 6.08 Agricultural policy costs.......................................... 3.3...........113 1.04 Public trust in politicians.......................................... 2.3...........107 6.09 Prevalence of trade barriers.................................... 4.0...........108 1.05 Irregular payments and bribes................................. 2.1...........143 6.10 Trade tariffs, % duty*............................................. 11.5...........120 1.06 Judicial independence............................................. 2.0...........139 6.11 Prevalence of foreign ownership.............................. 3.5...........119 1.07 Favoritism in decisions of government officials........ 2.0...........138 6.12 Business impact of rules on FDI.............................. 3.4...........127 1.08 Wastefulness of government spending.................... 2.6.............97 6.13 Burden of customs procedures............................... 3.3...........117 1.09 Burden of government regulation............................ 3.5.............68 6.14 Imports as a percentage of GDP*......................... 53.6.............55 1.10 Efficiency of legal framework in settling disputes..... 2.3...........142 6.15 Degree of customer orientation............................... 3.4...........136 1.11 Efficiency of legal framework in challenging regs..... 2.4...........126 6.16 Buyer sophistication................................................ 1.9...........143 1.12 Transparency of government policymaking.............. 3.0...........134 1.13 Business costs of terrorism..................................... 5.5.............61 7th pillar: Labor market efficiency 1.14 Business costs of crime and violence..................... 3.6...........109 7.01 Cooperation in labor-employer relations.................. 3.7...........124 1.15 Organized crime...................................................... 4.1...........107 7.02 Flexibility of wage determination.............................. 5.3.............47 1.16 Reliability of police services..................................... 3.0...........119 7.03 Hiring and firing practices........................................ 3.4...........105 1.17 Ethical behavior of firms.......................................... 3.1...........137 7.04 Redundancy costs, weeks of salary*....................... 7.9.............23 1.18 Strength of auditing and reporting standards.......... 3.1...........137 7.05 Effect of taxation on incentives to work................... 3.8.............57 1.19 Efficacy of corporate boards................................... 4.2...........102 7.06 Pay and productivity................................................ 2.8...........134 1.20 Protection of minority shareholders’ interests.......... 3.0...........135 7.07 Reliance on professional management.................... 2.8...........138 1.21 Strength of investor protection, 0–10 (best)*........... 2.7...........138 7.08 Country capacity to retain talent.............................. 2.5...........126 7.09 Country capacity to attract talent............................ 2.7...........112 2nd pillar: Infrastructure 7.10 Women in labor force, ratio to men*...................... 0.84.............58 2.01 Quality of overall infrastructure................................ 2.1...........143 2.02 Quality of roads....................................................... 1.9...........143 8th pillar: Financial market development 2.03 Quality of railroad infrastructure........................ N/Appl.............n/a 8.01 Availability of financial services................................ 2.9...........137 2.04 Quality of port infrastructure.................................... 2.9...........116 8.02 Affordability of financial services.............................. 2.8...........141 2.05 Quality of air transport infrastructure....................... 2.5...........138 8.03 Financing through local equity market..................... 1.6...........142 2.06 Available airline seat km/week, millions*.................. 8.6...........137 8.04 Ease of access to loans.......................................... 2.4...........105 2.07 Quality of electricity supply...................................... 1.3...........144 8.05 Venture capital availability........................................ 1.9...........130 2.08 Mobile telephone subscriptions/100 pop.*............ 63.3...........131 8.06 Soundness of banks............................................... 3.6...........127 2.09 Fixed telephone lines/100 pop.*.............................. 0.0...........144 8.07 Regulation of securities exchanges......................... 1.9...........139 8.08 Legal rights index, 0–10 (best)*.................................. 6.............63 3rd pillar: Macroeconomic environment 3.01 Government budget balance, % GDP*...................-5.3...........111 9th pillar: Technological readiness 3.02 Gross national savings, % GDP*............................-1.0...........141 9.01 Availability of latest technologies............................. 3.3...........137 3.03 Inflation, annual % change*................................... 12.0...........141 9.02 Firm-level technology absorption............................. 3.7...........133 3.04 General government debt, % GDP*...................... 37.8.............57 9.03 FDI and technology transfer.................................... 3.8...........121 3.05 Country credit rating, 0–100 (best)*....................... 12.5...........140 9.04 Individuals using Internet, %*.................................. 1.6...........141 9.05 Fixed broadband Internet subscriptions/100 pop.*.. 0.0...........141 4th pillar: Health and primary education 9.06 Int’l Internet bandwidth, kb/s per user*................... 2.5...........135 4.01 Malaria cases/100,000 pop.*......................... 38,423.7.............76 9.07 Mobile broadband subscriptions/100 pop.*............ 0.0...........133 4.02 Business impact of malaria..................................... 3.2.............67 4.03 Tuberculosis cases/100,000 pop.*...................... 178.0...........114 10th pillar: Market size 4.04 Business impact of tuberculosis.............................. 4.5...........105 10.01 Domestic market size index, 1–7 (best)*.................. 2.3...........128 4.05 HIV prevalence, % adult pop.*................................ 1.7...........122 10.02 Foreign market size index, 1–7 (best)*..................... 3.0...........132 4.06 Business impact of HIV/AIDS.................................. 4.6...........106 10.03 GDP (PPP$ billions)*............................................. 12.5...........129 4.07 Infant mortality, deaths/1,000 live births*............... 65.2...........134 10.04 Exports as a percentage of GDP*......................... 25.9...........111 4.08 Life expectancy, years*.......................................... 55.8...........131 4.09 Quality of primary education.................................... 2.3...........135 11th pillar: Business sophistication 4.10 Primary education enrollment, net %*................... 74.4...........130 11.01 Local supplier quantity............................................ 3.8...........131 11.02 Local supplier quality............................................... 3.1...........137 5th pillar: Higher education and training 11.03 State of cluster development................................... 3.0...........123 5.01 Secondary education enrollment, gross %*........... 38.1...........129 11.04 Nature of competitive advantage............................. 2.6...........133 5.02 Tertiary education enrollment, gross %*.................. 9.9...........114 11.05 Value chain breadth................................................. 2.9...........135 5.03 Quality of the education system.............................. 2.4...........137 11.06 Control of international distribution.......................... 3.0...........140 5.04 Quality of math and science education................... 3.1...........115 11.07 Production process sophistication........................... 2.3...........144 5.05 Quality of management schools.............................. 2.3...........141 11.08 Extent of marketing................................................. 2.7...........140 5.06 Internet access in schools....................................... 1.8...........139 11.09 Willingness to delegate authority............................. 2.3...........143 5.07 Availability of research and training services............ 2.8...........139 5.08 Extent of staff training............................................. 3.2...........128 12th pillar: Innovation 12.01 Capacity for innovation............................................ 2.7...........141 6th pillar: Goods market efficiency 12.02 Quality of scientific research institutions.................. 2.3...........137 6.01 Intensity of local competition................................... 4.2...........129 12.03 Company spending on R&D.................................... 2.0...........142 6.02 Extent of market dominance................................... 3.3...........104 12.04 University-industry collaboration in R&D.................. 2.2...........140 6.03 Effectiveness of anti-monopoly policy...................... 2.9...........138 12.05 Gov’t procurement of advanced tech products....... 2.6...........131 6.04 Effect of taxation on incentives to invest.................. 3.5.............87 12.06 Availability of scientists and engineers..................... 2.9...........137 6.05 Total tax rate, % profits*........................................ 91.2...........142 12.07 PCT patents, applications/million pop.*................... 0.0...........124 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 89. The Africa Competitiveness Report 2015 | 133 Part 3: Competitiveness Profiles Kenya Key indicators, 2013 Population (millions)...............................................44.4 GDP (PPP) per capita (int’l $), 1990–2013 GDP (US$ billions)*................................................55.0 4,000  Kenya     Sub-Saharan Africa GDP per capita (US$).......................................1,315.6 GDP (PPP) as share (%) of world total...................0.12 3,500 3,000 Sectoral value-added (% GDP), 2012 Agriculture.............................................................29.9 2,500 Industry.................................................................17.4 2,000 Services................................................................52.7 1,500 Human Development Index, 2013 Score, (0–1) best...................................................0.54 1,000 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012 Rank (out of 187 economies)..................................147 Sources: IMF; UNFPA; UNDP; World Bank Global Competitiveness Index Rank Score Stage of development (out of 144) (1–7) GCI 2014–2015................................................... 90...... 3.9 Transition Transition GCI 2013–2014 (out of 148)............................................ 96....... 3.8 1 1–2 2 2­­–3 3 GCI 2012–2013 (out of 144).......................................... 106....... 3.7 Factor Efficiency Innovation driven driven driven Basic requirements (60.0%)........................................ 115....... 3.8 Institutions Institutions....................................................................... 78....... 3.7 7 Infrastructure................................................................... 96....... 3.3 Innovation Infrastructure 6 Macroeconomic environment........................................ 126....... 3.7 5 Business Macroeconomic Health and primary education........................................ 120....... 4.6 sophistication 4 environment 3 Efficiency enhancers (35.0%)....................................... 66....... 4.1 2 Health and Higher education and training.......................................... 95....... 3.8 Market size 1 primary Goods market efficiency ................................................. 62....... 4.4 education Labor market efficiency................................................... 25....... 4.7 Financial market development......................................... 24....... 4.8 Technological Higher education readiness and training Technological readiness................................................... 87....... 3.5 Market size...................................................................... 74....... 3.6 Financial market Goods market development efficiency Innovation and sophistication factors (5.0%).............. 40....... 4.0 Labor market efficiency Business sophistication .................................................. 44....... 4.4 Innovation........................................................................ 38....... 3.7  Kenya     Sub-Saharan Africa The most problematic factors for doing business Corruption................................................................................ 20.0 Access to financing.................................................................. 18.1 Crime and theft........................................................................ 10.3 Inadequate supply of infrastructure............................................. 9.9 Tax rates..................................................................................... 9.9 Inefficient government bureaucracy............................................ 8.2 Inflation....................................................................................... 6.8 Policy instability.......................................................................... 3.5 Tax regulations........................................................................... 3.3 Restrictive labor regulations........................................................ 2.9 Insufficient capacity to innovate.................................................. 1.6 Poor work ethic in national labor force....................................... 1.4 Inadequately educated workforce............................................... 1.3 Poor public health...................................................................... 1.0 Foreign currency regulations....................................................... 0.9 Government instability/coups..................................................... 0.9 0 5 10 15 20 25 30 Score 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 2015 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 (cont’d.) 1.01 Property rights........................................................ 4.2.............65 6.06 No. procedures to start a business*......................... 10...........118 1.02 Intellectual property protection................................ 3.7.............69 6.07 No. days to start a business*................................ 32.0...........112 1.03 Diversion of public funds......................................... 3.0.............83 6.08 Agricultural policy costs.......................................... 4.0.............50 1.04 Public trust in politicians.......................................... 3.0.............69 6.09 Prevalence of trade barriers.................................... 4.0...........110 1.05 Irregular payments and bribes................................. 3.2...........108 6.10 Trade tariffs, % duty*............................................... 8.8.............98 1.06 Judicial independence............................................. 4.1.............52 6.11 Prevalence of foreign ownership.............................. 4.5.............78 1.07 Favoritism in decisions of government officials........ 3.0.............75 6.12 Business impact of rules on FDI.............................. 4.4.............70 1.08 Wastefulness of government spending.................... 3.3.............61 6.13 Burden of customs procedures............................... 3.6.............92 1.09 Burden of government regulation............................ 3.6.............48 6.14 Imports as a percentage of GDP*......................... 45.5.............75 1.10 Efficiency of legal framework in settling disputes..... 4.1.............47 6.15 Degree of customer orientation............................... 5.1.............35 1.11 Efficiency of legal framework in challenging regs..... 3.8.............42 6.16 Buyer sophistication................................................ 3.2.............89 1.12 Transparency of government policymaking.............. 4.1.............58 1.13 Business costs of terrorism..................................... 3.0...........135 7th pillar: Labor market efficiency 1.14 Business costs of crime and violence..................... 3.0...........129 7.01 Cooperation in labor-employer relations.................. 4.3.............70 1.15 Organized crime...................................................... 3.7...........125 7.02 Flexibility of wage determination.............................. 5.0.............69 1.16 Reliability of police services..................................... 3.9.............85 7.03 Hiring and firing practices........................................ 4.5.............17 1.17 Ethical behavior of firms.......................................... 3.9.............73 7.04 Redundancy costs, weeks of salary*....................... 6.5.............17 1.18 Strength of auditing and reporting standards.......... 4.7.............68 7.05 Effect of taxation on incentives to work................... 3.6.............75 1.19 Efficacy of corporate boards................................... 4.8.............55 7.06 Pay and productivity................................................ 4.1.............56 1.20 Protection of minority shareholders’ interests.......... 4.3.............60 7.07 Reliance on professional management.................... 4.8.............34 1.21 Strength of investor protection, 0–10 (best)*........... 5.0.............83 7.08 Country capacity to retain talent.............................. 3.8.............47 7.09 Country capacity to attract talent............................ 3.7.............55 2nd pillar: Infrastructure 7.10 Women in labor force, ratio to men*...................... 0.86.............48 2.01 Quality of overall infrastructure................................ 4.3.............65 2.02 Quality of roads....................................................... 4.2.............59 8th pillar: Financial market development 2.03 Quality of railroad infrastructure............................... 2.5.............71 8.01 Availability of financial services................................ 4.7.............56 2.04 Quality of port infrastructure.................................... 4.3.............61 8.02 Affordability of financial services.............................. 4.2.............64 2.05 Quality of air transport infrastructure....................... 4.8.............54 8.03 Financing through local equity market..................... 4.3.............30 2.06 Available airline seat km/week, millions*.............. 301.4.............53 8.04 Ease of access to loans.......................................... 3.4.............33 2.07 Quality of electricity supply...................................... 3.9.............95 8.05 Venture capital availability........................................ 3.1.............43 2.08 Mobile telephone subscriptions/100 pop.*............ 70.6...........122 8.06 Soundness of banks............................................... 5.3.............54 2.09 Fixed telephone lines/100 pop.*.............................. 0.5...........133 8.07 Regulation of securities exchanges......................... 4.6.............47 8.08 Legal rights index, 0–10 (best)*................................ 10...............1 3rd pillar: Macroeconomic environment 3.01 Government budget balance, % GDP*...................-6.2...........124 9th pillar: Technological readiness 3.02 Gross national savings, % GDP*........................... 12.2...........121 9.01 Availability of latest technologies............................. 5.1.............55 3.03 Inflation, annual % change*..................................... 5.7...........100 9.02 Firm-level technology absorption............................. 4.8.............56 3.04 General government debt, % GDP*...................... 50.5.............88 9.03 FDI and technology transfer.................................... 4.7.............59 3.05 Country credit rating, 0–100 (best)*....................... 34.6.............94 9.04 Individuals using Internet, %*................................ 39.0.............85 9.05 Fixed broadband Internet subscriptions/100 pop.*.. 0.1...........124 4th pillar: Health and primary education 9.06 Int’l Internet bandwidth, kb/s per user*................. 49.9.............53 4.01 Malaria cases/100,000 pop.*........................... 8,106.0.............54 9.07 Mobile broadband subscriptions/100 pop.*............ 3.0...........115 4.02 Business impact of malaria..................................... 4.5.............44 4.03 Tuberculosis cases/100,000 pop.*...................... 272.0...........128 10th pillar: Market size 4.04 Business impact of tuberculosis.............................. 4.6...........102 10.01 Domestic market size index, 1–7 (best)*.................. 3.5.............70 4.05 HIV prevalence, % adult pop.*................................ 6.1...........133 10.02 Foreign market size index, 1–7 (best)*..................... 4.0.............88 4.06 Business impact of HIV/AIDS.................................. 4.0...........125 10.03 GDP (PPP$ billions)*............................................. 80.4.............75 4.07 Infant mortality, deaths/1,000 live births*............... 48.7...........123 10.04 Exports as a percentage of GDP*......................... 24.5...........116 4.08 Life expectancy, years*.......................................... 61.1...........122 4.09 Quality of primary education.................................... 3.8.............79 11th pillar: Business sophistication 4.10 Primary education enrollment, net %*................... 81.8...........125 11.01 Local supplier quantity............................................ 5.2.............19 11.02 Local supplier quality............................................... 4.7.............47 5th pillar: Higher education and training 11.03 State of cluster development................................... 4.2.............41 5.01 Secondary education enrollment, gross %*........... 60.1...........113 11.04 Nature of competitive advantage............................. 3.8.............51 5.02 Tertiary education enrollment, gross %*.................. 4.0...........133 11.05 Value chain breadth................................................. 4.3.............36 5.03 Quality of the education system.............................. 4.5.............30 11.06 Control of international distribution.......................... 4.4.............40 5.04 Quality of math and science education................... 4.0.............76 11.07 Production process sophistication........................... 4.1.............55 5.05 Quality of management schools.............................. 4.7.............44 11.08 Extent of marketing................................................. 4.4.............59 5.06 Internet access in schools....................................... 4.1.............79 11.09 Willingness to delegate authority............................. 4.1.............38 5.07 Availability of research and training services............ 4.8.............32 5.08 Extent of staff training............................................. 4.4.............34 12th pillar: Innovation 12.01 Capacity for innovation............................................ 4.5.............33 6th pillar: Goods market efficiency 12.02 Quality of scientific research institutions.................. 4.2.............42 6.01 Intensity of local competition................................... 5.7.............21 12.03 Company spending on R&D.................................... 3.8.............28 6.02 Extent of market dominance................................... 4.1.............41 12.04 University-industry collaboration in R&D.................. 4.2.............37 6.03 Effectiveness of anti-monopoly policy...................... 4.4.............42 12.05 Gov’t procurement of advanced tech products....... 3.7.............49 6.04 Effect of taxation on incentives to invest.................. 3.6.............76 12.06 Availability of scientists and engineers..................... 4.4.............44 6.05 Total tax rate, % profits*........................................ 44.2.............98 12.07 PCT patents, applications/million pop.*................... 0.2.............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 89. The Africa Competitiveness Report 2015 | 135 Part 3: Competitiveness Profiles Lesotho Key indicators, 2013 Population (millions).................................................1.9 GDP (PPP) per capita (int’l $), 1990–2013 GDP (US$ billions)*..................................................2.3 4,000  Lesotho     Sub-Saharan Africa GDP per capita (US$).......................................1,190.0 3,500 GDP (PPP) as share (%) of world total...................0.01 3,000 Sectoral value-added (% GDP), 2012 2,500 Agriculture...............................................................7.8 2,000 Industry.................................................................36.6 Services................................................................55.6 1,500 1,000 Human Development Index, 2013 Score, (0–1) best...................................................0.49 500 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012 Rank (out of 187 economies)..................................162 Sources: IMF; UNFPA; UNDP; World Bank Global Competitiveness Index Rank Score Stage of development (out of 144) (1–7) GCI 2014–2015................................................. 107...... 3.7 Transition Transition GCI 2013–2014 (out of 148).......................................... 123....... 3.5 1 1–2 2 2­­–3 3 GCI 2012–2013 (out of 144).......................................... 137....... 3.2 Factor Efficiency Innovation driven driven driven Basic requirements (60.0%)........................................ 102....... 4.1 Institutions Institutions....................................................................... 68....... 3.9 7 Infrastructure................................................................. 116....... 2.8 Innovation Infrastructure 6 Macroeconomic environment.......................................... 28....... 5.7 5 Business Macroeconomic Health and primary education........................................ 128....... 4.0 sophistication 4 environment 3 Efficiency enhancers (35.0%)..................................... 130....... 3.2 2 Health and Higher education and training........................................ 116....... 3.2 Market size 1 primary Goods market efficiency ................................................. 80....... 4.2 education Labor market efficiency................................................... 76....... 4.2 Financial market development....................................... 123....... 3.3 Technological Higher education readiness and training Technological readiness................................................. 137....... 2.4 Market size.................................................................... 139....... 2.0 Financial market Goods market development efficiency Innovation and sophistication factors (5.0%)............ 117....... 3.1 Labor market efficiency Business sophistication ................................................ 123....... 3.4 Innovation...................................................................... 110....... 2.9  Lesotho     Sub-Saharan Africa The most problematic factors for doing business Access to financing.................................................................. 25.0 Corruption................................................................................ 21.0 Inadequate supply of infrastructure........................................... 14.6 Inadequately educated workforce............................................... 7.2 Poor work ethic in national labor force....................................... 6.5 Inefficient government bureaucracy............................................ 5.6 Crime and theft.......................................................................... 5.3 Foreign currency regulations....................................................... 3.3 Government instability/coups..................................................... 2.3 Tax rates..................................................................................... 2.0 Insufficient capacity to innovate.................................................. 1.5 Policy instability.......................................................................... 1.4 Restrictive labor regulations........................................................ 1.4 Poor public health...................................................................... 1.3 Inflation....................................................................................... 1.2 Tax regulations........................................................................... 0.4 0 5 10 15 20 25 30 Score 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 2015 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 (cont’d.) 1.01 Property rights........................................................ 3.6...........103 6.06 No. procedures to start a business*........................... 7.............78 1.02 Intellectual property protection................................ 3.5.............81 6.07 No. days to start a business*................................ 29.0...........110 1.03 Diversion of public funds......................................... 3.8.............49 6.08 Agricultural policy costs.......................................... 3.9.............61 1.04 Public trust in politicians.......................................... 3.4.............47 6.09 Prevalence of trade barriers.................................... 3.9...........122 1.05 Irregular payments and bribes................................. 4.2.............58 6.10 Trade tariffs, % duty*............................................... 6.1.............77 1.06 Judicial independence............................................. 4.1.............55 6.11 Prevalence of foreign ownership.............................. 4.0...........107 1.07 Favoritism in decisions of government officials........ 3.7.............39 6.12 Business impact of rules on FDI.............................. 4.7.............47 1.08 Wastefulness of government spending.................... 3.7.............39 6.13 Burden of customs procedures............................... 3.4...........107 1.09 Burden of government regulation............................ 3.9.............31 6.14 Imports as a percentage of GDP*....................... 127.4...............3 1.10 Efficiency of legal framework in settling disputes..... 3.7.............70 6.15 Degree of customer orientation............................... 3.5...........133 1.11 Efficiency of legal framework in challenging regs..... 3.5.............62 6.16 Buyer sophistication................................................ 3.6.............55 1.12 Transparency of government policymaking.............. 3.9.............71 1.13 Business costs of terrorism..................................... 5.2.............76 7th pillar: Labor market efficiency 1.14 Business costs of crime and violence..................... 3.9.............96 7.01 Cooperation in labor-employer relations.................. 4.0...........102 1.15 Organized crime...................................................... 4.5.............85 7.02 Flexibility of wage determination.............................. 4.0...........123 1.16 Reliability of police services..................................... 4.7.............45 7.03 Hiring and firing practices........................................ 3.9.............76 1.17 Ethical behavior of firms.......................................... 4.0.............63 7.04 Redundancy costs, weeks of salary*..................... 15.0.............70 1.18 Strength of auditing and reporting standards.......... 2.8...........139 7.05 Effect of taxation on incentives to work................... 4.0.............40 1.19 Efficacy of corporate boards................................... 3.6...........135 7.06 Pay and productivity................................................ 3.8.............84 1.20 Protection of minority shareholders’ interests.......... 3.1...........130 7.07 Reliance on professional management.................... 3.4...........119 1.21 Strength of investor protection, 0–10 (best)*........... 5.0.............83 7.08 Country capacity to retain talent.............................. 3.4.............68 7.09 Country capacity to attract talent............................ 3.6.............63 2nd pillar: Infrastructure 7.10 Women in labor force, ratio to men*...................... 0.81.............71 2.01 Quality of overall infrastructure................................ 3.6.............98 2.02 Quality of roads....................................................... 3.3.............97 8th pillar: Financial market development 2.03 Quality of railroad infrastructure........................ N/Appl.............n/a 8.01 Availability of financial services................................ 3.2...........131 2.04 Quality of port infrastructure.................................... 2.7...........120 8.02 Affordability of financial services.............................. 3.4...........125 2.05 Quality of air transport infrastructure....................... 2.1...........144 8.03 Financing through local equity market..................... 2.7...........109 2.06 Available airline seat km/week, millions*.................. 0.3...........143 8.04 Ease of access to loans.......................................... 2.9.............63 2.07 Quality of electricity supply...................................... 3.7.............97 8.05 Venture capital availability........................................ 2.7.............72 2.08 Mobile telephone subscriptions/100 pop.*............ 86.3...........110 8.06 Soundness of banks............................................... 3.5...........130 2.09 Fixed telephone lines/100 pop.*.............................. 2.8...........115 8.07 Regulation of securities exchanges......................... 2.6...........130 8.08 Legal rights index, 0–10 (best)*.................................. 6.............63 3rd pillar: Macroeconomic environment 3.01 Government budget balance, % GDP*.................... 3.0.............10 9th pillar: Technological readiness 3.02 Gross national savings, % GDP*........................... 31.7.............21 9.01 Availability of latest technologies............................. 3.5...........135 3.03 Inflation, annual % change*..................................... 5.3.............96 9.02 Firm-level technology absorption............................. 3.5...........136 3.04 General government debt, % GDP*...................... 39.6.............61 9.03 FDI and technology transfer.................................... 3.5...........134 3.05 Country credit rating, 0–100 (best)*....................... 32.7.............99 9.04 Individuals using Internet, %*.................................. 5.0...........132 9.05 Fixed broadband Internet subscriptions/100 pop.*.. 0.1...........127 4th pillar: Health and primary education 9.06 Int’l Internet bandwidth, kb/s per user*................... 5.9...........112 4.01 Malaria cases/100,000 pop.*................................. S.L.............n/a 9.07 Mobile broadband subscriptions/100 pop.*............ 7.4...........103 4.02 Business impact of malaria.............................. N/Appl.............n/a 4.03 Tuberculosis cases/100,000 pop.*...................... 630.0...........140 10th pillar: Market size 4.04 Business impact of tuberculosis.............................. 5.2.............86 10.01 Domestic market size index, 1–7 (best)*.................. 1.8...........137 4.05 HIV prevalence, % adult pop.*.............................. 23.1...........142 10.02 Foreign market size index, 1–7 (best)*..................... 2.7...........138 4.06 Business impact of HIV/AIDS.................................. 4.4...........113 10.03 GDP (PPP$ billions)*............................................... 4.3...........141 4.07 Infant mortality, deaths/1,000 live births*............... 74.2...........138 10.04 Exports as a percentage of GDP*......................... 43.6.............57 4.08 Life expectancy, years*.......................................... 48.8...........142 4.09 Quality of primary education.................................... 4.1.............66 11th pillar: Business sophistication 4.10 Primary education enrollment, net %*................... 81.6...........126 11.01 Local supplier quantity............................................ 3.6...........136 11.02 Local supplier quality............................................... 3.5...........128 5th pillar: Higher education and training 11.03 State of cluster development................................... 3.9.............65 5.01 Secondary education enrollment, gross %*........... 53.3...........119 11.04 Nature of competitive advantage............................. 3.3.............87 5.02 Tertiary education enrollment, gross %*................ 10.8...........111 11.05 Value chain breadth................................................. 3.5...........101 5.03 Quality of the education system.............................. 4.1.............49 11.06 Control of international distribution.......................... 3.2...........133 5.04 Quality of math and science education................... 3.8.............90 11.07 Production process sophistication........................... 3.0...........125 5.05 Quality of management schools.............................. 3.9.............91 11.08 Extent of marketing................................................. 3.3...........126 5.06 Internet access in schools....................................... 3.2...........114 11.09 Willingness to delegate authority............................. 3.0...........129 5.07 Availability of research and training services............ 3.9.............82 5.08 Extent of staff training............................................. 4.0.............75 12th pillar: Innovation 12.01 Capacity for innovation............................................ 3.1...........122 6th pillar: Goods market efficiency 12.02 Quality of scientific research institutions.................. 2.9...........114 6.01 Intensity of local competition................................... 4.8.............93 12.03 Company spending on R&D.................................... 2.9.............92 6.02 Extent of market dominance................................... 3.5.............84 12.04 University-industry collaboration in R&D.................. 3.2.............99 6.03 Effectiveness of anti-monopoly policy...................... 3.7...........103 12.05 Gov’t procurement of advanced tech products....... 3.0...........106 6.04 Effect of taxation on incentives to invest.................. 3.8.............65 12.06 Availability of scientists and engineers..................... 3.6.............97 6.05 Total tax rate, % profits*........................................ 16.0...............9 12.07 PCT patents, applications/million pop.*................... 0.0...........124 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 89. The Africa Competitiveness Report 2015 | 137 Part 3: Competitiveness Profiles Liberia* Key indicators, 2013 Population (millions).................................................4.1 GDP (PPP) per capita (int’l $), 1990–2013 GDP (US$ billions)*..................................................2.0 4,000  Liberia     Sub-Saharan Africa GDP per capita (US$)..........................................479.0 3,500 GDP (PPP) as share (%) of world total...................0.00 3,000 Sectoral value-added (% GDP), 2012 2,500 Agriculture.............................................................38.8 2,000 Industry.................................................................16.4 1,500 Services................................................................44.7 1,000 500 Human Development Index, 2013 Score, (0–1) best...................................................0.41 0 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012 Rank (out of 187 economies)..................................175 Sources: IMF; UNFPA; UNDP; World Bank Global Competitiveness Index Rank Score Stage of development (out of 144) (1–7) GCI 2014–2015..................................................n/a......n/a Transition Transition GCI 2013–2014 (out of 148).......................................... 128....... 3.5 1 1–2 2 2­­–3 3 GCI 2012–2013 (out of 144).......................................... 111....... 3.7 Factor Efficiency Innovation driven driven driven Basic requirements (60.0%)........................................ 127....... 3.6 Institutions Institutions....................................................................... 77....... 3.8 7 Innovation Infrastructure Infrastructure................................................................. 131....... 2.4 6 Macroeconomic environment.......................................... 51....... 5.1 5 Business Macroeconomic Health and primary education........................................ 144....... 3.2 sophistication 4 environment 3 Efficiency enhancers (35.0%)..................................... 131....... 3.2 2 Health and Higher education and training........................................ 126....... 2.9 Market size 1 primary Goods market efficiency ................................................. 47....... 4.4 education Labor market efficiency................................................... 60....... 4.4 Financial market development....................................... 106....... 3.6 Technological Higher education readiness and training Technological readiness................................................. 141....... 2.4 Market size.................................................................... 146....... 1.5 Financial market Goods market development efficiency Innovation and sophistication factors (5.0%)............ 114....... 3.2 Labor market efficiency Business sophistication ................................................ 108....... 3.6 Innovation...................................................................... 110....... 2.9  Liberia     Sub-Saharan Africa *  Benin and Liberia were not included in the GCI 2014–2015. Therefore the data in this section refer to the GCI 2013–2014. The most problematic factors for doing business Access to financing.................................................................. 17.6 Corruption................................................................................ 16.4 Crime and theft........................................................................ 11.6 Inefficient government bureaucracy.......................................... 10.7 Inadequate supply of infrastructure............................................. 8.2 Poor work ethic in national labor force....................................... 6.8 Inadequately educated workforce............................................... 5.5 Tax regulations........................................................................... 5.0 Foreign currency regulations....................................................... 4.4 Tax rates..................................................................................... 3.6 Restrictive labor regulations........................................................ 2.9 Poor public health...................................................................... 2.1 Insufficient capacity to innovate.................................................. 1.9 Inflation....................................................................................... 1.7 Policy instability.......................................................................... 1.2 Government instability/coups..................................................... 0.4 0 5 10 15 20 25 30 Score 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. Benin and Liberia were not included in the GCI 2014–2015. Therefore the most problematic factors for these countries are drawn from the 2013 edition of the World Economic Forum’s Executive Opinion Survey. 138 | The Africa Competitiveness Report 2015 Part 3: Competitiveness Profiles Liberia The Global Competitiveness Index in detail INDICATOR VALUE RANK/148 INDICATOR VALUE RANK/144 1st pillar: Institutions 6th pillar: Goods market efficiency (cont’d.) 1.01 Property rights........................................................ 3.8.............99 6.06 No. procedures to start a business*........................... 4.............20 1.02 Intellectual property protection................................ 3.7.............68 6.07 No. days to start a business*.................................. 6.0.............16 1.03 Diversion of public funds......................................... 3.6.............57 6.08 Agricultural policy costs.......................................... 3.5...........109 1.04 Public trust in politicians.......................................... 3.3.............52 6.09 Prevalence of trade barriers.................................... 4.4.............63 1.05 Irregular payments and bribes................................. 3.4...........100 6.10 Trade tariffs, % duty*............................................. 10.7...........119 1.06 Judicial independence............................................. 3.4.............83 6.11 Prevalence of foreign ownership.............................. 5.3.............31 1.07 Favoritism in decisions of government officials........ 3.4.............49 6.12 Business impact of rules on FDI.............................. 4.4.............88 1.08 Wastefulness of government spending.................... 3.9.............30 6.13 Burden of customs procedures............................... 3.9.............79 1.09 Burden of government regulation............................ 4.1.............23 6.14 Imports as a percentage of GDP*......................... 85.1.............19 1.10 Efficiency of legal framework in settling disputes..... 3.8.............67 6.15 Degree of customer orientation............................... 4.4.............90 1.11 Efficiency of legal framework in challenging regs..... 3.7.............57 6.16 Buyer sophistication................................................ 3.4.............74 1.12 Transparency of government policymaking.............. 4.3.............58 1.13 Business costs of terrorism..................................... 5.0.............97 7th pillar: Labor market efficiency 1.14 Business costs of crime and violence..................... 4.2.............99 7.01 Cooperation in labor-employer relations.................. 4.2.............78 1.15 Organized crime...................................................... 4.7.............87 7.02 Flexibility of wage determination.............................. 4.8.............92 1.16 Reliability of police services..................................... 3.7...........104 7.03 Hiring and firing practices........................................ 4.2.............47 1.17 Ethical behavior of firms.......................................... 3.8.............77 7.04 Redundancy costs, weeks of salary*..................... 25.7...........113 1.18 Strength of auditing and reporting standards.......... 4.0...........104 7.05 Effect of taxation on incentives to work................... 4.3.............23 1.19 Efficacy of corporate boards................................... 4.3.............99 7.06 Pay and productivity................................................ 3.8.............87 1.20 Protection of minority shareholders’ interests.......... 3.9.............85 7.07 Reliance on professional management.................... 3.5...........122 1.21 Strength of investor protection, 0–10 (best)*........... 3.7...........123 7.08 Country capacity to retain talent.............................. 3.1.............89 7.09 Country capacity to attract talent............................ 4.1.............36 2nd pillar: Infrastructure 7.10 Women in labor force, ratio to men*...................... 0.92.............25 2.01 Quality of overall infrastructure................................ 3.5...........103 2.02 Quality of roads....................................................... 2.9...........113 8th pillar: Financial market development 2.03 Quality of railroad infrastructure............................... 2.0.............96 8.01 Availability of financial services................................ 3.8...........114 2.04 Quality of port infrastructure.................................... 3.4...........117 8.02 Affordability of financial services.............................. 3.7...........108 2.05 Quality of air transport infrastructure....................... 3.1...........127 8.03 Financing through local equity market..................... 2.5...........117 2.06 Available airline seat km/week, millions*.................. 5.0...........143 8.04 Ease of access to loans.......................................... 2.5.............92 2.07 Quality of electricity supply...................................... 2.6...........125 8.05 Venture capital availability........................................ 2.7.............63 2.08 Mobile telephone subscriptions/100 pop.*............ 56.4...........133 8.06 Soundness of banks............................................... 4.6.............91 2.09 Fixed telephone lines/100 pop.*.............................. 0.0...........148 8.07 Regulation of securities exchanges......................... 2.6...........134 8.08 Legal rights index, 0–10 (best)*.................................. 7.............42 3rd pillar: Macroeconomic environment 3.01 Government budget balance, % GDP*...................-0.5.............34 9th pillar: Technological readiness 3.02 Gross national savings, % GDP*............................. n/a............n/a 9.01 Availability of latest technologies............................. 3.6...........136 3.03 Inflation, annual % change*..................................... 6.8...........112 9.02 Firm-level technology absorption............................. 3.8...........136 3.04 General government debt, % GDP*...................... 29.1.............38 9.03 FDI and technology transfer.................................... 3.8...........122 3.05 Country credit rating, 0–100 (best)*....................... 18.6...........136 9.04 Individuals using Internet, %*.................................. 3.8...........137 9.05 Fixed broadband Internet subscriptions/100 pop.*.. 0.0...........147 4th pillar: Health and primary education 9.06 Int’l Internet bandwidth, kb/s per user*................... 2.0...........135 4.01 Malaria cases/100,000 pop.*......................... 27,023.2...........138 9.07 Mobile broadband subscriptions/100 pop.*............ 0.0...........135 4.02 Business impact of malaria..................................... 3.4...........129 4.03 Tuberculosis cases/100,000 pop.*...................... 299.0...........133 10th pillar: Market size 4.04 Business impact of tuberculosis.............................. 3.6...........140 10.01 Domestic market size index, 1–7 (best)*.................. 1.2...........146 4.05 HIV prevalence, % adult pop.*................................ 1.0...........107 10.02 Foreign market size index, 1–7 (best)*..................... 2.5...........144 4.06 Business impact of HIV/AIDS.................................. 4.5...........107 10.03 GDP (PPP$ billions)*............................................... 2.7...........146 4.07 Infant mortality, deaths/1,000 live births*............... 58.2...........132 10.04 Exports as a percentage of GDP*......................... 47.6.............58 4.08 Life expectancy, years*.......................................... 56.7...........127 4.09 Quality of primary education.................................... 2.8...........123 11th pillar: Business sophistication 4.10 Primary education enrollment, net %*................... 40.8...........145 11.01 Local supplier quantity............................................ 4.1...........119 11.02 Local supplier quality............................................... 3.9...........109 5th pillar: Higher education and training 11.03 State of cluster development................................... 3.7.............77 5.01 Secondary education enrollment, gross %*........... 44.8...........124 11.04 Nature of competitive advantage............................. 3.3.............83 5.02 Tertiary education enrollment, gross %*................ 19.1.............95 11.05 Value chain breadth................................................. 3.5.............99 5.03 Quality of the education system.............................. 3.4.............96 11.06 Control of international distribution.......................... 3.5...........124 5.04 Quality of math and science education................... 2.9...........125 11.07 Production process sophistication........................... 3.2...........118 5.05 Quality of management schools.............................. 3.5...........117 11.08 Extent of marketing................................................. 3.3...........123 5.06 Internet access in schools....................................... 2.6...........129 11.09 Willingness to delegate authority............................. 3.5.............95 5.07 Availability of research and training services............ 3.4...........123 5.08 Extent of staff training............................................. 3.7...........101 12th pillar: Innovation 12.01 Capacity for innovation............................................ 3.5.............68 6th pillar: Goods market efficiency 12.02 Quality of scientific research institutions.................. 2.8...........122 6.01 Intensity of local competition................................... 4.6...........103 12.03 Company spending on R&D.................................... 2.9.............95 6.02 Extent of market dominance................................... 3.8.............68 12.04 University-industry collaboration in R&D.................. 2.9...........122 6.03 Effectiveness of anti-monopoly policy...................... 4.3.............56 12.05 Gov’t procurement of advanced tech products....... 3.8.............40 6.04 Effect of taxation on incentives to invest.................. 4.2.............35 12.06 Availability of scientists and engineers..................... 2.8...........142 6.05 Total tax rate, % profits*........................................ 27.4.............26 12.07 PCT patents, applications/million pop.*................... 0.0...........126 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 89. Benin and Liberia were not included in the GCI 2014–2015. Therefore the data in this section refer to the GCI 2013–2014. The Africa Competitiveness Report 2015 | 139 Part 3: Competitiveness Profiles Libya Key indicators, 2013 Population (millions).................................................6.1 GDP (PPP) per capita (int’l $), 1990–2013 GDP (US$ billions)*................................................65.5 30,000  Libya     Middle East, North Africa, GDP per capita (US$).....................................10,702.4 and Pakistan GDP (PPP) as share (%) of world total...................0.12 25,000 Sectoral value-added (% GDP), 2008 20,000 Agriculture...............................................................1.9 Industry.................................................................78.2 15,000 Services................................................................19.9 10,000 Human Development Index, 2013 5,000 Score, (0–1) best...................................................0.78 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012 Rank (out of 187 economies)....................................55 Sources: IMF; UNFPA; UNDP; World Bank Global Competitiveness Index Rank Score Stage of development (out of 144) (1–7) GCI 2014–2015................................................. 126...... 3.5 Transition Transition GCI 2013–2014 (out of 148).......................................... 108....... 3.7 1 1–2 2 2­­–3 3 GCI 2012–2013 (out of 144).......................................... 113....... 3.7 Factor Efficiency Innovation driven driven driven Basic requirements (58.5%)........................................ 111....... 3.9 Institutions Institutions..................................................................... 142....... 2.6 7 Infrastructure................................................................. 113....... 2.9 Innovation Infrastructure 6 Macroeconomic environment.......................................... 41....... 5.4 5 Business Macroeconomic Health and primary education........................................ 119....... 4.6 sophistication 4 environment 3 Efficiency enhancers (36.1%)..................................... 137....... 3.0 2 Health and Higher education and training........................................ 102....... 3.6 Market size 1 primary Goods market efficiency ............................................... 139....... 3.3 education Labor market efficiency................................................. 133....... 3.4 Financial market development....................................... 144....... 1.9 Technological Higher education readiness and training Technological readiness................................................. 130....... 2.6 Market size...................................................................... 85....... 3.3 Financial market Goods market development efficiency Innovation and sophistication factors (5.4%)............ 143....... 2.5 Labor market efficiency Business sophistication ................................................ 135....... 3.0 Innovation...................................................................... 144....... 2.0  Libya     Middle East, North Africa, and Pakistan The most problematic factors for doing business Government instability/coups................................................... 11.6 Access to financing.................................................................. 11.4 Inadequately educated workforce............................................. 10.8 Inefficient government bureaucracy.......................................... 10.6 Policy instability........................................................................ 10.4 Corruption................................................................................ 10.0 Inadequate supply of infrastructure............................................. 8.0 Poor work ethic in national labor force....................................... 6.9 Foreign currency regulations....................................................... 6.1 Crime and theft.......................................................................... 5.9 Restrictive labor regulations........................................................ 5.1 Poor public health...................................................................... 1.4 Insufficient capacity to innovate.................................................. 0.8 Inflation....................................................................................... 0.6 Tax regulations........................................................................... 0.4 Tax rates..................................................................................... 0.2 0 5 10 15 20 25 30 Score 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 2015 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 (cont’d.) 1.01 Property rights........................................................ 3.0...........131 6.06 No. procedures to start a business*......................... 10...........118 1.02 Intellectual property protection................................ 1.8...........143 6.07 No. days to start a business*................................ 35.0...........119 1.03 Diversion of public funds......................................... 2.1...........133 6.08 Agricultural policy costs.......................................... 2.1...........143 1.04 Public trust in politicians.......................................... 2.3...........112 6.09 Prevalence of trade barriers.................................... 3.7...........132 1.05 Irregular payments and bribes................................. 2.9...........122 6.10 Trade tariffs, % duty*............................................... 0.0...............1 1.06 Judicial independence............................................. 3.0...........104 6.11 Prevalence of foreign ownership.............................. 2.4...........143 1.07 Favoritism in decisions of government officials........ 2.3...........124 6.12 Business impact of rules on FDI.............................. 3.0...........135 1.08 Wastefulness of government spending.................... 2.0...........136 6.13 Burden of customs procedures............................... 2.6...........139 1.09 Burden of government regulation............................ 2.5...........134 6.14 Imports as a percentage of GDP*......................... 34.5...........101 1.10 Efficiency of legal framework in settling disputes..... 2.4...........135 6.15 Degree of customer orientation............................... 3.4...........137 1.11 Efficiency of legal framework in challenging regs..... 2.4...........127 6.16 Buyer sophistication................................................ 2.3...........139 1.12 Transparency of government policymaking.............. 2.9...........139 1.13 Business costs of terrorism..................................... 2.4...........142 7th pillar: Labor market efficiency 1.14 Business costs of crime and violence..................... 2.5...........138 7.01 Cooperation in labor-employer relations.................. 4.0...........103 1.15 Organized crime...................................................... 4.0...........116 7.02 Flexibility of wage determination.............................. 4.9.............82 1.16 Reliability of police services..................................... 2.0...........143 7.03 Hiring and firing practices........................................ 3.6.............95 1.17 Ethical behavior of firms.......................................... 3.4...........127 7.04 Redundancy costs, weeks of salary*..................... 10.3.............42 1.18 Strength of auditing and reporting standards.......... 2.2...........144 7.05 Effect of taxation on incentives to work................... 3.8.............52 1.19 Efficacy of corporate boards................................... 2.4...........144 7.06 Pay and productivity................................................ 3.0...........132 1.20 Protection of minority shareholders’ interests.......... 2.4...........144 7.07 Reliance on professional management.................... 2.7...........140 1.21 Strength of investor protection, 0–10 (best)*........... 1.7...........143 7.08 Country capacity to retain talent.............................. 2.7...........118 7.09 Country capacity to attract talent............................ 2.3...........132 2nd pillar: Infrastructure 7.10 Women in labor force, ratio to men*...................... 0.40...........131 2.01 Quality of overall infrastructure................................ 1.9...........144 2.02 Quality of roads....................................................... 2.1...........142 8th pillar: Financial market development 2.03 Quality of railroad infrastructure........................ N/Appl.............n/a 8.01 Availability of financial services................................ 2.1...........144 2.04 Quality of port infrastructure.................................... 2.6...........131 8.02 Affordability of financial services.............................. 2.0...........144 2.05 Quality of air transport infrastructure....................... 2.4...........139 8.03 Financing through local equity market..................... 1.8...........140 2.06 Available airline seat km/week, millions*.............. 111.2.............79 8.04 Ease of access to loans.......................................... 1.5...........142 2.07 Quality of electricity supply...................................... 2.8...........116 8.05 Venture capital availability........................................ 1.6...........142 2.08 Mobile telephone subscriptions/100 pop.*.......... 165.0...............9 8.06 Soundness of banks............................................... 2.7...........142 2.09 Fixed telephone lines/100 pop.*............................ 12.7.............82 8.07 Regulation of securities exchanges......................... 2.0...........137 8.08 Legal rights index, 0–10 (best)*.................................. 1...........143 3rd pillar: Macroeconomic environment 3.01 Government budget balance, % GDP*.................... 1.6.............12 9th pillar: Technological readiness 3.02 Gross national savings, % GDP*........................... 18.4.............78 9.01 Availability of latest technologies............................. 3.1...........140 3.03 Inflation, annual % change*..................................... 2.6...............1 9.02 Firm-level technology absorption............................. 3.2...........142 3.04 General government debt, % GDP*........................ 0.0...............1 9.03 FDI and technology transfer.................................... 2.7...........144 3.05 Country credit rating, 0–100 (best)*....................... 35.6.............93 9.04 Individuals using Internet, %*................................ 16.5...........108 9.05 Fixed broadband Internet subscriptions/100 pop.*.. 1.0...........106 4th pillar: Health and primary education 9.06 Int’l Internet bandwidth, kb/s per user*................. 21.5.............82 4.01 Malaria cases/100,000 pop.*................................. S.L.............n/a 9.07 Mobile broadband subscriptions/100 pop.*............ n/a............n/a 4.02 Business impact of malaria.............................. N/Appl.............n/a 4.03 Tuberculosis cases/100,000 pop.*........................ 40.0.............65 10th pillar: Market size 4.04 Business impact of tuberculosis.............................. 5.0.............91 10.01 Domestic market size index, 1–7 (best)*.................. 2.9.............95 4.05 HIV prevalence, % adult pop.*.............................. <0.2...............1 10.02 Foreign market size index, 1–7 (best)*..................... 4.6.............67 4.06 Business impact of HIV/AIDS.................................. 4.9.............93 10.03 GDP (PPP$ billions)*............................................. 70.4.............78 4.07 Infant mortality, deaths/1,000 live births*............... 13.2.............68 10.04 Exports as a percentage of GDP*......................... 76.1.............19 4.08 Life expectancy, years*.......................................... 75.2.............54 4.09 Quality of primary education.................................... 2.5...........128 11th pillar: Business sophistication 4.10 Primary education enrollment, net %*..................... n/a............n/a 11.01 Local supplier quantity............................................ 4.7.............58 11.02 Local supplier quality............................................... 2.8...........142 5th pillar: Higher education and training 11.03 State of cluster development................................... 2.7...........140 5.01 Secondary education enrollment, gross %*......... 104.3.............20 11.04 Nature of competitive advantage............................. 2.6...........134 5.02 Tertiary education enrollment, gross %*................ 60.9.............41 11.05 Value chain breadth................................................. 2.7...........143 5.03 Quality of the education system.............................. 1.9...........144 11.06 Control of international distribution.......................... 3.9.............83 5.04 Quality of math and science education................... 2.9...........125 11.07 Production process sophistication........................... 2.3...........142 5.05 Quality of management schools.............................. 2.3...........142 11.08 Extent of marketing................................................. 2.5...........143 5.06 Internet access in schools....................................... 1.6...........143 11.09 Willingness to delegate authority............................. 3.1...........128 5.07 Availability of research and training services............ 2.5...........143 5.08 Extent of staff training............................................. 2.7...........143 12th pillar: Innovation 12.01 Capacity for innovation............................................ 2.5...........144 6th pillar: Goods market efficiency 12.02 Quality of scientific research institutions.................. 1.7...........143 6.01 Intensity of local competition................................... 3.7...........141 12.03 Company spending on R&D.................................... 1.8...........144 6.02 Extent of market dominance................................... 2.7...........137 12.04 University-industry collaboration in R&D.................. 1.7...........144 6.03 Effectiveness of anti-monopoly policy...................... 2.1...........143 12.05 Gov’t procurement of advanced tech products....... 1.9...........143 6.04 Effect of taxation on incentives to invest.................. 3.2...........109 12.06 Availability of scientists and engineers..................... 3.3...........119 6.05 Total tax rate, % profits*........................................ 31.6.............44 12.07 PCT patents, applications/million pop.*................... 0.0...........124 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 89. The Africa Competitiveness Report 2015 | 141 Part 3: Competitiveness Profiles Madagascar Key indicators, 2013 Population (millions)...............................................23.0 GDP (PPP) per capita (int’l $), 1990–2013 GDP (US$ billions)*................................................10.6 4,000  Madagascar     Sub-Saharan Africa GDP per capita (US$)..........................................463.4 3,500 GDP (PPP) as share (%) of world total...................0.03 3,000 Sectoral value-added (% GDP), 2009 2,500 Agriculture.............................................................29.1 2,000 Industry.................................................................16.0 Services................................................................54.9 1,500 1,000 Human Development Index, 2013 Score, (0–1) best...................................................0.50 500 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012 Rank (out of 187 economies)..................................155 Sources: IMF; UNFPA; UNDP; World Bank Global Competitiveness Index Rank Score Stage of development (out of 144) (1–7) GCI 2014–2015................................................. 130...... 3.4 Transition Transition GCI 2013–2014 (out of 148).......................................... 132....... 3.4 1 1–2 2 2­­–3 3 GCI 2012–2013 (out of 144).......................................... 130....... 3.4 Factor Efficiency Innovation driven driven driven Basic requirements (60.0%)........................................ 129....... 3.5 Institutions Institutions..................................................................... 128....... 3.1 7 Infrastructure................................................................. 135....... 2.1 Innovation Infrastructure 6 Macroeconomic environment.......................................... 81....... 4.6 5 Business Macroeconomic Health and primary education........................................ 125....... 4.3 sophistication 4 environment 3 Efficiency enhancers (35.0%)..................................... 128....... 3.3 2 Health and Higher education and training........................................ 130....... 2.6 Market size 1 primary Goods market efficiency ............................................... 102....... 4.1 education Labor market efficiency................................................... 39....... 4.5 Financial market development....................................... 132....... 2.9 Technological Higher education readiness and training Technological readiness................................................. 127....... 2.6 Market size.................................................................... 114....... 2.8 Financial market Goods market development efficiency Innovation and sophistication factors (5.0%)............ 105....... 3.3 Labor market efficiency Business sophistication ................................................ 117....... 3.5 Innovation........................................................................ 94....... 3.1  Madagascar     Sub-Saharan Africa The most problematic factors for doing business Government instability/coups................................................... 16.6 Policy instability........................................................................ 15.4 Access to financing.................................................................. 15.1 Corruption................................................................................ 14.9 Inadequate supply of infrastructure............................................. 7.8 Crime and theft.......................................................................... 5.3 Tax rates..................................................................................... 4.6 Tax regulations........................................................................... 4.0 Inadequately educated workforce............................................... 3.9 Inefficient government bureaucracy............................................ 3.2 Inflation....................................................................................... 3.2 Foreign currency regulations....................................................... 1.4 Poor work ethic in national labor force....................................... 1.4 Restrictive labor regulations........................................................ 1.4 Insufficient capacity to innovate.................................................. 1.1 Poor public health...................................................................... 0.5 0 5 10 15 20 25 30 Score 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 2015 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 (cont’d.) 1.01 Property rights........................................................ 3.1...........130 6.06 No. procedures to start a business*........................... 2...............3 1.02 Intellectual property protection................................ 2.9...........115 6.07 No. days to start a business*.................................. 8.0.............39 1.03 Diversion of public funds......................................... 2.3...........126 6.08 Agricultural policy costs.......................................... 3.5...........100 1.04 Public trust in politicians.......................................... 2.1...........120 6.09 Prevalence of trade barriers.................................... 4.0...........109 1.05 Irregular payments and bribes................................. 3.0...........117 6.10 Trade tariffs, % duty*............................................... 7.6.............88 1.06 Judicial independence............................................. 2.2...........134 6.11 Prevalence of foreign ownership.............................. 4.3.............96 1.07 Favoritism in decisions of government officials........ 2.7.............96 6.12 Business impact of rules on FDI.............................. 4.0...........102 1.08 Wastefulness of government spending.................... 2.4...........117 6.13 Burden of customs procedures............................... 3.4...........114 1.09 Burden of government regulation............................ 3.5.............69 6.14 Imports as a percentage of GDP*......................... 42.0.............82 1.10 Efficiency of legal framework in settling disputes..... 2.9...........117 6.15 Degree of customer orientation............................... 4.5.............74 1.11 Efficiency of legal framework in challenging regs..... 2.7...........117 6.16 Buyer sophistication................................................ 2.5...........133 1.12 Transparency of government policymaking.............. 3.1...........132 1.13 Business costs of terrorism..................................... 4.5...........112 7th pillar: Labor market efficiency 1.14 Business costs of crime and violence..................... 3.7...........106 7.01 Cooperation in labor-employer relations.................. 4.2.............77 1.15 Organized crime...................................................... 4.1...........110 7.02 Flexibility of wage determination.............................. 5.2.............57 1.16 Reliability of police services..................................... 2.8...........130 7.03 Hiring and firing practices........................................ 4.2.............36 1.17 Ethical behavior of firms.......................................... 3.4...........120 7.04 Redundancy costs, weeks of salary*..................... 12.3.............54 1.18 Strength of auditing and reporting standards.......... 4.1...........104 7.05 Effect of taxation on incentives to work................... 3.1...........111 1.19 Efficacy of corporate boards................................... 4.4.............85 7.06 Pay and productivity................................................ 3.9.............71 1.20 Protection of minority shareholders’ interests.......... 3.4...........120 7.07 Reliance on professional management.................... 3.9.............91 1.21 Strength of investor protection, 0–10 (best)*........... 5.7.............57 7.08 Country capacity to retain talent.............................. 2.9...........104 7.09 Country capacity to attract talent............................ 3.0.............96 2nd pillar: Infrastructure 7.10 Women in labor force, ratio to men*...................... 0.97...............8 2.01 Quality of overall infrastructure................................ 3.1...........122 2.02 Quality of roads....................................................... 2.6...........129 8th pillar: Financial market development 2.03 Quality of railroad infrastructure............................... 1.8.............92 8.01 Availability of financial services................................ 3.5...........127 2.04 Quality of port infrastructure.................................... 3.4...........103 8.02 Affordability of financial services.............................. 3.1...........132 2.05 Quality of air transport infrastructure....................... 3.4...........114 8.03 Financing through local equity market..................... 2.3...........125 2.06 Available airline seat km/week, millions*................ 40.0...........107 8.04 Ease of access to loans.......................................... 2.7.............78 2.07 Quality of electricity supply...................................... 2.3...........130 8.05 Venture capital availability........................................ 2.5.............89 2.08 Mobile telephone subscriptions/100 pop.*............ 36.1...........139 8.06 Soundness of banks............................................... 4.0...........119 2.09 Fixed telephone lines/100 pop.*.............................. 1.1...........123 8.07 Regulation of securities exchanges......................... 2.5...........133 8.08 Legal rights index, 0–10 (best)*.................................. 2...........137 3rd pillar: Macroeconomic environment 3.01 Government budget balance, % GDP*...................-1.5.............44 9th pillar: Technological readiness 3.02 Gross national savings, % GDP*........................... 19.2.............74 9.01 Availability of latest technologies............................. 4.3...........103 3.03 Inflation, annual % change*..................................... 5.8...........106 9.02 Firm-level technology absorption............................. 4.4.............87 3.04 General government debt, % GDP*...................... 49.8.............86 9.03 FDI and technology transfer.................................... 4.2...........103 3.05 Country credit rating, 0–100 (best)*....................... 18.2...........136 9.04 Individuals using Internet, %*.................................. 2.2...........138 9.05 Fixed broadband Internet subscriptions/100 pop.*.. 0.1...........135 4th pillar: Health and primary education 9.06 Int’l Internet bandwidth, kb/s per user*................... 0.4...........143 4.01 Malaria cases/100,000 pop.*........................... 5,831.2.............52 9.07 Mobile broadband subscriptions/100 pop.*............ 0.4...........128 4.02 Business impact of malaria..................................... 3.4.............64 4.03 Tuberculosis cases/100,000 pop.*...................... 234.0...........124 10th pillar: Market size 4.04 Business impact of tuberculosis.............................. 4.4...........112 10.01 Domestic market size index, 1–7 (best)*.................. 2.6...........114 4.05 HIV prevalence, % adult pop.*................................ 0.5.............88 10.02 Foreign market size index, 1–7 (best)*..................... 3.4...........117 4.06 Business impact of HIV/AIDS.................................. 5.0.............87 10.03 GDP (PPP$ billions)*............................................. 22.3...........114 4.07 Infant mortality, deaths/1,000 live births*............... 40.9...........111 10.04 Exports as a percentage of GDP*......................... 28.8...........100 4.08 Life expectancy, years*.......................................... 64.2...........113 4.09 Quality of primary education.................................... 2.6...........123 11th pillar: Business sophistication 4.10 Primary education enrollment, net %*................... 77.1...........129 11.01 Local supplier quantity............................................ 4.4.............94 11.02 Local supplier quality............................................... 3.9...........101 5th pillar: Higher education and training 11.03 State of cluster development................................... 2.9...........133 5.01 Secondary education enrollment, gross %*........... 38.0...........130 11.04 Nature of competitive advantage............................. 2.7...........124 5.02 Tertiary education enrollment, gross %*.................. 4.2...........132 11.05 Value chain breadth................................................. 3.5.............99 5.03 Quality of the education system.............................. 3.0...........115 11.06 Control of international distribution.......................... 3.3...........128 5.04 Quality of math and science education................... 3.7.............93 11.07 Production process sophistication........................... 3.3...........110 5.05 Quality of management schools.............................. 3.8.............93 11.08 Extent of marketing................................................. 3.4...........123 5.06 Internet access in schools....................................... 2.4...........135 11.09 Willingness to delegate authority............................. 3.6.............83 5.07 Availability of research and training services............ 3.4...........117 5.08 Extent of staff training............................................. 3.7...........102 12th pillar: Innovation 12.01 Capacity for innovation............................................ 3.6.............83 6th pillar: Goods market efficiency 12.02 Quality of scientific research institutions.................. 3.2...........104 6.01 Intensity of local competition................................... 4.8.............90 12.03 Company spending on R&D.................................... 2.9.............88 6.02 Extent of market dominance................................... 3.3...........112 12.04 University-industry collaboration in R&D.................. 3.3.............93 6.03 Effectiveness of anti-monopoly policy...................... 3.4...........119 12.05 Gov’t procurement of advanced tech products....... 3.3.............83 6.04 Effect of taxation on incentives to invest.................. 3.1...........125 12.06 Availability of scientists and engineers..................... 4.4.............38 6.05 Total tax rate, % profits*........................................ 35.8.............63 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 89. The Africa Competitiveness Report 2015 | 143 Part 3: Competitiveness Profiles Malawi Key indicators, 2013 Population (millions)...............................................17.1 GDP (PPP) per capita (int’l $), 1990–2013 GDP (US$ billions)*..................................................3.8 4,000  Malawi     Sub-Saharan Africa GDP per capita (US$)..........................................223.4 3,500 GDP (PPP) as share (%) of world total...................0.01 3,000 Sectoral value-added (% GDP), 2013 2,500 Agriculture.............................................................27.0 2,000 Industry.................................................................18.8 1,500 Services................................................................54.2 1,000 500 Human Development Index, 2013 Score, (0–1) best...................................................0.41 0 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012 Rank (out of 187 economies)..................................174 Sources: IMF; UNFPA; UNDP; World Bank Global Competitiveness Index Rank Score Stage of development (out of 144) (1–7) GCI 2014–2015................................................. 132...... 3.2 Transition Transition GCI 2013–2014 (out of 148).......................................... 136....... 3.3 1 1–2 2 2­­–3 3 GCI 2012–2013 (out of 144).......................................... 129....... 3.4 Factor Efficiency Innovation driven driven driven Basic requirements (60.0%)........................................ 139....... 3.2 Institutions Institutions....................................................................... 77....... 3.7 7 Infrastructure................................................................. 131....... 2.2 Innovation Infrastructure 6 Macroeconomic environment........................................ 144....... 2.4 5 Business Macroeconomic Health and primary education........................................ 123....... 4.4 sophistication 4 environment 3 Efficiency enhancers (35.0%)..................................... 122....... 3.4 2 Health and Higher education and training........................................ 132....... 2.6 Market size 1 primary Goods market efficiency ............................................... 108....... 4.0 education Labor market efficiency................................................... 28....... 4.6 Financial market development......................................... 79....... 3.8 Technological Higher education readiness and training Technological readiness................................................. 135....... 2.4 Market size.................................................................... 123....... 2.6 Financial market Goods market development efficiency Innovation and sophistication factors (5.0%)............ 115....... 3.2 Labor market efficiency Business sophistication ................................................ 108....... 3.5 Innovation...................................................................... 115....... 2.8  Malawi     Sub-Saharan Africa The most problematic factors for doing business Access to financing.................................................................. 19.1 Corruption................................................................................ 16.8 Inadequate supply of infrastructure........................................... 10.1 Inflation....................................................................................... 9.6 Tax rates..................................................................................... 8.8 Inefficient government bureaucracy............................................ 8.2 Crime and theft.......................................................................... 6.7 Foreign currency regulations....................................................... 6.4 Policy instability.......................................................................... 5.1 Inadequately educated workforce............................................... 2.2 Tax regulations........................................................................... 1.7 Poor work ethic in national labor force....................................... 1.5 Restrictive labor regulations........................................................ 1.3 Insufficient capacity to innovate.................................................. 1.2 Poor public health...................................................................... 0.8 Government instability/coups..................................................... 0.5 0 5 10 15 20 25 30 Score 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 2015 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 (cont’d.) 1.01 Property rights........................................................ 3.9.............83 6.06 No. procedures to start a business*......................... 10...........118 1.02 Intellectual property protection................................ 3.1...........100 6.07 No. days to start a business*................................ 40.0...........127 1.03 Diversion of public funds......................................... 2.6...........107 6.08 Agricultural policy costs.......................................... 3.6.............91 1.04 Public trust in politicians.......................................... 2.7.............86 6.09 Prevalence of trade barriers.................................... 4.6.............34 1.05 Irregular payments and bribes................................. 3.5.............94 6.10 Trade tariffs, % duty*............................................... 9.7...........103 1.06 Judicial independence............................................. 4.0.............59 6.11 Prevalence of foreign ownership.............................. 4.6.............67 1.07 Favoritism in decisions of government officials........ 2.7.............97 6.12 Business impact of rules on FDI.............................. 4.1.............99 1.08 Wastefulness of government spending.................... 2.6...........106 6.13 Burden of customs procedures............................... 3.8.............80 1.09 Burden of government regulation............................ 3.7.............44 6.14 Imports as a percentage of GDP*......................... 70.2.............32 1.10 Efficiency of legal framework in settling disputes..... 3.7.............72 6.15 Degree of customer orientation............................... 4.0...........108 1.11 Efficiency of legal framework in challenging regs..... 3.6.............49 6.16 Buyer sophistication................................................ 2.9...........117 1.12 Transparency of government policymaking.............. 3.6...........102 1.13 Business costs of terrorism..................................... 5.7.............47 7th pillar: Labor market efficiency 1.14 Business costs of crime and violence..................... 3.6...........111 7.01 Cooperation in labor-employer relations.................. 4.3.............68 1.15 Organized crime...................................................... 5.1.............56 7.02 Flexibility of wage determination.............................. 5.3.............48 1.16 Reliability of police services..................................... 4.0.............82 7.03 Hiring and firing practices........................................ 3.6.............90 1.17 Ethical behavior of firms.......................................... 3.9.............78 7.04 Redundancy costs, weeks of salary*..................... 16.7.............80 1.18 Strength of auditing and reporting standards.......... 4.7.............70 7.05 Effect of taxation on incentives to work................... 3.3...........100 1.19 Efficacy of corporate boards................................... 4.7.............58 7.06 Pay and productivity................................................ 4.0.............61 1.20 Protection of minority shareholders’ interests.......... 4.4.............50 7.07 Reliance on professional management.................... 4.7.............40 1.21 Strength of investor protection, 0–10 (best)*........... 5.3.............68 7.08 Country capacity to retain talent.............................. 3.3.............78 7.09 Country capacity to attract talent............................ 3.5.............64 2nd pillar: Infrastructure 7.10 Women in labor force, ratio to men*...................... 1.05...............1 2.01 Quality of overall infrastructure................................ 3.1...........118 2.02 Quality of roads....................................................... 3.3.............99 8th pillar: Financial market development 2.03 Quality of railroad infrastructure............................... 1.9.............89 8.01 Availability of financial services................................ 3.8...........112 2.04 Quality of port infrastructure.................................... 2.6...........132 8.02 Affordability of financial services.............................. 3.1...........133 2.05 Quality of air transport infrastructure....................... 2.8...........132 8.03 Financing through local equity market..................... 3.5.............63 2.06 Available airline seat km/week, millions*.................. 9.3...........136 8.04 Ease of access to loans.......................................... 2.3...........114 2.07 Quality of electricity supply...................................... 2.9...........113 8.05 Venture capital availability........................................ 2.2...........112 2.08 Mobile telephone subscriptions/100 pop.*............ 32.3...........141 8.06 Soundness of banks............................................... 4.8.............74 2.09 Fixed telephone lines/100 pop.*.............................. 0.2...........143 8.07 Regulation of securities exchanges......................... 4.0.............74 8.08 Legal rights index, 0–10 (best)*.................................. 7.............43 3rd pillar: Macroeconomic environment 3.01 Government budget balance, % GDP*...................-6.7...........125 9th pillar: Technological readiness 3.02 Gross national savings, % GDP*........................... 16.9.............93 9.01 Availability of latest technologies............................. 3.8...........129 3.03 Inflation, annual % change*................................... 27.7...........142 9.02 Firm-level technology absorption............................. 3.8...........125 3.04 General government debt, % GDP*...................... 68.9...........112 9.03 FDI and technology transfer.................................... 3.8...........119 3.05 Country credit rating, 0–100 (best)*....................... 19.7...........130 9.04 Individuals using Internet, %*.................................. 5.4...........130 9.05 Fixed broadband Internet subscriptions/100 pop.*.. 0.0...........139 4th pillar: Health and primary education 9.06 Int’l Internet bandwidth, kb/s per user*................... 2.2...........138 4.01 Malaria cases/100,000 pop.*......................... 27,661.7.............70 9.07 Mobile broadband subscriptions/100 pop.*............ 3.9...........112 4.02 Business impact of malaria..................................... 3.1.............71 4.03 Tuberculosis cases/100,000 pop.*...................... 163.0...........109 10th pillar: Market size 4.04 Business impact of tuberculosis.............................. 3.7...........137 10.01 Domestic market size index, 1–7 (best)*.................. 2.4...........122 4.05 HIV prevalence, % adult pop.*.............................. 10.8...........135 10.02 Foreign market size index, 1–7 (best)*..................... 3.2...........124 4.06 Business impact of HIV/AIDS.................................. 3.1...........142 10.03 GDP (PPP$ billions)*............................................. 15.0...........124 4.07 Infant mortality, deaths/1,000 live births*............... 46.0...........118 10.04 Exports as a percentage of GDP*......................... 30.9.............93 4.08 Life expectancy, years*.......................................... 54.7...........132 4.09 Quality of primary education.................................... 2.5...........127 11th pillar: Business sophistication 4.10 Primary education enrollment, net %*................... 96.9.............46 11.01 Local supplier quantity............................................ 4.4.............92 11.02 Local supplier quality............................................... 3.7...........119 5th pillar: Higher education and training 11.03 State of cluster development................................... 3.7.............79 5.01 Secondary education enrollment, gross %*........... 34.2...........133 11.04 Nature of competitive advantage............................. 2.8...........120 5.02 Tertiary education enrollment, gross %*.................. 0.8...........141 11.05 Value chain breadth................................................. 3.2...........119 5.03 Quality of the education system.............................. 3.2.............99 11.06 Control of international distribution.......................... 3.5...........116 5.04 Quality of math and science education................... 3.0...........119 11.07 Production process sophistication........................... 3.0...........127 5.05 Quality of management schools.............................. 3.2...........127 11.08 Extent of marketing................................................. 3.4...........122 5.06 Internet access in schools....................................... 2.7...........128 11.09 Willingness to delegate authority............................. 3.6.............87 5.07 Availability of research and training services............ 3.4...........113 5.08 Extent of staff training............................................. 4.0.............65 12th pillar: Innovation 12.01 Capacity for innovation............................................ 3.2...........116 6th pillar: Goods market efficiency 12.02 Quality of scientific research institutions.................. 3.1...........110 6.01 Intensity of local competition................................... 4.9.............76 12.03 Company spending on R&D.................................... 2.8...........105 6.02 Extent of market dominance................................... 3.1...........122 12.04 University-industry collaboration in R&D.................. 2.8...........120 6.03 Effectiveness of anti-monopoly policy...................... 3.9.............79 12.05 Gov’t procurement of advanced tech products....... 3.0...........110 6.04 Effect of taxation on incentives to invest.................. 3.3...........103 12.06 Availability of scientists and engineers..................... 3.5...........103 6.05 Total tax rate, % profits*........................................ 34.9.............57 12.07 PCT patents, applications/million pop.*................... 0.0...........122 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 89. The Africa Competitiveness Report 2015 | 145 Part 3: Competitiveness Profiles Mali Key indicators, 2013 Population (millions)...............................................16.9 GDP (PPP) per capita (int’l $), 1990–2013 GDP (US$ billions)*................................................10.9 4,000  Mali     Sub-Saharan Africa GDP per capita (US$)..........................................645.7 3,500 GDP (PPP) as share (%) of world total...................0.03 3,000 Sectoral value-added (% GDP), 2012 2,500 Agriculture.............................................................42.3 2,000 Industry.................................................................22.7 Services................................................................35.0 1,500 1,000 Human Development Index, 2013 Score, (0–1) best...................................................0.41 500 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012 Rank (out of 187 economies)..................................176 Sources: IMF; UNFPA; UNDP; World Bank Global Competitiveness Index Rank Score Stage of development (out of 144) (1–7) GCI 2014–2015................................................. 128...... 3.4 Transition Transition GCI 2013–2014 (out of 148).......................................... 135....... 3.3 1 1–2 2 2­­–3 3 GCI 2012–2013 (out of 144).......................................... 128....... 3.4 Factor Efficiency Innovation driven driven driven Basic requirements (60.0%)........................................ 128....... 3.5 Institutions Institutions..................................................................... 126....... 3.2 7 Infrastructure................................................................. 103....... 3.2 Innovation Infrastructure 6 Macroeconomic environment.......................................... 86....... 4.5 5 Business Macroeconomic Health and primary education........................................ 138....... 3.3 sophistication 4 environment 3 Efficiency enhancers (35.0%)..................................... 129....... 3.2 2 Health and Higher education and training........................................ 128....... 2.7 Market size 1 primary Goods market efficiency ............................................... 104....... 4.1 education Labor market efficiency................................................. 102....... 3.9 Financial market development....................................... 122....... 3.3 Technological Higher education readiness and training Technological readiness................................................. 112....... 2.9 Market size.................................................................... 122....... 2.7 Financial market Goods market development efficiency Innovation and sophistication factors (5.0%).............. 97....... 3.4 Labor market efficiency Business sophistication ................................................ 102....... 3.6 Innovation........................................................................ 92....... 3.1  Mali     Sub-Saharan Africa The most problematic factors for doing business Access to financing.................................................................. 26.9 Corruption................................................................................ 15.3 Inefficient government bureaucracy............................................ 8.4 Inadequate supply of infrastructure............................................. 8.1 Inadequately educated workforce............................................... 6.6 Policy instability.......................................................................... 6.1 Government instability/coups..................................................... 4.7 Restrictive labor regulations........................................................ 4.5 Tax regulations........................................................................... 3.5 Poor work ethic in national labor force....................................... 3.3 Foreign currency regulations....................................................... 3.2 Tax rates..................................................................................... 2.5 Crime and theft.......................................................................... 2.4 Insufficient capacity to innovate.................................................. 2.3 Poor public health...................................................................... 1.3 Inflation....................................................................................... 0.8 0 5 10 15 20 25 30 Score 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 2015 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 (cont’d.) 1.01 Property rights........................................................ 3.4...........114 6.06 No. procedures to start a business*........................... 5.............32 1.02 Intellectual property protection................................ 3.0...........109 6.07 No. days to start a business*................................ 11.0.............57 1.03 Diversion of public funds......................................... 2.5...........116 6.08 Agricultural policy costs.......................................... 3.9.............59 1.04 Public trust in politicians.......................................... 2.8.............82 6.09 Prevalence of trade barriers.................................... 3.2...........141 1.05 Irregular payments and bribes................................. 2.5...........134 6.10 Trade tariffs, % duty*............................................. 10.8...........111 1.06 Judicial independence............................................. 3.1...........103 6.11 Prevalence of foreign ownership.............................. 3.5...........120 1.07 Favoritism in decisions of government officials........ 2.7.............95 6.12 Business impact of rules on FDI.............................. 3.9...........109 1.08 Wastefulness of government spending.................... 3.2.............69 6.13 Burden of customs procedures............................... 3.2...........121 1.09 Burden of government regulation............................ 3.2.............95 6.14 Imports as a percentage of GDP*......................... 42.3.............80 1.10 Efficiency of legal framework in settling disputes..... 3.4.............87 6.15 Degree of customer orientation............................... 4.2.............95 1.11 Efficiency of legal framework in challenging regs..... 3.5.............58 6.16 Buyer sophistication................................................ 2.9...........114 1.12 Transparency of government policymaking.............. 3.7.............97 1.13 Business costs of terrorism..................................... 2.5...........141 7th pillar: Labor market efficiency 1.14 Business costs of crime and violence..................... 2.9...........131 7.01 Cooperation in labor-employer relations.................. 4.5.............53 1.15 Organized crime...................................................... 3.2...........134 7.02 Flexibility of wage determination.............................. 4.7.............94 1.16 Reliability of police services..................................... 3.8.............90 7.03 Hiring and firing practices........................................ 4.3.............35 1.17 Ethical behavior of firms.......................................... 3.8.............87 7.04 Redundancy costs, weeks of salary*..................... 13.7.............63 1.18 Strength of auditing and reporting standards.......... 3.3...........135 7.05 Effect of taxation on incentives to work................... 3.3.............96 1.19 Efficacy of corporate boards................................... 3.5...........138 7.06 Pay and productivity................................................ 3.5...........106 1.20 Protection of minority shareholders’ interests.......... 3.6...........104 7.07 Reliance on professional management.................... 2.9...........135 1.21 Strength of investor protection, 0–10 (best)*........... 3.7...........117 7.08 Country capacity to retain talent.............................. 3.4.............65 7.09 Country capacity to attract talent............................ 3.3.............78 2nd pillar: Infrastructure 7.10 Women in labor force, ratio to men*...................... 0.63...........109 2.01 Quality of overall infrastructure................................ 3.6...........101 2.02 Quality of roads....................................................... 3.4.............94 8th pillar: Financial market development 2.03 Quality of railroad infrastructure............................... 2.1.............85 8.01 Availability of financial services................................ 3.5...........126 2.04 Quality of port infrastructure.................................... 3.1...........112 8.02 Affordability of financial services.............................. 3.6...........113 2.05 Quality of air transport infrastructure....................... 3.8.............96 8.03 Financing through local equity market..................... 2.4...........118 2.06 Available airline seat km/week, millions*................ 28.3...........113 8.04 Ease of access to loans.......................................... 2.7.............84 2.07 Quality of electricity supply...................................... 3.5...........101 8.05 Venture capital availability........................................ 2.4.............94 2.08 Mobile telephone subscriptions/100 pop.*.......... 129.1.............44 8.06 Soundness of banks............................................... 3.9...........123 2.09 Fixed telephone lines/100 pop.*.............................. 0.7...........130 8.07 Regulation of securities exchanges......................... 2.6...........129 8.08 Legal rights index, 0–10 (best)*.................................. 6.............63 3rd pillar: Macroeconomic environment 3.01 Government budget balance, % GDP*...................-2.7.............68 9th pillar: Technological readiness 3.02 Gross national savings, % GDP*........................... 14.9...........108 9.01 Availability of latest technologies............................. 4.2...........105 3.03 Inflation, annual % change*....................................-0.6.............79 9.02 Firm-level technology absorption............................. 4.1...........107 3.04 General government debt, % GDP*...................... 31.5.............39 9.03 FDI and technology transfer.................................... 4.3.............88 3.05 Country credit rating, 0–100 (best)*....................... 18.5...........134 9.04 Individuals using Internet, %*.................................. 2.3...........136 9.05 Fixed broadband Internet subscriptions/100 pop.*.. 0.0...........138 4th pillar: Health and primary education 9.06 Int’l Internet bandwidth, kb/s per user*................... 5.9...........113 4.01 Malaria cases/100,000 pop.*......................... 20,197.2.............63 9.07 Mobile broadband subscriptions/100 pop.*............ 1.8...........119 4.02 Business impact of malaria..................................... 3.2.............68 4.03 Tuberculosis cases/100,000 pop.*........................ 60.0.............78 10th pillar: Market size 4.04 Business impact of tuberculosis.............................. 4.0...........129 10.01 Domestic market size index, 1–7 (best)*.................. 2.5...........121 4.05 HIV prevalence, % adult pop.*................................ 0.9...........106 10.02 Foreign market size index, 1–7 (best)*..................... 3.3...........123 4.06 Business impact of HIV/AIDS.................................. 3.9...........128 10.03 GDP (PPP$ billions)*............................................. 18.6...........120 4.07 Infant mortality, deaths/1,000 live births*............... 79.6...........141 10.04 Exports as a percentage of GDP*......................... 27.4...........107 4.08 Life expectancy, years*.......................................... 54.6...........133 4.09 Quality of primary education.................................... 2.8...........120 11th pillar: Business sophistication 4.10 Primary education enrollment, net %*................... 68.7...........136 11.01 Local supplier quantity............................................ 4.7.............63 11.02 Local supplier quality............................................... 4.2.............84 5th pillar: Higher education and training 11.03 State of cluster development................................... 3.9.............56 5.01 Secondary education enrollment, gross %*........... 44.5...........126 11.04 Nature of competitive advantage............................. 3.4.............78 5.02 Tertiary education enrollment, gross %*.................. 7.5...........122 11.05 Value chain breadth................................................. 3.3...........111 5.03 Quality of the education system.............................. 3.0...........110 11.06 Control of international distribution.......................... 3.7...........107 5.04 Quality of math and science education................... 3.1...........114 11.07 Production process sophistication........................... 3.0...........128 5.05 Quality of management schools.............................. 3.4...........120 11.08 Extent of marketing................................................. 3.5...........112 5.06 Internet access in schools....................................... 3.4...........109 11.09 Willingness to delegate authority............................. 3.3...........114 5.07 Availability of research and training services............ 3.4...........115 5.08 Extent of staff training............................................. 3.3...........126 12th pillar: Innovation 12.01 Capacity for innovation............................................ 3.3...........112 6th pillar: Goods market efficiency 12.02 Quality of scientific research institutions.................. 3.6.............79 6.01 Intensity of local competition................................... 4.7.............97 12.03 Company spending on R&D.................................... 2.8.............99 6.02 Extent of market dominance................................... 4.2.............33 12.04 University-industry collaboration in R&D.................. 3.2...........100 6.03 Effectiveness of anti-monopoly policy...................... 4.0.............69 12.05 Gov’t procurement of advanced tech products....... 3.6.............58 6.04 Effect of taxation on incentives to invest.................. 3.2...........113 12.06 Availability of scientists and engineers..................... 4.3.............50 6.05 Total tax rate, % profits*........................................ 49.5...........112 12.07 PCT patents, applications/million pop.*................... 0.0...........124 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 89. The Africa Competitiveness Report 2015 | 147 Part 3: Competitiveness Profiles Mauritania Key indicators, 2013 Population (millions).................................................3.7 GDP (PPP) per capita (int’l $), 1990–2013 GDP (US$ billions)*..................................................4.2 15,000  Mauritania     Middle East, North Africa, and Pakistan GDP per capita (US$).......................................1,128.0 GDP (PPP) as share (%) of world total...................0.01 12,000 Sectoral value-added (% GDP), 2012 9,000 Agriculture.............................................................17.0 Industry.................................................................46.1 6,000 Services................................................................36.9 3,000 Human Development Index, 2013 0 Score, (0–1) best...................................................0.49 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012 Rank (out of 187 economies)..................................161 Sources: IMF; UNFPA; UNDP; World Bank Global Competitiveness Index Rank Score Stage of development (out of 144) (1–7) GCI 2014–2015................................................. 141...... 3.0 Transition Transition GCI 2013–2014 (out of 148).......................................... 141....... 3.2 1 1–2 2 2­­–3 3 GCI 2012–2013 (out of 144).......................................... 134....... 3.3 Factor Efficiency Innovation driven driven driven Basic requirements (60.0%)........................................ 138....... 3.2 Institutions Institutions..................................................................... 138....... 2.8 7 Infrastructure................................................................. 123....... 2.6 Innovation Infrastructure 6 Macroeconomic environment........................................ 115....... 4.0 5 Business Macroeconomic Health and primary education........................................ 137....... 3.5 sophistication 4 environment 3 Efficiency enhancers (35.0%)..................................... 143....... 2.7 2 Health and Higher education and training........................................ 141....... 2.2 Market size 1 primary Goods market efficiency ............................................... 138....... 3.4 education Labor market efficiency................................................. 141....... 3.1 Financial market development....................................... 141....... 2.5 Technological Higher education readiness and training Technological readiness................................................. 123....... 2.7 Market size.................................................................... 131....... 2.3 Financial market Goods market development efficiency Innovation and sophistication factors (5.0%)............ 138....... 2.6 Labor market efficiency Business sophistication ................................................ 142....... 2.9 Innovation...................................................................... 136....... 2.4  Mauritania     Middle East, North Africa, and Pakistan The most problematic factors for doing business Access to financing.................................................................. 28.2 Inadequate supply of infrastructure........................................... 13.9 Corruption.................................................................................. 8.9 Foreign currency regulations....................................................... 8.2 Government instability/coups..................................................... 6.2 Restrictive labor regulations........................................................ 6.2 Inadequately educated workforce............................................... 4.5 Poor work ethic in national labor force....................................... 4.2 Inefficient government bureaucracy............................................ 3.4 Policy instability.......................................................................... 3.3 Inflation....................................................................................... 3.2 Crime and theft.......................................................................... 2.8 Tax rates..................................................................................... 2.8 Tax regulations........................................................................... 1.9 Poor public health...................................................................... 1.3 Insufficient capacity to innovate.................................................. 0.9 0 5 10 15 20 25 30 Score 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 2015 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 (cont’d.) 1.01 Property rights........................................................ 2.5...........139 6.06 No. procedures to start a business*........................... 9...........106 1.02 Intellectual property protection................................ 2.2...........141 6.07 No. days to start a business*................................ 19.0.............90 1.03 Diversion of public funds......................................... 2.5...........115 6.08 Agricultural policy costs.......................................... 3.0...........130 1.04 Public trust in politicians.......................................... 2.2...........115 6.09 Prevalence of trade barriers.................................... 3.2...........140 1.05 Irregular payments and bribes................................. 2.3...........141 6.10 Trade tariffs, % duty*............................................. 11.1...........116 1.06 Judicial independence............................................. 2.3...........125 6.11 Prevalence of foreign ownership.............................. 2.7...........140 1.07 Favoritism in decisions of government officials........ 2.3...........128 6.12 Business impact of rules on FDI.............................. 3.1...........132 1.08 Wastefulness of government spending.................... 2.6...........100 6.13 Burden of customs procedures............................... 3.0...........134 1.09 Burden of government regulation............................ 3.1.............98 6.14 Imports as a percentage of GDP*....................... 102.0...............7 1.10 Efficiency of legal framework in settling disputes..... 2.4...........138 6.15 Degree of customer orientation............................... 2.8...........142 1.11 Efficiency of legal framework in challenging regs..... 2.1...........140 6.16 Buyer sophistication................................................ 2.5...........135 1.12 Transparency of government policymaking.............. 2.6...........142 1.13 Business costs of terrorism..................................... 4.4...........116 7th pillar: Labor market efficiency 1.14 Business costs of crime and violence..................... 4.7.............57 7.01 Cooperation in labor-employer relations.................. 3.4...........136 1.15 Organized crime...................................................... 4.9.............64 7.02 Flexibility of wage determination.............................. 4.6...........101 1.16 Reliability of police services..................................... 3.0...........121 7.03 Hiring and firing practices........................................ 3.3...........117 1.17 Ethical behavior of firms.......................................... 2.7...........143 7.04 Redundancy costs, weeks of salary*..................... 10.5.............43 1.18 Strength of auditing and reporting standards.......... 2.6...........142 7.05 Effect of taxation on incentives to work................... 2.8...........126 1.19 Efficacy of corporate boards................................... 2.8...........142 7.06 Pay and productivity................................................ 2.5...........140 1.20 Protection of minority shareholders’ interests.......... 2.4...........143 7.07 Reliance on professional management.................... 2.0...........144 1.21 Strength of investor protection, 0–10 (best)*........... 3.7...........117 7.08 Country capacity to retain talent.............................. 2.3...........131 7.09 Country capacity to attract talent............................ 2.5...........123 2nd pillar: Infrastructure 7.10 Women in labor force, ratio to men*...................... 0.37...........132 2.01 Quality of overall infrastructure................................ 2.6...........134 2.02 Quality of roads....................................................... 2.3...........137 8th pillar: Financial market development 2.03 Quality of railroad infrastructure............................... 2.4.............77 8.01 Availability of financial services................................ 2.9...........138 2.04 Quality of port infrastructure.................................... 2.4...........135 8.02 Affordability of financial services.............................. 3.2...........129 2.05 Quality of air transport infrastructure....................... 2.4...........140 8.03 Financing through local equity market..................... 2.0...........136 2.06 Available airline seat km/week, millions*................ 11.4...........133 8.04 Ease of access to loans.......................................... 2.0...........125 2.07 Quality of electricity supply...................................... 3.3...........105 8.05 Venture capital availability........................................ 1.9...........134 2.08 Mobile telephone subscriptions/100 pop.*.......... 102.5.............90 8.06 Soundness of banks............................................... 3.1...........135 2.09 Fixed telephone lines/100 pop.*.............................. 1.4...........120 8.07 Regulation of securities exchanges......................... 1.9...........138 8.08 Legal rights index, 0–10 (best)*.................................. 3...........113 3rd pillar: Macroeconomic environment 3.01 Government budget balance, % GDP*...................-1.1.............38 9th pillar: Technological readiness 3.02 Gross national savings, % GDP*........................... 10.0...........129 9.01 Availability of latest technologies............................. 4.5.............86 3.03 Inflation, annual % change*..................................... 4.1.............82 9.02 Firm-level technology absorption............................. 4.2...........104 3.04 General government debt, % GDP*...................... 87.7...........122 9.03 FDI and technology transfer.................................... 3.4...........135 3.05 Country credit rating, 0–100 (best)*....................... 21.1...........126 9.04 Individuals using Internet, %*.................................. 6.2...........128 9.05 Fixed broadband Internet subscriptions/100 pop.*.. 0.2...........121 4th pillar: Health and primary education 9.06 Int’l Internet bandwidth, kb/s per user*................... 2.6...........134 4.01 Malaria cases/100,000 pop.*......................... 17,649.5.............60 9.07 Mobile broadband subscriptions/100 pop.*............ 5.4...........108 4.02 Business impact of malaria..................................... 4.0.............54 4.03 Tuberculosis cases/100,000 pop.*...................... 350.0...........131 10th pillar: Market size 4.04 Business impact of tuberculosis.............................. 3.4...........141 10.01 Domestic market size index, 1–7 (best)*.................. 2.0...........133 4.05 HIV prevalence, % adult pop.*................................ 0.4.............75 10.02 Foreign market size index, 1–7 (best)*..................... 3.3...........121 4.06 Business impact of HIV/AIDS.................................. 3.7...........133 10.03 GDP (PPP$ billions)*............................................... 8.2...........133 4.07 Infant mortality, deaths/1,000 live births*............... 64.8...........133 10.04 Exports as a percentage of GDP*......................... 69.6.............28 4.08 Life expectancy, years*.......................................... 61.4...........121 4.09 Quality of primary education.................................... 2.5...........129 11th pillar: Business sophistication 4.10 Primary education enrollment, net %*................... 69.6...........135 11.01 Local supplier quantity............................................ 3.8...........127 11.02 Local supplier quality............................................... 2.8...........141 5th pillar: Higher education and training 11.03 State of cluster development................................... 2.8...........135 5.01 Secondary education enrollment, gross %*........... 26.8...........139 11.04 Nature of competitive advantage............................. 2.8...........116 5.02 Tertiary education enrollment, gross %*.................. 5.1...........128 11.05 Value chain breadth................................................. 3.1...........130 5.03 Quality of the education system.............................. 2.7...........128 11.06 Control of international distribution.......................... 2.8...........143 5.04 Quality of math and science education................... 2.9...........123 11.07 Production process sophistication........................... 2.6...........134 5.05 Quality of management schools.............................. 2.8...........136 11.08 Extent of marketing................................................. 2.9...........138 5.06 Internet access in schools....................................... 2.1...........138 11.09 Willingness to delegate authority............................. 2.4...........141 5.07 Availability of research and training services............ 3.1...........128 5.08 Extent of staff training............................................. 2.6...........144 12th pillar: Innovation 12.01 Capacity for innovation............................................ 2.9...........131 6th pillar: Goods market efficiency 12.02 Quality of scientific research institutions.................. 2.7...........124 6.01 Intensity of local competition................................... 4.1...........131 12.03 Company spending on R&D.................................... 2.7...........109 6.02 Extent of market dominance................................... 3.1...........126 12.04 University-industry collaboration in R&D.................. 2.0...........141 6.03 Effectiveness of anti-monopoly policy...................... 2.8...........139 12.05 Gov’t procurement of advanced tech products....... 2.8...........126 6.04 Effect of taxation on incentives to invest.................. 3.1...........120 12.06 Availability of scientists and engineers..................... 2.9...........139 6.05 Total tax rate, % profits*........................................ 68.2...........135 12.07 PCT patents, applications/million pop.*................... 0.0...........124 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 89. The Africa Competitiveness Report 2015 | 149 Part 3: Competitiveness Profiles Mauritius Key indicators, 2013 Population (millions).................................................1.3 GDP (PPP) per capita (int’l $), 1990–2013 GDP (US$ billions)*................................................11.9 20,000  Mauritius     Sub-Saharan Africa GDP per capita (US$).......................................9,164.9 GDP (PPP) as share (%) of world total...................0.02 15,000 Sectoral value-added (% GDP), 2013 Agriculture...............................................................3.3 10,000 Industry.................................................................23.1 Services................................................................73.7 5,000 Human Development Index, 2013 0 Score, (0–1) best...................................................0.77 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012 Rank (out of 187 economies)....................................63 Sources: IMF; UNFPA; UNDP; World Bank Global Competitiveness Index Rank Score Stage of development (out of 144) (1–7) GCI 2014–2015................................................... 39...... 4.5 Transition Transition GCI 2013–2014 (out of 148)............................................ 45....... 4.4 1 1–2 2 2­­–3 3 GCI 2012–2013 (out of 144)............................................ 54....... 4.4 Factor Efficiency Innovation driven driven driven Basic requirements (39.6%).......................................... 38....... 5.0 Institutions Institutions....................................................................... 35....... 4.6 7 Infrastructure................................................................... 42....... 4.7 Innovation Infrastructure 6 Macroeconomic environment.......................................... 74....... 4.7 5 Business Macroeconomic Health and primary education.......................................... 42....... 6.1 sophistication 4 environment 3 Efficiency enhancers (50.0%)....................................... 59....... 4.2 2 Health and Higher education and training.......................................... 54....... 4.7 Market size 1 primary Goods market efficiency ................................................. 25....... 4.9 education Labor market efficiency................................................... 52....... 4.3 Financial market development......................................... 26....... 4.7 Technological Higher education readiness and training Technological readiness................................................... 63....... 4.0 Market size.................................................................... 113....... 2.8 Financial market Goods market development efficiency Innovation and sophistication factors (10.4%)............ 53....... 3.8 Labor market efficiency Business sophistication .................................................. 33....... 4.5 Innovation........................................................................ 76....... 3.2  Mauritius     Sub-Saharan Africa The most problematic factors for doing business Inefficient government bureaucracy.......................................... 17.0 Insufficient capacity to innovate................................................ 15.8 Access to financing.................................................................. 13.1 Inadequate supply of infrastructure............................................. 9.6 Inadequately educated workforce............................................... 9.0 Poor work ethic in national labor force....................................... 8.0 Restrictive labor regulations........................................................ 7.5 Corruption.................................................................................. 7.2 Inflation....................................................................................... 4.7 Tax rates..................................................................................... 2.7 Policy instability.......................................................................... 2.5 Tax regulations........................................................................... 1.7 Foreign currency regulations....................................................... 0.7 Crime and theft.......................................................................... 0.3 Poor public health...................................................................... 0.3 Government instability/coups..................................................... 0.0 0 5 10 15 20 25 30 Score 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 2015 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 (cont’d.) 1.01 Property rights........................................................ 5.1.............33 6.06 No. procedures to start a business*........................... 5.............32 1.02 Intellectual property protection................................ 4.2.............41 6.07 No. days to start a business*.................................. 6.0.............21 1.03 Diversion of public funds......................................... 3.9.............46 6.08 Agricultural policy costs.......................................... 4.3.............26 1.04 Public trust in politicians.......................................... 3.1.............66 6.09 Prevalence of trade barriers.................................... 4.6.............33 1.05 Irregular payments and bribes................................. 4.6.............45 6.10 Trade tariffs, % duty*............................................... 0.8...............4 1.06 Judicial independence............................................. 5.1.............31 6.11 Prevalence of foreign ownership.............................. 4.7.............65 1.07 Favoritism in decisions of government officials........ 3.0.............73 6.12 Business impact of rules on FDI.............................. 5.6...............7 1.08 Wastefulness of government spending.................... 3.6.............44 6.13 Burden of customs procedures............................... 4.7.............38 1.09 Burden of government regulation............................ 3.9.............36 6.14 Imports as a percentage of GDP*......................... 67.1.............36 1.10 Efficiency of legal framework in settling disputes..... 4.9.............22 6.15 Degree of customer orientation............................... 4.8.............50 1.11 Efficiency of legal framework in challenging regs..... 4.1.............30 6.16 Buyer sophistication................................................ 3.8.............36 1.12 Transparency of government policymaking.............. 4.5.............34 1.13 Business costs of terrorism..................................... 6.3.............12 7th pillar: Labor market efficiency 1.14 Business costs of crime and violence..................... 5.2.............35 7.01 Cooperation in labor-employer relations.................. 4.9.............31 1.15 Organized crime...................................................... 6.0.............20 7.02 Flexibility of wage determination.............................. 4.7.............99 1.16 Reliability of police services..................................... 4.5.............51 7.03 Hiring and firing practices........................................ 4.2.............42 1.17 Ethical behavior of firms.......................................... 4.6.............37 7.04 Redundancy costs, weeks of salary*..................... 10.6.............45 1.18 Strength of auditing and reporting standards.......... 5.5.............25 7.05 Effect of taxation on incentives to work................... 5.1...............9 1.19 Efficacy of corporate boards................................... 5.0.............39 7.06 Pay and productivity................................................ 4.2.............47 1.20 Protection of minority shareholders’ interests.......... 5.2.............18 7.07 Reliance on professional management.................... 4.4.............55 1.21 Strength of investor protection, 0–10 (best)*........... 7.7.............12 7.08 Country capacity to retain talent.............................. 3.2.............85 7.09 Country capacity to attract talent............................ 3.9.............38 2nd pillar: Infrastructure 7.10 Women in labor force, ratio to men*...................... 0.61...........115 2.01 Quality of overall infrastructure................................ 4.7.............49 2.02 Quality of roads....................................................... 4.8.............42 8th pillar: Financial market development 2.03 Quality of railroad infrastructure........................ N/Appl.............n/a 8.01 Availability of financial services................................ 5.2.............34 2.04 Quality of port infrastructure.................................... 5.0.............36 8.02 Affordability of financial services.............................. 4.9.............40 2.05 Quality of air transport infrastructure....................... 5.0.............46 8.03 Financing through local equity market..................... 4.2.............32 2.06 Available airline seat km/week, millions*.............. 158.1.............70 8.04 Ease of access to loans.......................................... 3.5.............31 2.07 Quality of electricity supply...................................... 5.5.............45 8.05 Venture capital availability........................................ 3.1.............41 2.08 Mobile telephone subscriptions/100 pop.*.......... 123.2.............52 8.06 Soundness of banks............................................... 6.1.............15 2.09 Fixed telephone lines/100 pop.*............................ 29.2.............38 8.07 Regulation of securities exchanges......................... 5.2.............24 8.08 Legal rights index, 0–10 (best)*.................................. 6.............63 3rd pillar: Macroeconomic environment 3.01 Government budget balance, % GDP*...................-3.5.............84 9th pillar: Technological readiness 3.02 Gross national savings, % GDP*........................... 14.1...........113 9.01 Availability of latest technologies............................. 5.2.............48 3.03 Inflation, annual % change*..................................... 3.5.............71 9.02 Firm-level technology absorption............................. 5.0.............44 3.04 General government debt, % GDP*...................... 53.8.............89 9.03 FDI and technology transfer.................................... 4.7.............57 3.05 Country credit rating, 0–100 (best)*....................... 59.0.............52 9.04 Individuals using Internet, %*................................ 39.0.............85 9.05 Fixed broadband Internet subscriptions/100 pop.*.12.5.............56 4th pillar: Health and primary education 9.06 Int’l Internet bandwidth, kb/s per user*................. 24.4.............76 4.01 Malaria cases/100,000 pop.*.................................M.F.............n/a 9.07 Mobile broadband subscriptions/100 pop.*.......... 28.8.............68 4.02 Business impact of malaria.............................. N/Appl.............n/a 4.03 Tuberculosis cases/100,000 pop.*........................ 21.0.............46 10th pillar: Market size 4.04 Business impact of tuberculosis.............................. 6.0.............52 10.01 Domestic market size index, 1–7 (best)*.................. 2.5...........115 4.05 HIV prevalence, % adult pop.*................................ 1.2...........113 10.02 Foreign market size index, 1–7 (best)*..................... 3.7...........104 4.06 Business impact of HIV/AIDS.................................. 5.6.............70 10.03 GDP (PPP$ billions)*............................................. 20.9...........116 4.07 Infant mortality, deaths/1,000 live births*............... 13.0.............66 10.04 Exports as a percentage of GDP*......................... 51.0.............46 4.08 Life expectancy, years*.......................................... 73.6.............79 4.09 Quality of primary education.................................... 4.5.............45 11th pillar: Business sophistication 4.10 Primary education enrollment, net %*................... 97.8.............34 11.01 Local supplier quantity............................................ 4.9.............35 11.02 Local supplier quality............................................... 4.6.............53 5th pillar: Higher education and training 11.03 State of cluster development................................... 4.3.............35 5.01 Secondary education enrollment, gross %*........... 95.9.............52 11.04 Nature of competitive advantage............................. 4.1.............39 5.02 Tertiary education enrollment, gross %*................ 40.3.............68 11.05 Value chain breadth................................................. 4.6.............26 5.03 Quality of the education system.............................. 4.2.............42 11.06 Control of international distribution.......................... 4.7.............18 5.04 Quality of math and science education................... 4.6.............40 11.07 Production process sophistication........................... 4.5.............35 5.05 Quality of management schools.............................. 4.4.............55 11.08 Extent of marketing................................................. 4.6.............48 5.06 Internet access in schools....................................... 4.4.............65 11.09 Willingness to delegate authority............................. 4.1.............43 5.07 Availability of research and training services............ 4.4.............52 5.08 Extent of staff training............................................. 4.4.............35 12th pillar: Innovation 12.01 Capacity for innovation............................................ 4.0.............50 6th pillar: Goods market efficiency 12.02 Quality of scientific research institutions.................. 3.4.............91 6.01 Intensity of local competition................................... 5.6.............24 12.03 Company spending on R&D.................................... 3.3.............54 6.02 Extent of market dominance................................... 3.6.............79 12.04 University-industry collaboration in R&D.................. 3.2...........101 6.03 Effectiveness of anti-monopoly policy...................... 4.4.............45 12.05 Gov’t procurement of advanced tech products....... 3.5.............66 6.04 Effect of taxation on incentives to invest.................. 5.3...............9 12.06 Availability of scientists and engineers..................... 3.7.............93 6.05 Total tax rate, % profits*........................................ 28.2.............32 12.07 PCT patents, applications/million pop.*................... 0.2.............94 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 89. The Africa Competitiveness Report 2015 | 151 Part 3: Competitiveness Profiles Morocco Key indicators, 2013 Population (millions)...............................................32.9 GDP (PPP) per capita (int’l $), 1990–2013 GDP (US$ billions)*..............................................103.8 15,000  Morocco     Middle East, North Africa, and Pakistan GDP per capita (US$).......................................3,160.3 GDP (PPP) as share (%) of world total...................0.24 12,000 Sectoral value-added (% GDP), 2012 9,000 Agriculture.............................................................14.6 Industry.................................................................29.6 6,000 Services................................................................55.8 3,000 Human Development Index, 2013 0 Score, (0–1) best...................................................0.62 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012 Rank (out of 187 economies)..................................129 Sources: IMF; UNFPA; UNDP; World Bank Global Competitiveness Index Rank Score Stage of development (out of 144) (1–7) GCI 2014–2015................................................... 72...... 4.2 Transition Transition GCI 2013–2014 (out of 148)............................................ 77....... 4.1 1 1–2 2 2­­–3 3 GCI 2012–2013 (out of 144)............................................ 70....... 4.1 Factor Efficiency Innovation driven driven driven Basic requirements (40.0%).......................................... 57....... 4.7 Institutions Institutions....................................................................... 49....... 4.2 7 Infrastructure................................................................... 55....... 4.4 Innovation Infrastructure 6 Macroeconomic environment.......................................... 66....... 4.7 5 Business Macroeconomic Health and primary education.......................................... 76....... 5.7 sophistication 4 environment 3 Efficiency enhancers (50.0%)....................................... 78....... 3.9 2 Health and Higher education and training........................................ 104....... 3.6 Market size 1 primary Goods market efficiency ................................................. 58....... 4.4 education Labor market efficiency................................................. 111....... 3.8 Financial market development......................................... 69....... 4.0 Technological Higher education readiness and training Technological readiness................................................... 78....... 3.6 Market size...................................................................... 56....... 4.2 Financial market Goods market development efficiency Innovation and sophistication factors (10.0%)............ 82....... 3.5 Labor market efficiency Business sophistication .................................................. 78....... 3.9 Innovation........................................................................ 90....... 3.1  Morocco     Middle East, North Africa, and Pakistan The most problematic factors for doing business Access to financing.................................................................. 16.3 Inefficient government bureaucracy.......................................... 13.9 Inadequately educated workforce............................................. 11.3 Inadequate supply of infrastructure........................................... 10.2 Restrictive labor regulations...................................................... 10.2 Corruption................................................................................ 10.0 Tax rates..................................................................................... 8.4 Insufficient capacity to innovate.................................................. 5.3 Tax regulations........................................................................... 4.9 Poor work ethic in national labor force....................................... 4.2 Foreign currency regulations....................................................... 3.1 Policy instability.......................................................................... 0.8 Poor public health...................................................................... 0.8 Inflation....................................................................................... 0.5 Crime and theft.......................................................................... 0.0 Government instability/coups..................................................... 0.0 0 5 10 15 20 25 30 Score 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 2015 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 (cont’d.) 1.01 Property rights........................................................ 4.9.............41 6.06 No. procedures to start a business*........................... 5.............32 1.02 Intellectual property protection................................ 3.7.............64 6.07 No. days to start a business*................................ 11.0.............57 1.03 Diversion of public funds......................................... 3.8.............47 6.08 Agricultural policy costs.......................................... 4.5.............15 1.04 Public trust in politicians.......................................... 3.3.............53 6.09 Prevalence of trade barriers.................................... 4.7.............25 1.05 Irregular payments and bribes................................. 4.3.............53 6.10 Trade tariffs, % duty*............................................. 11.7...........122 1.06 Judicial independence............................................. 3.5.............81 6.11 Prevalence of foreign ownership.............................. 5.1.............40 1.07 Favoritism in decisions of government officials........ 3.5.............44 6.12 Business impact of rules on FDI.............................. 5.5.............10 1.08 Wastefulness of government spending.................... 3.6.............41 6.13 Burden of customs procedures............................... 4.3.............57 1.09 Burden of government regulation............................ 3.6.............53 6.14 Imports as a percentage of GDP*......................... 49.1.............69 1.10 Efficiency of legal framework in settling disputes..... 3.7.............73 6.15 Degree of customer orientation............................... 4.4.............82 1.11 Efficiency of legal framework in challenging regs..... 3.3.............73 6.16 Buyer sophistication................................................ 3.1...........100 1.12 Transparency of government policymaking.............. 4.3.............47 1.13 Business costs of terrorism..................................... 5.4.............67 7th pillar: Labor market efficiency 1.14 Business costs of crime and violence..................... 5.3.............28 7.01 Cooperation in labor-employer relations.................. 4.2.............83 1.15 Organized crime...................................................... 5.7.............33 7.02 Flexibility of wage determination.............................. 5.4.............37 1.16 Reliability of police services..................................... 4.9.............41 7.03 Hiring and firing practices........................................ 3.7.............86 1.17 Ethical behavior of firms.......................................... 4.2.............52 7.04 Redundancy costs, weeks of salary*..................... 20.7.............97 1.18 Strength of auditing and reporting standards.......... 5.0.............49 7.05 Effect of taxation on incentives to work................... 3.9.............42 1.19 Efficacy of corporate boards................................... 4.8.............52 7.06 Pay and productivity................................................ 4.0.............65 1.20 Protection of minority shareholders’ interests.......... 4.3.............59 7.07 Reliance on professional management.................... 4.3.............64 1.21 Strength of investor protection, 0–10 (best)*........... 4.7.............98 7.08 Country capacity to retain talent.............................. 3.8.............45 7.09 Country capacity to attract talent............................ 3.9.............40 2nd pillar: Infrastructure 7.10 Women in labor force, ratio to men*...................... 0.34...........137 2.01 Quality of overall infrastructure................................ 4.6.............55 2.02 Quality of roads....................................................... 4.5.............51 8th pillar: Financial market development 2.03 Quality of railroad infrastructure............................... 3.9.............34 8.01 Availability of financial services................................ 4.6.............59 2.04 Quality of port infrastructure.................................... 4.9.............43 8.02 Affordability of financial services.............................. 4.2.............63 2.05 Quality of air transport infrastructure....................... 4.8.............51 8.03 Financing through local equity market..................... 3.8.............49 2.06 Available airline seat km/week, millions*.............. 451.3.............46 8.04 Ease of access to loans.......................................... 3.1.............46 2.07 Quality of electricity supply...................................... 5.4.............48 8.05 Venture capital availability........................................ 2.9.............49 2.08 Mobile telephone subscriptions/100 pop.*.......... 128.5.............45 8.06 Soundness of banks............................................... 5.6.............42 2.09 Fixed telephone lines/100 pop.*.............................. 8.9.............94 8.07 Regulation of securities exchanges......................... 4.5.............49 8.08 Legal rights index, 0–10 (best)*.................................. 3...........113 3rd pillar: Macroeconomic environment 3.01 Government budget balance, % GDP*...................-5.4...........113 9th pillar: Technological readiness 3.02 Gross national savings, % GDP*........................... 27.2.............32 9.01 Availability of latest technologies............................. 5.1.............57 3.03 Inflation, annual % change*..................................... 1.9...............1 9.02 Firm-level technology absorption............................. 4.5.............75 3.04 General government debt, % GDP*...................... 61.9...........101 9.03 FDI and technology transfer.................................... 4.8.............45 3.05 Country credit rating, 0–100 (best)*....................... 52.6.............67 9.04 Individuals using Internet, %*................................ 56.0.............59 9.05 Fixed broadband Internet subscriptions/100 pop.*.. 2.5.............94 4th pillar: Health and primary education 9.06 Int’l Internet bandwidth, kb/s per user*................. 22.3.............80 4.01 Malaria cases/100,000 pop.*.................................M.F.............n/a 9.07 Mobile broadband subscriptions/100 pop.*.......... 15.0.............90 4.02 Business impact of malaria.............................. N/Appl.............n/a 4.03 Tuberculosis cases/100,000 pop.*...................... 103.0.............94 10th pillar: Market size 4.04 Business impact of tuberculosis.............................. 5.7.............69 10.01 Domestic market size index, 1–7 (best)*.................. 4.0.............53 4.05 HIV prevalence, % adult pop.*................................ 0.1...............1 10.02 Foreign market size index, 1–7 (best)*..................... 4.7.............65 4.06 Business impact of HIV/AIDS.................................. 5.7.............61 10.03 GDP (PPP$ billions)*........................................... 179.2.............58 4.07 Infant mortality, deaths/1,000 live births*............... 26.8.............99 10.04 Exports as a percentage of GDP*......................... 33.3.............86 4.08 Life expectancy, years*.......................................... 70.6.............92 4.09 Quality of primary education.................................... 3.1...........105 11th pillar: Business sophistication 4.10 Primary education enrollment, net %*................... 97.5.............39 11.01 Local supplier quantity............................................ 4.8.............43 11.02 Local supplier quality............................................... 4.4.............70 5th pillar: Higher education and training 11.03 State of cluster development................................... 3.8.............71 5.01 Secondary education enrollment, gross %*........... 68.9...........105 11.04 Nature of competitive advantage............................. 3.2.............98 5.02 Tertiary education enrollment, gross %*................ 16.2...........100 11.05 Value chain breadth................................................. 3.9.............60 5.03 Quality of the education system.............................. 3.2...........102 11.06 Control of international distribution.......................... 4.0.............75 5.04 Quality of math and science education................... 4.2.............68 11.07 Production process sophistication........................... 3.4...........105 5.05 Quality of management schools.............................. 4.5.............54 11.08 Extent of marketing................................................. 3.8...........103 5.06 Internet access in schools....................................... 3.3...........112 11.09 Willingness to delegate authority............................. 3.6.............84 5.07 Availability of research and training services............ 4.1.............72 5.08 Extent of staff training............................................. 3.6...........106 12th pillar: Innovation 12.01 Capacity for innovation............................................ 3.2...........118 6th pillar: Goods market efficiency 12.02 Quality of scientific research institutions.................. 3.5.............85 6.01 Intensity of local competition................................... 5.3.............48 12.03 Company spending on R&D.................................... 2.6...........112 6.02 Extent of market dominance................................... 4.0.............47 12.04 University-industry collaboration in R&D.................. 3.2.............96 6.03 Effectiveness of anti-monopoly policy...................... 4.2.............64 12.05 Gov’t procurement of advanced tech products....... 3.4.............78 6.04 Effect of taxation on incentives to invest.................. 3.9.............53 12.06 Availability of scientists and engineers..................... 4.6.............34 6.05 Total tax rate, % profits*........................................ 49.6...........113 12.07 PCT patents, applications/million pop.*................... 0.5.............78 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 89. The Africa Competitiveness Report 2015 | 153 Part 3: Competitiveness Profiles Mozambique Key indicators, 2013 Population (millions)...............................................25.9 GDP (PPP) per capita (int’l $), 1990–2013 GDP (US$ billions)*................................................15.3 4,000  Mozambique     Sub-Saharan Africa GDP per capita (US$)..........................................592.7 3,500 GDP (PPP) as share (%) of world total...................0.03 3,000 Sectoral value-added (% GDP), 2013 2,500 Agriculture.............................................................29.3 2,000 Industry.................................................................23.7 1,500 Services................................................................47.1 1,000 500 Human Development Index, 2013 Score, (0–1) best...................................................0.39 0 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012 Rank (out of 187 economies)..................................178 Sources: IMF; UNFPA; UNDP; World Bank Global Competitiveness Index Rank Score Stage of development (out of 144) (1–7) GCI 2014–2015................................................. 133...... 3.2 Transition Transition GCI 2013–2014 (out of 148).......................................... 137....... 3.3 1 1–2 2 2­­–3 3 GCI 2012–2013 (out of 144).......................................... 138....... 3.2 Factor Efficiency Innovation driven driven driven Basic requirements (60.0%)........................................ 133....... 3.3 Institutions Institutions..................................................................... 127....... 3.2 7 Infrastructure................................................................. 128....... 2.4 Innovation Infrastructure 6 Macroeconomic environment........................................ 110....... 4.1 5 Business Macroeconomic Health and primary education........................................ 135....... 3.6 sophistication 4 environment 3 Efficiency enhancers (35.0%)..................................... 131....... 3.2 2 Health and Higher education and training........................................ 138....... 2.4 Market size 1 primary Goods market efficiency ............................................... 116....... 4.0 education Labor market efficiency................................................. 104....... 3.9 Financial market development....................................... 126....... 3.1 Technological Higher education readiness and training Technological readiness................................................. 122....... 2.7 Market size.................................................................... 101....... 3.1 Financial market Goods market development efficiency Innovation and sophistication factors (5.0%)............ 120....... 3.1 Labor market efficiency Business sophistication ................................................ 125....... 3.3 Innovation...................................................................... 118....... 2.8  Mozambique     Sub-Saharan Africa The most problematic factors for doing business Access to financing.................................................................. 19.0 Corruption................................................................................ 15.5 Inadequate supply of infrastructure........................................... 12.5 Inefficient government bureaucracy.......................................... 12.3 Inadequately educated workforce............................................. 10.0 Crime and theft.......................................................................... 6.7 Restrictive labor regulations........................................................ 4.5 Policy instability.......................................................................... 4.1 Poor work ethic in national labor force....................................... 3.4 Tax rates..................................................................................... 3.2 Foreign currency regulations....................................................... 2.2 Inflation....................................................................................... 2.0 Insufficient capacity to innovate.................................................. 1.8 Tax regulations........................................................................... 1.2 Poor public health...................................................................... 0.9 Government instability/coups..................................................... 0.6 0 5 10 15 20 25 30 Score 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 2015 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 (cont’d.) 1.01 Property rights........................................................ 3.4...........117 6.06 No. procedures to start a business*........................... 9...........106 1.02 Intellectual property protection................................ 2.7...........122 6.07 No. days to start a business*................................ 13.0.............67 1.03 Diversion of public funds......................................... 2.3...........125 6.08 Agricultural policy costs.......................................... 3.2...........119 1.04 Public trust in politicians.......................................... 2.4.............99 6.09 Prevalence of trade barriers.................................... 4.5.............56 1.05 Irregular payments and bribes................................. 3.1...........114 6.10 Trade tariffs, % duty*............................................... 7.7.............89 1.06 Judicial independence............................................. 2.5...........123 6.11 Prevalence of foreign ownership.............................. 4.8.............56 1.07 Favoritism in decisions of government officials........ 2.5...........115 6.12 Business impact of rules on FDI.............................. 4.7.............39 1.08 Wastefulness of government spending.................... 2.7.............95 6.13 Burden of customs procedures............................... 3.5...........104 1.09 Burden of government regulation............................ 3.5.............65 6.14 Imports as a percentage of GDP*......................... 75.4.............28 1.10 Efficiency of legal framework in settling disputes..... 3.3...........103 6.15 Degree of customer orientation............................... 3.7...........122 1.11 Efficiency of legal framework in challenging regs..... 2.8...........112 6.16 Buyer sophistication................................................ 2.7...........129 1.12 Transparency of government policymaking.............. 3.6...........112 1.13 Business costs of terrorism..................................... 4.4...........113 7th pillar: Labor market efficiency 1.14 Business costs of crime and violence..................... 3.4...........117 7.01 Cooperation in labor-employer relations.................. 3.6...........131 1.15 Organized crime...................................................... 3.5...........130 7.02 Flexibility of wage determination.............................. 3.9...........128 1.16 Reliability of police services..................................... 2.9...........125 7.03 Hiring and firing practices........................................ 3.4...........102 1.17 Ethical behavior of firms.......................................... 3.3...........130 7.04 Redundancy costs, weeks of salary*..................... 37.5...........135 1.18 Strength of auditing and reporting standards.......... 3.9...........110 7.05 Effect of taxation on incentives to work................... 3.6.............78 1.19 Efficacy of corporate boards................................... 4.2.............99 7.06 Pay and productivity................................................ 2.9...........133 1.20 Protection of minority shareholders’ interests.......... 3.5...........114 7.07 Reliance on professional management.................... 3.4...........120 1.21 Strength of investor protection, 0–10 (best)*........... 6.0.............45 7.08 Country capacity to retain talent.............................. 3.4.............73 7.09 Country capacity to attract talent............................ 3.6.............58 2nd pillar: Infrastructure 7.10 Women in labor force, ratio to men*...................... 1.04...............2 2.01 Quality of overall infrastructure................................ 3.0...........124 2.02 Quality of roads....................................................... 2.1...........141 8th pillar: Financial market development 2.03 Quality of railroad infrastructure............................... 2.1.............84 8.01 Availability of financial services................................ 3.7...........118 2.04 Quality of port infrastructure.................................... 3.7.............94 8.02 Affordability of financial services.............................. 3.6...........117 2.05 Quality of air transport infrastructure....................... 3.3...........119 8.03 Financing through local equity market..................... 2.4...........119 2.06 Available airline seat km/week, millions*................ 35.8...........109 8.04 Ease of access to loans.......................................... 1.9...........127 2.07 Quality of electricity supply...................................... 3.1...........108 8.05 Venture capital availability........................................ 2.1...........120 2.08 Mobile telephone subscriptions/100 pop.*............ 48.0...........136 8.06 Soundness of banks............................................... 4.6.............84 2.09 Fixed telephone lines/100 pop.*.............................. 0.3...........137 8.07 Regulation of securities exchanges......................... 3.2...........116 8.08 Legal rights index, 0–10 (best)*.................................. 3...........113 3rd pillar: Macroeconomic environment 3.01 Government budget balance, % GDP*...................-4.6...........101 9th pillar: Technological readiness 3.02 Gross national savings, % GDP*............................. 6.8...........132 9.01 Availability of latest technologies............................. 4.3...........102 3.03 Inflation, annual % change*..................................... 4.2.............83 9.02 Firm-level technology absorption............................. 4.2.............99 3.04 General government debt, % GDP*...................... 43.3.............73 9.03 FDI and technology transfer.................................... 4.6.............75 3.05 Country credit rating, 0–100 (best)*....................... 31.5...........106 9.04 Individuals using Internet, %*.................................. 5.4...........130 9.05 Fixed broadband Internet subscriptions/100 pop.*.. 0.1...........133 4th pillar: Health and primary education 9.06 Int’l Internet bandwidth, kb/s per user*................... 2.9...........132 4.01 Malaria cases/100,000 pop.*......................... 27,774.0.............72 9.07 Mobile broadband subscriptions/100 pop.*............ 1.8...........120 4.02 Business impact of malaria..................................... 3.6.............63 4.03 Tuberculosis cases/100,000 pop.*...................... 552.0...........138 10th pillar: Market size 4.04 Business impact of tuberculosis.............................. 4.1...........126 10.01 Domestic market size index, 1–7 (best)*.................. 2.9.............98 4.05 HIV prevalence, % adult pop.*.............................. 11.1...........136 10.02 Foreign market size index, 1–7 (best)*..................... 3.7...........103 4.06 Business impact of HIV/AIDS.................................. 3.6...........134 10.03 GDP (PPP$ billions)*............................................. 28.2...........102 4.07 Infant mortality, deaths/1,000 live births*............... 63.1...........132 10.04 Exports as a percentage of GDP*......................... 38.4.............71 4.08 Life expectancy, years*.......................................... 49.8...........140 4.09 Quality of primary education.................................... 2.2...........139 11th pillar: Business sophistication 4.10 Primary education enrollment, net %*................... 86.2...........113 11.01 Local supplier quantity............................................ 4.1...........111 11.02 Local supplier quality............................................... 3.4...........131 5th pillar: Higher education and training 11.03 State of cluster development................................... 3.5.............85 5.01 Secondary education enrollment, gross %*........... 25.9...........142 11.04 Nature of competitive advantage............................. 2.7...........126 5.02 Tertiary education enrollment, gross %*.................. 4.9...........129 11.05 Value chain breadth................................................. 3.0...........131 5.03 Quality of the education system.............................. 2.8...........124 11.06 Control of international distribution.......................... 3.3...........129 5.04 Quality of math and science education................... 2.6...........133 11.07 Production process sophistication........................... 3.1...........123 5.05 Quality of management schools.............................. 2.9...........134 11.08 Extent of marketing................................................. 3.7...........106 5.06 Internet access in schools....................................... 2.8...........123 11.09 Willingness to delegate authority............................. 3.2...........119 5.07 Availability of research and training services............ 3.4...........112 5.08 Extent of staff training............................................. 3.4...........121 12th pillar: Innovation 12.01 Capacity for innovation............................................ 3.2...........114 6th pillar: Goods market efficiency 12.02 Quality of scientific research institutions.................. 2.9...........115 6.01 Intensity of local competition................................... 4.7.............96 12.03 Company spending on R&D.................................... 2.6...........113 6.02 Extent of market dominance................................... 3.3...........105 12.04 University-industry collaboration in R&D.................. 3.3.............89 6.03 Effectiveness of anti-monopoly policy...................... 3.4...........121 12.05 Gov’t procurement of advanced tech products....... 3.3.............86 6.04 Effect of taxation on incentives to invest.................. 3.6.............84 12.06 Availability of scientists and engineers..................... 3.0...........132 6.05 Total tax rate, % profits*........................................ 37.5.............71 12.07 PCT patents, applications/million pop.*................... 0.0...........124 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 89. The Africa Competitiveness Report 2015 | 155 Part 3: Competitiveness Profiles Namibia Key indicators, 2013 Population (millions).................................................2.2 GDP (PPP) per capita (int’l $), 1990–2013 GDP (US$ billions)*................................................12.3 12,000  Namibia     Sub-Saharan Africa GDP per capita (US$).......................................5,636.1 10,000 GDP (PPP) as share (%) of world total...................0.02 8,000 Sectoral value-added (% GDP), 2013 Agriculture...............................................................7.1 6,000 Industry.................................................................29.6 4,000 Services................................................................63.3 2,000 Human Development Index, 2013 0 Score, (0–1) best...................................................0.62 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012 Rank (out of 187 economies)..................................127 Sources: IMF; UNFPA; UNDP; World Bank Global Competitiveness Index Rank Score Stage of development (out of 144) (1–7) GCI 2014–2015................................................... 88...... 4.0 Transition Transition GCI 2013–2014 (out of 148)............................................ 90....... 3.9 1 1–2 2 2­­–3 3 GCI 2012–2013 (out of 144)............................................ 92....... 3.9 Factor Efficiency Innovation driven driven driven Basic requirements (40.0%).......................................... 81....... 4.4 Institutions Institutions....................................................................... 50....... 4.2 7 Infrastructure................................................................... 66....... 4.2 Innovation Infrastructure 6 Macroeconomic environment.......................................... 78....... 4.6 5 Business Macroeconomic Health and primary education........................................ 115....... 4.6 sophistication 4 environment 3 Efficiency enhancers (50.0%)....................................... 97....... 3.7 2 Health and Higher education and training........................................ 115....... 3.2 Market size 1 primary Goods market efficiency ................................................. 96....... 4.1 education Labor market efficiency................................................... 55....... 4.3 Financial market development......................................... 46....... 4.4 Technological Higher education readiness and training Technological readiness................................................... 89....... 3.4 Market size.................................................................... 119....... 2.7 Financial market Goods market development efficiency Innovation and sophistication factors (10.0%)............ 91....... 3.4 Labor market efficiency Business sophistication .................................................. 94....... 3.7 Innovation........................................................................ 91....... 3.1  Namibia     Sub-Saharan Africa The most problematic factors for doing business Inadequately educated workforce............................................. 16.0 Access to financing.................................................................. 14.5 Restrictive labor regulations...................................................... 11.5 Poor work ethic in national labor force..................................... 10.9 Corruption................................................................................ 10.4 Inefficient government bureaucracy............................................ 9.8 Tax rates..................................................................................... 5.5 Inadequate supply of infrastructure............................................. 4.6 Crime and theft.......................................................................... 4.4 Insufficient capacity to innovate.................................................. 4.1 Tax regulations........................................................................... 2.3 Inflation....................................................................................... 2.2 Foreign currency regulations....................................................... 2.1 Poor public health...................................................................... 1.1 Policy instability.......................................................................... 0.4 Government instability/coups..................................................... 0.1 0 5 10 15 20 25 30 Score 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 2015 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 (cont’d.) 1.01 Property rights........................................................ 5.1.............35 6.06 No. procedures to start a business*......................... 10...........118 1.02 Intellectual property protection................................ 4.3.............40 6.07 No. days to start a business*................................ 66.0...........134 1.03 Diversion of public funds......................................... 3.2.............73 6.08 Agricultural policy costs.......................................... 3.9.............55 1.04 Public trust in politicians.......................................... 3.2.............59 6.09 Prevalence of trade barriers.................................... 4.4.............64 1.05 Irregular payments and bribes................................. 4.1.............61 6.10 Trade tariffs, % duty*............................................... 6.1.............78 1.06 Judicial independence............................................. 4.7.............39 6.11 Prevalence of foreign ownership.............................. 5.1.............36 1.07 Favoritism in decisions of government officials........ 2.9.............84 6.12 Business impact of rules on FDI.............................. 4.2.............97 1.08 Wastefulness of government spending.................... 3.2.............70 6.13 Burden of customs procedures............................... 4.1.............64 1.09 Burden of government regulation............................ 3.5.............72 6.14 Imports as a percentage of GDP*......................... 68.1.............34 1.10 Efficiency of legal framework in settling disputes..... 4.5.............29 6.15 Degree of customer orientation............................... 3.5...........134 1.11 Efficiency of legal framework in challenging regs..... 3.9.............36 6.16 Buyer sophistication................................................ 3.3.............81 1.12 Transparency of government policymaking.............. 3.9.............78 1.13 Business costs of terrorism..................................... 5.8.............39 7th pillar: Labor market efficiency 1.14 Business costs of crime and violence..................... 4.0.............94 7.01 Cooperation in labor-employer relations.................. 4.0...........101 1.15 Organized crime...................................................... 4.7.............76 7.02 Flexibility of wage determination.............................. 4.8.............91 1.16 Reliability of police services..................................... 3.9.............84 7.03 Hiring and firing practices........................................ 2.9...........128 1.17 Ethical behavior of firms.......................................... 4.2.............53 7.04 Redundancy costs, weeks of salary*....................... 9.7.............35 1.18 Strength of auditing and reporting standards.......... 5.4.............34 7.05 Effect of taxation on incentives to work................... 4.0.............39 1.19 Efficacy of corporate boards................................... 4.6.............67 7.06 Pay and productivity................................................ 3.5...........107 1.20 Protection of minority shareholders’ interests.......... 4.8.............30 7.07 Reliance on professional management.................... 4.2.............69 1.21 Strength of investor protection, 0–10 (best)*........... 5.3.............68 7.08 Country capacity to retain talent.............................. 3.4.............72 7.09 Country capacity to attract talent............................ 3.4.............71 2nd pillar: Infrastructure 7.10 Women in labor force, ratio to men*...................... 0.87.............46 2.01 Quality of overall infrastructure................................ 5.0.............42 2.02 Quality of roads....................................................... 5.2.............28 8th pillar: Financial market development 2.03 Quality of railroad infrastructure............................... 3.3.............47 8.01 Availability of financial services................................ 4.7.............54 2.04 Quality of port infrastructure.................................... 5.2.............30 8.02 Affordability of financial services.............................. 4.4.............49 2.05 Quality of air transport infrastructure....................... 4.6.............62 8.03 Financing through local equity market..................... 3.7.............54 2.06 Available airline seat km/week, millions*................ 29.3...........111 8.04 Ease of access to loans.......................................... 2.8.............68 2.07 Quality of electricity supply...................................... 5.4.............52 8.05 Venture capital availability........................................ 2.5.............88 2.08 Mobile telephone subscriptions/100 pop.*.......... 110.2.............74 8.06 Soundness of banks............................................... 5.7.............36 2.09 Fixed telephone lines/100 pop.*.............................. 8.0...........100 8.07 Regulation of securities exchanges......................... 4.8.............37 8.08 Legal rights index, 0–10 (best)*.................................. 7.............43 3rd pillar: Macroeconomic environment 3.01 Government budget balance, % GDP*...................-4.7...........103 9th pillar: Technological readiness 3.02 Gross national savings, % GDP*........................... 20.1.............68 9.01 Availability of latest technologies............................. 5.1.............54 3.03 Inflation, annual % change*..................................... 6.2...........109 9.02 Firm-level technology absorption............................. 4.9.............54 3.04 General government debt, % GDP*...................... 26.6.............28 9.03 FDI and technology transfer.................................... 4.7.............58 3.05 Country credit rating, 0–100 (best)*....................... 54.1.............62 9.04 Individuals using Internet, %*................................ 13.9...........118 9.05 Fixed broadband Internet subscriptions/100 pop.*.. 1.3...........102 4th pillar: Health and primary education 9.06 Int’l Internet bandwidth, kb/s per user*................... 3.4...........128 4.01 Malaria cases/100,000 pop.*................................ 23.0.............22 9.07 Mobile broadband subscriptions/100 pop.*.......... 34.2.............61 4.02 Business impact of malaria..................................... 4.6.............42 4.03 Tuberculosis cases/100,000 pop.*...................... 655.0...........141 10th pillar: Market size 4.04 Business impact of tuberculosis.............................. 3.9...........133 10.01 Domestic market size index, 1–7 (best)*.................. 2.5...........117 4.05 HIV prevalence, % adult pop.*.............................. 13.3...........138 10.02 Foreign market size index, 1–7 (best)*..................... 3.4...........120 4.06 Business impact of HIV/AIDS.................................. 3.4...........137 10.03 GDP (PPP$ billions)*............................................. 17.8...........121 4.07 Infant mortality, deaths/1,000 live births*............... 28.3...........100 10.04 Exports as a percentage of GDP*......................... 33.8.............83 4.08 Life expectancy, years*.......................................... 63.9...........114 4.09 Quality of primary education.................................... 3.1...........107 11th pillar: Business sophistication 4.10 Primary education enrollment, net %*................... 87.7...........107 11.01 Local supplier quantity............................................ 3.7...........132 11.02 Local supplier quality............................................... 4.2.............82 5th pillar: Higher education and training 11.03 State of cluster development................................... 3.8.............68 5.01 Secondary education enrollment, gross %*........... 64.8...........111 11.04 Nature of competitive advantage............................. 3.5.............66 5.02 Tertiary education enrollment, gross %*.................. 9.3...........117 11.05 Value chain breadth................................................. 3.2...........117 5.03 Quality of the education system.............................. 3.1...........107 11.06 Control of international distribution.......................... 3.6...........111 5.04 Quality of math and science education................... 2.9...........126 11.07 Production process sophistication........................... 3.7.............83 5.05 Quality of management schools.............................. 3.4...........118 11.08 Extent of marketing................................................. 3.9.............96 5.06 Internet access in schools....................................... 3.5...........106 11.09 Willingness to delegate authority............................. 3.6.............78 5.07 Availability of research and training services............ 3.6...........102 5.08 Extent of staff training............................................. 4.1.............57 12th pillar: Innovation 12.01 Capacity for innovation............................................ 3.7.............79 6th pillar: Goods market efficiency 12.02 Quality of scientific research institutions.................. 3.5.............84 6.01 Intensity of local competition................................... 4.6...........104 12.03 Company spending on R&D.................................... 3.1.............69 6.02 Extent of market dominance................................... 3.5.............90 12.04 University-industry collaboration in R&D.................. 3.5.............79 6.03 Effectiveness of anti-monopoly policy...................... 4.2.............59 12.05 Gov’t procurement of advanced tech products....... 3.3.............82 6.04 Effect of taxation on incentives to invest.................. 4.0.............39 12.06 Availability of scientists and engineers..................... 3.0...........130 6.05 Total tax rate, % profits*........................................ 21.8.............15 12.07 PCT patents, applications/million pop.*................... 1.7.............59 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 89. The Africa Competitiveness Report 2015 | 157 Part 3: Competitiveness Profiles Nigeria Key indicators, 2013 Population (millions).............................................169.3 GDP (PPP) per capita (int’l $), 1990–2013 GDP (US$ billions)*..............................................521.8 6,000  Nigeria     Sub-Saharan Africa GDP per capita (US$).......................................3,082.5 GDP (PPP) as share (%) of world total...................0.95 5,000 Sectoral value-added (% GDP), 2013 4,000 Agriculture.............................................................21.0 Industry.................................................................22.0 3,000 Services................................................................57.0 2,000 Human Development Index, 2013 Score, (0–1) best...................................................0.50 1,000 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012 Rank (out of 187 economies)..................................152 Sources: IMF; UNFPA; UNDP; World Bank Global Competitiveness Index Rank Score Stage of development (out of 144) (1–7) GCI 2014–2015................................................. 127...... 3.4 Transition Transition GCI 2013–2014 (out of 148).......................................... 120....... 3.6 1 1–2 2 2­­–3 3 GCI 2012–2013 (out of 144).......................................... 115....... 3.7 Factor Efficiency Innovation driven driven driven Basic requirements (60.0%)........................................ 140....... 3.2 Institutions Institutions..................................................................... 129....... 3.0 7 Infrastructure................................................................. 134....... 2.1 Innovation Infrastructure 6 Macroeconomic environment.......................................... 76....... 4.6 5 Business Macroeconomic Health and primary education........................................ 143....... 3.0 sophistication 4 environment 3 Efficiency enhancers (35.0%)....................................... 82....... 3.9 2 Health and Higher education and training........................................ 124....... 2.9 Market size 1 primary Goods market efficiency ................................................. 87....... 4.2 education Labor market efficiency................................................... 40....... 4.5 Financial market development......................................... 67....... 4.1 Technological Higher education readiness and training Technological readiness................................................. 104....... 3.0 Market size...................................................................... 33....... 4.7 Financial market Goods market development efficiency Innovation and sophistication factors (5.0%)............ 103....... 3.3 Labor market efficiency Business sophistication .................................................. 87....... 3.8 Innovation...................................................................... 114....... 2.8  Nigeria     Sub-Saharan Africa The most problematic factors for doing business Inadequate supply of infrastructure........................................... 26.1 Corruption................................................................................ 19.6 Access to financing.................................................................. 17.7 Policy instability.......................................................................... 7.5 Inefficient government bureaucracy............................................ 7.4 Inadequately educated workforce............................................... 6.0 Poor work ethic in national labor force....................................... 3.1 Crime and theft.......................................................................... 2.6 Tax regulations........................................................................... 2.2 Tax rates..................................................................................... 2.1 Inflation....................................................................................... 1.8 Foreign currency regulations....................................................... 1.3 Insufficient capacity to innovate.................................................. 1.2 Government instability/coups..................................................... 0.6 Restrictive labor regulations........................................................ 0.4 Poor public health...................................................................... 0.3 0 5 10 15 20 25 30 Score 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 2015 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 (cont’d.) 1.01 Property rights........................................................ 3.4...........116 6.06 No. procedures to start a business*........................... 8.............93 1.02 Intellectual property protection................................ 2.7...........126 6.07 No. days to start a business*................................ 28.0...........109 1.03 Diversion of public funds......................................... 1.8...........142 6.08 Agricultural policy costs.......................................... 4.2.............30 1.04 Public trust in politicians.......................................... 1.8...........134 6.09 Prevalence of trade barriers.................................... 4.6.............42 1.05 Irregular payments and bribes................................. 2.5...........135 6.10 Trade tariffs, % duty*............................................. 11.4...........119 1.06 Judicial independence............................................. 3.1...........102 6.11 Prevalence of foreign ownership.............................. 4.9.............49 1.07 Favoritism in decisions of government officials........ 2.3...........126 6.12 Business impact of rules on FDI.............................. 4.7.............45 1.08 Wastefulness of government spending.................... 2.2...........134 6.13 Burden of customs procedures............................... 3.0...........132 1.09 Burden of government regulation............................ 3.1.............99 6.14 Imports as a percentage of GDP*......................... 27.0...........125 1.10 Efficiency of legal framework in settling disputes..... 3.3.............98 6.15 Degree of customer orientation............................... 3.9...........113 1.11 Efficiency of legal framework in challenging regs..... 2.9...........105 6.16 Buyer sophistication................................................ 3.3.............88 1.12 Transparency of government policymaking.............. 3.2...........126 1.13 Business costs of terrorism..................................... 2.8...........137 7th pillar: Labor market efficiency 1.14 Business costs of crime and violence..................... 2.9...........130 7.01 Cooperation in labor-employer relations.................. 4.4.............61 1.15 Organized crime...................................................... 3.7...........124 7.02 Flexibility of wage determination.............................. 5.5.............35 1.16 Reliability of police services..................................... 2.6...........136 7.03 Hiring and firing practices........................................ 5.2...............7 1.17 Ethical behavior of firms.......................................... 3.3...........132 7.04 Redundancy costs, weeks of salary*..................... 16.2.............79 1.18 Strength of auditing and reporting standards.......... 4.3.............88 7.05 Effect of taxation on incentives to work................... 4.3.............21 1.19 Efficacy of corporate boards................................... 4.4.............80 7.06 Pay and productivity................................................ 4.2.............51 1.20 Protection of minority shareholders’ interests.......... 3.8.............90 7.07 Reliance on professional management.................... 4.5.............52 1.21 Strength of investor protection, 0–10 (best)*........... 5.7.............57 7.08 Country capacity to retain talent.............................. 3.1.............92 7.09 Country capacity to attract talent............................ 3.8.............47 2nd pillar: Infrastructure 7.10 Women in labor force, ratio to men*...................... 0.76.............85 2.01 Quality of overall infrastructure................................ 2.7...........133 2.02 Quality of roads....................................................... 2.7...........125 8th pillar: Financial market development 2.03 Quality of railroad infrastructure............................... 1.5...........100 8.01 Availability of financial services................................ 4.1.............87 2.04 Quality of port infrastructure.................................... 3.2...........110 8.02 Affordability of financial services.............................. 3.5...........122 2.05 Quality of air transport infrastructure....................... 3.2...........121 8.03 Financing through local equity market..................... 3.8.............46 2.06 Available airline seat km/week, millions*.............. 302.6.............52 8.04 Ease of access to loans.......................................... 1.6...........137 2.07 Quality of electricity supply...................................... 1.6...........141 8.05 Venture capital availability........................................ 1.9...........131 2.08 Mobile telephone subscriptions/100 pop.*............ 73.3...........116 8.06 Soundness of banks............................................... 4.8.............78 2.09 Fixed telephone lines/100 pop.*.............................. 0.2...........142 8.07 Regulation of securities exchanges......................... 4.2.............65 8.08 Legal rights index, 0–10 (best)*.................................. 9.............11 3rd pillar: Macroeconomic environment 3.01 Government budget balance, % GDP*...................-4.9...........106 9th pillar: Technological readiness 3.02 Gross national savings, % GDP*........................... 29.3.............26 9.01 Availability of latest technologies............................. 4.4.............94 3.03 Inflation, annual % change*..................................... 8.5...........127 9.02 Firm-level technology absorption............................. 4.3.............91 3.04 General government debt, % GDP*...................... 19.4.............18 9.03 FDI and technology transfer.................................... 4.5.............77 3.05 Country credit rating, 0–100 (best)*....................... 39.7.............80 9.04 Individuals using Internet, %*................................ 38.0.............87 9.05 Fixed broadband Internet subscriptions/100 pop.*.. 0.0...........140 4th pillar: Health and primary education 9.06 Int’l Internet bandwidth, kb/s per user*................... 0.8...........141 4.01 Malaria cases/100,000 pop.*......................... 28,430.3.............73 9.07 Mobile broadband subscriptions/100 pop.*.......... 10.1.............96 4.02 Business impact of malaria..................................... 3.6.............62 4.03 Tuberculosis cases/100,000 pop.*...................... 108.0.............95 10th pillar: Market size 4.04 Business impact of tuberculosis.............................. 5.0.............92 10.01 Domestic market size index, 1–7 (best)*.................. 4.5.............31 4.05 HIV prevalence, % adult pop.*................................ 3.1...........128 10.02 Foreign market size index, 1–7 (best)*..................... 5.3.............37 4.06 Business impact of HIV/AIDS.................................. 4.5...........108 10.03 GDP (PPP$ billions)*........................................... 479.3.............30 4.07 Infant mortality, deaths/1,000 live births*............... 77.8...........140 10.04 Exports as a percentage of GDP*......................... 35.6.............77 4.08 Life expectancy, years*.......................................... 52.1...........136 4.09 Quality of primary education.................................... 2.6...........124 11th pillar: Business sophistication 4.10 Primary education enrollment, net %*................... 63.9...........138 11.01 Local supplier quantity............................................ 4.8.............46 11.02 Local supplier quality............................................... 3.9.............99 5th pillar: Higher education and training 11.03 State of cluster development................................... 3.8.............72 5.01 Secondary education enrollment, gross %*........... 43.8...........127 11.04 Nature of competitive advantage............................. 2.8...........117 5.02 Tertiary education enrollment, gross %*................ 10.4...........112 11.05 Value chain breadth................................................. 3.6.............92 5.03 Quality of the education system.............................. 2.9...........122 11.06 Control of international distribution.......................... 3.8.............98 5.04 Quality of math and science education................... 2.6...........132 11.07 Production process sophistication........................... 3.3...........106 5.05 Quality of management schools.............................. 3.8...........101 11.08 Extent of marketing................................................. 4.1.............77 5.06 Internet access in schools....................................... 3.4...........111 11.09 Willingness to delegate authority............................. 3.6.............90 5.07 Availability of research and training services............ 3.7.............95 5.08 Extent of staff training............................................. 4.3.............48 12th pillar: Innovation 12.01 Capacity for innovation............................................ 3.7.............73 6th pillar: Goods market efficiency 12.02 Quality of scientific research institutions.................. 2.8...........120 6.01 Intensity of local competition................................... 5.3.............50 12.03 Company spending on R&D.................................... 2.8...........106 6.02 Extent of market dominance................................... 3.8.............63 12.04 University-industry collaboration in R&D.................. 2.8...........123 6.03 Effectiveness of anti-monopoly policy...................... 3.6...........110 12.05 Gov’t procurement of advanced tech products....... 3.0...........109 6.04 Effect of taxation on incentives to invest.................. 4.0.............40 12.06 Availability of scientists and engineers..................... 3.8.............89 6.05 Total tax rate, % profits*........................................ 33.8.............53 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 89. The Africa Competitiveness Report 2015 | 159 Part 3: Competitiveness Profiles Rwanda Key indicators, 2013 Population (millions)...............................................10.6 GDP (PPP) per capita (int’l $), 1990–2013 GDP (US$ billions)*..................................................7.6 4,000  Rwanda     Sub-Saharan Africa GDP per capita (US$)..........................................703.8 3,500 GDP (PPP) as share (%) of world total...................0.02 3,000 Sectoral value-added (% GDP), 2013 2,500 Agriculture.............................................................33.3 2,000 Industry.................................................................14.7 1,500 Services................................................................52.0 1,000 500 Human Development Index, 2013 Score, (0–1) best...................................................0.51 0 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012 Rank (out of 187 economies)..................................151 Sources: IMF; UNFPA; UNDP; World Bank Global Competitiveness Index Rank Score Stage of development (out of 144) (1–7) GCI 2014–2015................................................... 62...... 4.3 Transition Transition GCI 2013–2014 (out of 148)............................................ 66....... 4.2 1 1–2 2 2­­–3 3 GCI 2012–2013 (out of 144)............................................ 63....... 4.2 Factor Efficiency Innovation driven driven driven Basic requirements (60.0%).......................................... 67....... 4.6 Institutions Institutions....................................................................... 18....... 5.2 7 Infrastructure................................................................. 105....... 3.1 Innovation Infrastructure 6 Macroeconomic environment.......................................... 79....... 4.6 5 Business Macroeconomic Health and primary education.......................................... 86....... 5.5 sophistication 4 environment 3 Efficiency enhancers (35.0%)....................................... 91....... 3.8 2 Health and Higher education and training........................................ 122....... 3.0 Market size 1 primary Goods market efficiency ................................................. 42....... 4.6 education Labor market efficiency..................................................... 9....... 5.1 Financial market development......................................... 55....... 4.3 Technological Higher education readiness and training Technological readiness................................................... 98....... 3.1 Market size.................................................................... 125....... 2.5 Financial market Goods market development efficiency Innovation and sophistication factors (5.0%).............. 66....... 3.6 Labor market efficiency Business sophistication .................................................. 84....... 3.8 Innovation........................................................................ 53....... 3.5  Rwanda     Sub-Saharan Africa The most problematic factors for doing business Access to financing.................................................................. 21.3 Inadequately educated workforce............................................. 14.3 Insufficient capacity to innovate................................................ 11.5 Inadequate supply of infrastructure........................................... 11.3 Tax rates................................................................................... 10.1 Poor work ethic in national labor force....................................... 7.5 Tax regulations........................................................................... 7.2 Inflation....................................................................................... 5.3 Inefficient government bureaucracy............................................ 3.5 Corruption.................................................................................. 2.5 Policy instability.......................................................................... 1.6 Foreign currency regulations....................................................... 1.3 Restrictive labor regulations........................................................ 1.1 Poor public health...................................................................... 0.9 Crime and theft.......................................................................... 0.6 Government instability/coups..................................................... 0.0 0 5 10 15 20 25 30 Score 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. For Rwanda, only 2013 responses were used. Please see the GCR 2014–2015, Chapter 1.3, for further information. 160 | The Africa Competitiveness Report 2015 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 (cont’d.) 1.01 Property rights........................................................ 5.3.............28 6.06 No. procedures to start a business*........................... 2...............3 1.02 Intellectual property protection................................ 4.6.............32 6.07 No. days to start a business*.................................. 2.0...............2 1.03 Diversion of public funds......................................... 5.3.............19 6.08 Agricultural policy costs.......................................... 4.5.............18 1.04 Public trust in politicians.......................................... 5.3.............10 6.09 Prevalence of trade barriers.................................... 4.5.............53 1.05 Irregular payments and bribes................................. 5.5.............27 6.10 Trade tariffs, % duty*............................................... 8.7.............96 1.06 Judicial independence............................................. 4.9.............34 6.11 Prevalence of foreign ownership.............................. 4.4.............83 1.07 Favoritism in decisions of government officials........ 4.5.............16 6.12 Business impact of rules on FDI.............................. 5.8...............5 1.08 Wastefulness of government spending.................... 5.7...............4 6.13 Burden of customs procedures............................... 5.2.............16 1.09 Burden of government regulation............................ 4.8...............6 6.14 Imports as a percentage of GDP*......................... 39.9.............88 1.10 Efficiency of legal framework in settling disputes..... 5.2.............16 6.15 Degree of customer orientation............................... 4.1...........107 1.11 Efficiency of legal framework in challenging regs..... 4.3.............24 6.16 Buyer sophistication................................................ 3.5.............61 1.12 Transparency of government policymaking.............. 5.5...............8 1.13 Business costs of terrorism..................................... 5.9.............37 7th pillar: Labor market efficiency 1.14 Business costs of crime and violence..................... 6.1...............6 7.01 Cooperation in labor-employer relations.................. 5.0.............24 1.15 Organized crime...................................................... 6.4...............9 7.02 Flexibility of wage determination.............................. 5.3.............54 1.16 Reliability of police services..................................... 5.8.............21 7.03 Hiring and firing practices........................................ 4.3.............31 1.17 Ethical behavior of firms.......................................... 5.3.............22 7.04 Redundancy costs, weeks of salary*..................... 13.0.............56 1.18 Strength of auditing and reporting standards.......... 4.8.............63 7.05 Effect of taxation on incentives to work................... 4.5.............16 1.19 Efficacy of corporate boards................................... 5.0.............35 7.06 Pay and productivity................................................ 4.0.............68 1.20 Protection of minority shareholders’ interests.......... 4.7.............34 7.07 Reliance on professional management.................... 4.8.............35 1.21 Strength of investor protection, 0–10 (best)*........... 6.7.............22 7.08 Country capacity to retain talent.............................. 4.3.............27 7.09 Country capacity to attract talent............................ 4.6.............20 2nd pillar: Infrastructure 7.10 Women in labor force, ratio to men*...................... 1.02...............3 2.01 Quality of overall infrastructure................................ 4.3.............68 2.02 Quality of roads....................................................... 4.7.............46 8th pillar: Financial market development 2.03 Quality of railroad infrastructure........................ N/Appl.............n/a 8.01 Availability of financial services................................ 4.4.............69 2.04 Quality of port infrastructure.................................... 3.6.............98 8.02 Affordability of financial services.............................. 4.3.............56 2.05 Quality of air transport infrastructure....................... 4.3.............73 8.03 Financing through local equity market..................... 3.4.............73 2.06 Available airline seat km/week, millions*................ 15.7...........130 8.04 Ease of access to loans.......................................... 3.2.............41 2.07 Quality of electricity supply...................................... 4.0.............92 8.05 Venture capital availability........................................ 3.1.............39 2.08 Mobile telephone subscriptions/100 pop.*............ 56.8...........134 8.06 Soundness of banks............................................... 4.7.............82 2.09 Fixed telephone lines/100 pop.*.............................. 0.4...........135 8.07 Regulation of securities exchanges......................... 4.0.............73 8.08 Legal rights index, 0–10 (best)*.................................. 8.............29 3rd pillar: Macroeconomic environment 3.01 Government budget balance, % GDP*...................-2.5.............62 9th pillar: Technological readiness 3.02 Gross national savings, % GDP*........................... 15.7...........100 9.01 Availability of latest technologies............................. 5.3.............46 3.03 Inflation, annual % change*..................................... 4.2.............84 9.02 Firm-level technology absorption............................. 5.0.............49 3.04 General government debt, % GDP*...................... 29.4.............34 9.03 FDI and technology transfer.................................... 5.1.............25 3.05 Country credit rating, 0–100 (best)*....................... 25.2...........120 9.04 Individuals using Internet, %*.................................. 8.7...........125 9.05 Fixed broadband Internet subscriptions/100 pop.*.. 0.0...........137 4th pillar: Health and primary education 9.06 Int’l Internet bandwidth, kb/s per user*................... 9.8...........103 4.01 Malaria cases/100,000 pop.*........................... 5,673.0.............51 9.07 Mobile broadband subscriptions/100 pop.*............ 5.8...........106 4.02 Business impact of malaria..................................... 4.8.............38 4.03 Tuberculosis cases/100,000 pop.*........................ 86.0.............87 10th pillar: Market size 4.04 Business impact of tuberculosis.............................. 5.3.............85 10.01 Domestic market size index, 1–7 (best)*.................. 2.4...........125 4.05 HIV prevalence, % adult pop.*................................ 2.9...........127 10.02 Foreign market size index, 1–7 (best)*..................... 2.8...........136 4.06 Business impact of HIV/AIDS.................................. 4.7.............98 10.03 GDP (PPP$ billions)*............................................. 16.4...........123 4.07 Infant mortality, deaths/1,000 live births*............... 38.8...........110 10.04 Exports as a percentage of GDP*......................... 13.4...........136 4.08 Life expectancy, years*.......................................... 63.5...........115 4.09 Quality of primary education.................................... 3.7.............82 11th pillar: Business sophistication 4.10 Primary education enrollment, net %*................... 98.7.............16 11.01 Local supplier quantity............................................ 4.2...........107 11.02 Local supplier quality............................................... 4.0.............96 5th pillar: Higher education and training 11.03 State of cluster development................................... 3.9.............59 5.01 Secondary education enrollment, gross %*........... 31.8...........134 11.04 Nature of competitive advantage............................. 3.6.............65 5.02 Tertiary education enrollment, gross %*.................. 7.2...........124 11.05 Value chain breadth................................................. 3.7.............71 5.03 Quality of the education system.............................. 4.0.............50 11.06 Control of international distribution.......................... 4.0.............67 5.04 Quality of math and science education................... 4.1.............71 11.07 Production process sophistication........................... 3.4...........102 5.05 Quality of management schools.............................. 3.8.............99 11.08 Extent of marketing................................................. 3.3...........125 5.06 Internet access in schools....................................... 4.3.............70 11.09 Willingness to delegate authority............................. 3.8.............65 5.07 Availability of research and training services............ 3.7.............96 5.08 Extent of staff training............................................. 4.0.............66 12th pillar: Innovation 12.01 Capacity for innovation............................................ 3.5.............86 6th pillar: Goods market efficiency 12.02 Quality of scientific research institutions.................. 3.7.............72 6.01 Intensity of local competition................................... 4.9.............78 12.03 Company spending on R&D.................................... 2.9.............94 6.02 Extent of market dominance................................... 4.0.............52 12.04 University-industry collaboration in R&D.................. 3.7.............64 6.03 Effectiveness of anti-monopoly policy...................... 4.7.............28 12.05 Gov’t procurement of advanced tech products....... 4.8...............5 6.04 Effect of taxation on incentives to invest.................. 4.3.............29 12.06 Availability of scientists and engineers..................... 4.0.............74 6.05 Total tax rate, % profits*........................................ 29.9.............38 12.07 PCT patents, applications/million pop.*................... 0.0...........124 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 89. The Africa Competitiveness Report 2015 | 161 Part 3: Competitiveness Profiles Senegal Key indicators, 2013 Population (millions)...............................................14.1 GDP (PPP) per capita (int’l $), 1990–2013 GDP (US$ billions)*................................................14.8 4,000  Senegal     Sub-Saharan Africa GDP per capita (US$).......................................1,047.5 GDP (PPP) as share (%) of world total...................0.03 3,500 3,000 Sectoral value-added (% GDP), 2012 Agriculture.............................................................16.7 2,500 Industry.................................................................24.2 2,000 Services................................................................59.0 1,500 Human Development Index, 2013 Score, (0–1) best...................................................0.49 1,000 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012 Rank (out of 187 economies)..................................163 Sources: IMF; UNFPA; UNDP; World Bank Global Competitiveness Index Rank Score Stage of development (out of 144) (1–7) GCI 2014–2015................................................. 112...... 3.7 Transition Transition GCI 2013–2014 (out of 148).......................................... 113....... 3.7 1 1–2 2 2­­–3 3 GCI 2012–2013 (out of 144).......................................... 117....... 3.7 Factor Efficiency Innovation driven driven driven Basic requirements (60.0%)........................................ 120....... 3.7 Institutions Institutions....................................................................... 74....... 3.8 7 Infrastructure................................................................. 111....... 2.9 Innovation Infrastructure 6 Macroeconomic environment.......................................... 97....... 4.3 5 Business Macroeconomic Health and primary education........................................ 131....... 4.0 sophistication 4 environment 3 Efficiency enhancers (35.0%)..................................... 102....... 3.6 2 Health and Higher education and training........................................ 119....... 3.2 Market size 1 primary Goods market efficiency ................................................. 68....... 4.3 education Labor market efficiency................................................... 68....... 4.2 Financial market development......................................... 85....... 3.8 Technological Higher education readiness and training Technological readiness................................................... 96....... 3.2 Market size.................................................................... 104....... 3.0 Financial market Goods market development efficiency Innovation and sophistication factors (5.0%).............. 65....... 3.6 Labor market efficiency Business sophistication .................................................. 77....... 3.9 Innovation........................................................................ 57....... 3.4  Senegal     Sub-Saharan Africa The most problematic factors for doing business Access to financing.................................................................. 25.3 Inadequate supply of infrastructure........................................... 12.2 Restrictive labor regulations........................................................ 8.1 Corruption.................................................................................. 6.4 Inefficient government bureaucracy............................................ 5.9 Tax regulations........................................................................... 5.6 Tax rates..................................................................................... 5.5 Inadequately educated workforce............................................... 5.2 Foreign currency regulations....................................................... 4.8 Policy instability.......................................................................... 4.6 Poor work ethic in national labor force....................................... 4.2 Inflation....................................................................................... 3.5 Crime and theft.......................................................................... 2.9 Insufficient capacity to innovate.................................................. 2.9 Poor public health...................................................................... 2.2 Government instability/coups..................................................... 0.8 0 5 10 15 20 25 30 Score 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 2015 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 (cont’d.) 1.01 Property rights........................................................ 3.9.............80 6.06 No. procedures to start a business*........................... 4.............22 1.02 Intellectual property protection................................ 3.4.............86 6.07 No. days to start a business*.................................. 6.0.............21 1.03 Diversion of public funds......................................... 3.2.............72 6.08 Agricultural policy costs.......................................... 3.5.............97 1.04 Public trust in politicians.......................................... 3.1.............64 6.09 Prevalence of trade barriers.................................... 4.1.............98 1.05 Irregular payments and bribes................................. 3.5.............92 6.10 Trade tariffs, % duty*............................................. 10.8...........113 1.06 Judicial independence............................................. 3.5.............80 6.11 Prevalence of foreign ownership.............................. 4.5.............73 1.07 Favoritism in decisions of government officials........ 3.2.............58 6.12 Business impact of rules on FDI.............................. 4.5.............68 1.08 Wastefulness of government spending.................... 3.6.............45 6.13 Burden of customs procedures............................... 4.3.............56 1.09 Burden of government regulation............................ 4.0.............29 6.14 Imports as a percentage of GDP*......................... 53.7.............54 1.10 Efficiency of legal framework in settling disputes..... 3.8.............58 6.15 Degree of customer orientation............................... 4.7.............58 1.11 Efficiency of legal framework in challenging regs..... 3.7.............46 6.16 Buyer sophistication................................................ 3.2.............92 1.12 Transparency of government policymaking.............. 4.1.............57 1.13 Business costs of terrorism..................................... 4.7...........101 7th pillar: Labor market efficiency 1.14 Business costs of crime and violence..................... 4.5.............65 7.01 Cooperation in labor-employer relations.................. 4.4.............57 1.15 Organized crime...................................................... 4.3.............96 7.02 Flexibility of wage determination.............................. 4.5...........112 1.16 Reliability of police services..................................... 4.6.............47 7.03 Hiring and firing practices........................................ 4.1.............56 1.17 Ethical behavior of firms.......................................... 4.0.............62 7.04 Redundancy costs, weeks of salary*..................... 13.7.............64 1.18 Strength of auditing and reporting standards.......... 4.5.............76 7.05 Effect of taxation on incentives to work................... 3.9.............44 1.19 Efficacy of corporate boards................................... 4.7.............59 7.06 Pay and productivity................................................ 3.8.............90 1.20 Protection of minority shareholders’ interests.......... 3.7.............95 7.07 Reliance on professional management.................... 4.1.............81 1.21 Strength of investor protection, 0–10 (best)*........... 3.0...........130 7.08 Country capacity to retain talent.............................. 3.4.............77 7.09 Country capacity to attract talent............................ 3.7.............54 2nd pillar: Infrastructure 7.10 Women in labor force, ratio to men*...................... 0.75.............90 2.01 Quality of overall infrastructure................................ 3.6.............97 2.02 Quality of roads....................................................... 3.4.............92 8th pillar: Financial market development 2.03 Quality of railroad infrastructure............................... 2.3.............79 8.01 Availability of financial services................................ 3.7...........114 2.04 Quality of port infrastructure.................................... 4.4.............58 8.02 Affordability of financial services.............................. 3.7...........102 2.05 Quality of air transport infrastructure....................... 3.8.............94 8.03 Financing through local equity market..................... 3.3.............77 2.06 Available airline seat km/week, millions*.............. 103.4.............82 8.04 Ease of access to loans.......................................... 2.9.............61 2.07 Quality of electricity supply...................................... 3.0...........111 8.05 Venture capital availability........................................ 2.9.............53 2.08 Mobile telephone subscriptions/100 pop.*............ 92.9...........106 8.06 Soundness of banks............................................... 4.8.............79 2.09 Fixed telephone lines/100 pop.*.............................. 2.4...........117 8.07 Regulation of securities exchanges......................... 3.5...........106 8.08 Legal rights index, 0–10 (best)*.................................. 6.............63 3rd pillar: Macroeconomic environment 3.01 Government budget balance, % GDP*...................-5.4...........112 9th pillar: Technological readiness 3.02 Gross national savings, % GDP*........................... 17.5.............86 9.01 Availability of latest technologies............................. 4.9.............68 3.03 Inflation, annual % change*..................................... 0.8...............1 9.02 Firm-level technology absorption............................. 5.0.............43 3.04 General government debt, % GDP*...................... 45.9.............79 9.03 FDI and technology transfer.................................... 4.6.............74 3.05 Country credit rating, 0–100 (best)*....................... 32.5...........100 9.04 Individuals using Internet, %*................................ 20.9...........101 9.05 Fixed broadband Internet subscriptions/100 pop.*.. 0.8...........109 4th pillar: Health and primary education 9.06 Int’l Internet bandwidth, kb/s per user*................... 5.4...........114 4.01 Malaria cases/100,000 pop.*......................... 27,684.6.............71 9.07 Mobile broadband subscriptions/100 pop.*.......... 15.3.............88 4.02 Business impact of malaria..................................... 3.9.............55 4.03 Tuberculosis cases/100,000 pop.*...................... 137.0...........102 10th pillar: Market size 4.04 Business impact of tuberculosis.............................. 4.6...........101 10.01 Domestic market size index, 1–7 (best)*.................. 2.8...........100 4.05 HIV prevalence, % adult pop.*................................ 0.5.............88 10.02 Foreign market size index, 1–7 (best)*..................... 3.4...........116 4.06 Business impact of HIV/AIDS.................................. 4.6...........104 10.03 GDP (PPP$ billions)*............................................. 27.7...........105 4.07 Infant mortality, deaths/1,000 live births*............... 45.2...........116 10.04 Exports as a percentage of GDP*......................... 24.7...........114 4.08 Life expectancy, years*.......................................... 63.2...........116 4.09 Quality of primary education.................................... 3.3.............98 11th pillar: Business sophistication 4.10 Primary education enrollment, net %*................... 73.3...........131 11.01 Local supplier quantity............................................ 4.5.............86 11.02 Local supplier quality............................................... 4.4.............74 5th pillar: Higher education and training 11.03 State of cluster development................................... 3.3...........103 5.01 Secondary education enrollment, gross %*........... 41.0...........128 11.04 Nature of competitive advantage............................. 3.4.............74 5.02 Tertiary education enrollment, gross %*.................. 7.6...........120 11.05 Value chain breadth................................................. 4.0.............55 5.03 Quality of the education system.............................. 3.8.............66 11.06 Control of international distribution.......................... 3.9.............85 5.04 Quality of math and science education................... 4.0.............77 11.07 Production process sophistication........................... 3.9.............69 5.05 Quality of management schools.............................. 4.6.............51 11.08 Extent of marketing................................................. 4.1.............73 5.06 Internet access in schools....................................... 3.9.............85 11.09 Willingness to delegate authority............................. 3.6.............89 5.07 Availability of research and training services............ 4.4.............56 5.08 Extent of staff training............................................. 3.9.............78 12th pillar: Innovation 12.01 Capacity for innovation............................................ 3.9.............56 6th pillar: Goods market efficiency 12.02 Quality of scientific research institutions.................. 3.9.............66 6.01 Intensity of local competition................................... 4.9.............81 12.03 Company spending on R&D.................................... 3.2.............58 6.02 Extent of market dominance................................... 3.8.............60 12.04 University-industry collaboration in R&D.................. 3.6.............65 6.03 Effectiveness of anti-monopoly policy...................... 4.2.............61 12.05 Gov’t procurement of advanced tech products....... 4.0.............27 6.04 Effect of taxation on incentives to invest.................. 3.8.............61 12.06 Availability of scientists and engineers..................... 4.1.............68 6.05 Total tax rate, % profits*........................................ 48.5...........107 12.07 PCT patents, applications/million pop.*................... 0.1...........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 89. The Africa Competitiveness Report 2015 | 163 Part 3: Competitiveness Profiles Seychelles Key indicators, 2013 Population (millions).................................................0.1 GDP (PPP) per capita (int’l $), 1990–2013 GDP (US$ billions)*..................................................1.4 25,000  Seychelles     Sub-Saharan Africa GDP per capita (US$).....................................14,918.4 GDP (PPP) as share (%) of world total...................0.00 20,000 Sectoral value-added (% GDP), 2012 15,000 Agriculture...............................................................2.1 Industry.................................................................15.4 10,000 Services................................................................82.5 5,000 Human Development Index, 2013 0 Score, (0–1) best...................................................0.76 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012 Rank (out of 187 economies)....................................71 Sources: IMF; UNFPA; UNDP; World Bank Global Competitiveness Index Rank Score Stage of development (out of 144) (1–7) GCI 2014–2015................................................... 92...... 3.9 Transition Transition GCI 2013–2014 (out of 148)............................................ 80....... 4.1 1 1–2 2 2­­–3 3 GCI 2012–2013 (out of 144)............................................ 76....... 4.1 Factor Efficiency Innovation driven driven driven Basic requirements (24.9%).......................................... 50....... 4.9 Institutions Institutions....................................................................... 54....... 4.0 7 Infrastructure................................................................... 53....... 4.5 Innovation Infrastructure 6 Macroeconomic environment.......................................... 57....... 4.9 5 Business Macroeconomic Health and primary education.......................................... 55....... 6.0 sophistication 4 environment 3 Efficiency enhancers (50.0%)..................................... 105....... 3.6 2 Health and Higher education and training.......................................... 85....... 4.0 Market size 1 primary Goods market efficiency ................................................. 88....... 4.2 education Labor market efficiency................................................... 44....... 4.4 Financial market development....................................... 103....... 3.6 Technological Higher education readiness and training Technological readiness................................................... 70....... 3.7 Market size.................................................................... 143....... 1.5 Financial market Goods market development efficiency Innovation and sophistication factors (25.1%)............ 69....... 3.6 Labor market efficiency Business sophistication .................................................. 66....... 4.0 Innovation........................................................................ 73....... 3.3  Seychelles     Sub-Saharan Africa The most problematic factors for doing business Access to financing.................................................................. 21.9 Poor work ethic in national labor force..................................... 15.1 Inadequately educated workforce............................................. 11.3 Inefficient government bureaucracy............................................ 8.0 Inadequate supply of infrastructure............................................. 7.7 Restrictive labor regulations........................................................ 7.3 Corruption.................................................................................. 5.7 Policy instability.......................................................................... 4.3 Foreign currency regulations....................................................... 4.1 Crime and theft.......................................................................... 3.2 Tax rates..................................................................................... 3.2 Insufficient capacity to innovate.................................................. 2.4 Poor public health...................................................................... 1.8 Tax regulations........................................................................... 1.7 Inflation....................................................................................... 1.3 Government instability/coups..................................................... 1.0 0 5 10 15 20 25 30 Score 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 2015 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 (cont’d.) 1.01 Property rights........................................................ 4.2.............68 6.06 No. procedures to start a business*......................... 10...........118 1.02 Intellectual property protection................................ 3.8.............60 6.07 No. days to start a business*................................ 39.0...........125 1.03 Diversion of public funds......................................... 3.7.............53 6.08 Agricultural policy costs.......................................... 3.9.............66 1.04 Public trust in politicians.......................................... 3.4.............45 6.09 Prevalence of trade barriers.................................... 4.4.............60 1.05 Irregular payments and bribes................................. 4.1.............63 6.10 Trade tariffs, % duty*............................................. 16.0...........137 1.06 Judicial independence............................................. 4.1.............53 6.11 Prevalence of foreign ownership.............................. 4.4.............87 1.07 Favoritism in decisions of government officials........ 3.2.............57 6.12 Business impact of rules on FDI.............................. 4.1.............98 1.08 Wastefulness of government spending.................... 3.5.............48 6.13 Burden of customs procedures............................... 3.8.............79 1.09 Burden of government regulation............................ 4.2.............13 6.14 Imports as a percentage of GDP*......................... 88.8.............13 1.10 Efficiency of legal framework in settling disputes..... 4.0.............52 6.15 Degree of customer orientation............................... 3.9...........115 1.11 Efficiency of legal framework in challenging regs..... 3.4.............70 6.16 Buyer sophistication................................................ 3.6.............57 1.12 Transparency of government policymaking.............. 4.1.............59 1.13 Business costs of terrorism..................................... 4.6...........107 7th pillar: Labor market efficiency 1.14 Business costs of crime and violence..................... 4.2.............87 7.01 Cooperation in labor-employer relations.................. 4.0.............99 1.15 Organized crime...................................................... 4.9.............61 7.02 Flexibility of wage determination.............................. 4.9.............83 1.16 Reliability of police services..................................... 4.1.............68 7.03 Hiring and firing practices........................................ 3.6.............88 1.17 Ethical behavior of firms.......................................... 4.1.............58 7.04 Redundancy costs, weeks of salary*..................... 13.5.............62 1.18 Strength of auditing and reporting standards.......... 4.3.............92 7.05 Effect of taxation on incentives to work................... 3.9.............48 1.19 Efficacy of corporate boards................................... 4.9.............48 7.06 Pay and productivity................................................ 3.5...........102 1.20 Protection of minority shareholders’ interests.......... 4.4.............52 7.07 Reliance on professional management.................... 4.4.............56 1.21 Strength of investor protection, 0–10 (best)*........... 5.7.............57 7.08 Country capacity to retain talent.............................. 3.1.............90 7.09 Country capacity to attract talent............................ 4.0.............31 2nd pillar: Infrastructure 7.10 Women in labor force, ratio to men*...................... 0.91.............29 2.01 Quality of overall infrastructure................................ 4.7.............51 2.02 Quality of roads....................................................... 4.2.............60 8th pillar: Financial market development 2.03 Quality of railroad infrastructure........................ N/Appl.............n/a 8.01 Availability of financial services................................ 3.9...........103 2.04 Quality of port infrastructure.................................... 5.0.............41 8.02 Affordability of financial services.............................. 3.9.............95 2.05 Quality of air transport infrastructure....................... 4.9.............49 8.03 Financing through local equity market..................... 3.1.............89 2.06 Available airline seat km/week, millions*................ 26.8...........116 8.04 Ease of access to loans.......................................... 3.0.............50 2.07 Quality of electricity supply...................................... 4.8.............75 8.05 Venture capital availability........................................ 2.7.............62 2.08 Mobile telephone subscriptions/100 pop.*.......... 147.3.............26 8.06 Soundness of banks............................................... 4.5.............87 2.09 Fixed telephone lines/100 pop.*............................ 23.4.............47 8.07 Regulation of securities exchanges......................... 4.0.............71 8.08 Legal rights index, 0–10 (best)*.................................. 4.............96 3rd pillar: Macroeconomic environment 3.01 Government budget balance, % GDP*.................... 1.2.............13 9th pillar: Technological readiness 3.02 Gross national savings, % GDP*........................... 18.7.............77 9.01 Availability of latest technologies............................. 4.9.............65 3.03 Inflation, annual % change*..................................... 4.3.............87 9.02 Firm-level technology absorption............................. 4.7.............63 3.04 General government debt, % GDP*...................... 62.0...........103 9.03 FDI and technology transfer.................................... 4.2...........102 3.05 Country credit rating, 0–100 (best)*....................... 25.2...........122 9.04 Individuals using Internet, %*................................ 50.4.............66 9.05 Fixed broadband Internet subscriptions/100 pop.*.12.9.............54 4th pillar: Health and primary education 9.06 Int’l Internet bandwidth, kb/s per user*................. 23.6.............77 4.01 Malaria cases/100,000 pop.*................................. S.L.............n/a 9.07 Mobile broadband subscriptions/100 pop.*............ 9.9.............97 4.02 Business impact of malaria.............................. N/Appl.............n/a 4.03 Tuberculosis cases/100,000 pop.*........................ 30.0.............59 10th pillar: Market size 4.04 Business impact of tuberculosis.............................. 4.4...........109 10.01 Domestic market size index, 1–7 (best)*.................. 1.0...........143 4.05 HIV prevalence, % adult pop.*................................ 0.8...........105 10.02 Foreign market size index, 1–7 (best)*..................... 2.7...........137 4.06 Business impact of HIV/AIDS.................................. 4.1...........123 10.03 GDP (PPP$ billions)*............................................... 2.5...........143 4.07 Infant mortality, deaths/1,000 live births*............... 11.2.............60 10.04 Exports as a percentage of GDP*......................... 82.3.............18 4.08 Life expectancy, years*.......................................... 72.7.............83 4.09 Quality of primary education.................................... 4.6.............42 11th pillar: Business sophistication 4.10 Primary education enrollment, net %*................... 93.8.............71 11.01 Local supplier quantity............................................ 4.0...........119 11.02 Local supplier quality............................................... 3.8...........109 5th pillar: Higher education and training 11.03 State of cluster development................................... 3.9.............63 5.01 Secondary education enrollment, gross %*......... 101.3.............28 11.04 Nature of competitive advantage............................. 4.7.............27 5.02 Tertiary education enrollment, gross %*.................. 1.4...........140 11.05 Value chain breadth................................................. 3.9.............58 5.03 Quality of the education system.............................. 4.3.............37 11.06 Control of international distribution.......................... 3.8.............90 5.04 Quality of math and science education................... 4.3.............57 11.07 Production process sophistication........................... 3.9.............67 5.05 Quality of management schools.............................. 4.3.............63 11.08 Extent of marketing................................................. 3.9.............92 5.06 Internet access in schools....................................... 4.2.............74 11.09 Willingness to delegate authority............................. 3.7.............71 5.07 Availability of research and training services............ 3.6.............99 5.08 Extent of staff training............................................. 4.0.............67 12th pillar: Innovation 12.01 Capacity for innovation............................................ 3.9.............59 6th pillar: Goods market efficiency 12.02 Quality of scientific research institutions.................. 3.6.............76 6.01 Intensity of local competition................................... 4.2...........127 12.03 Company spending on R&D.................................... 3.1.............64 6.02 Extent of market dominance................................... 3.9.............56 12.04 University-industry collaboration in R&D.................. 3.4.............80 6.03 Effectiveness of anti-monopoly policy...................... 4.1.............66 12.05 Gov’t procurement of advanced tech products....... 3.7.............46 6.04 Effect of taxation on incentives to invest.................. 3.9.............47 12.06 Availability of scientists and engineers..................... 2.8...........140 6.05 Total tax rate, % profits*........................................ 25.7.............23 12.07 PCT patents, applications/million pop.*................. 30.2.............28 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 89. The Africa Competitiveness Report 2015 | 165 Part 3: Competitiveness Profiles Sierra Leone Key indicators, 2013 Population (millions).................................................6.1 GDP (PPP) per capita (int’l $), 1990–2013 GDP (US$ billions)*..................................................4.9 4,000  Sierra Leone     Sub-Saharan Africa GDP per capita (US$)..........................................805.1 3,500 GDP (PPP) as share (%) of world total...................0.01 3,000 Sectoral value-added (% GDP), 2011 2,500 Agriculture.............................................................56.7 2,000 Industry...................................................................8.3 Services................................................................35.0 1,500 1,000 Human Development Index, 2013 Score, (0–1) best...................................................0.37 500 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012 Rank (out of 187 economies)..................................183 Sources: IMF; UNFPA; UNDP; World Bank Global Competitiveness Index Rank Score Stage of development (out of 144) (1–7) GCI 2014–2015................................................. 138...... 3.1 Transition Transition GCI 2013–2014 (out of 148).......................................... 144....... 3.0 1 1–2 2 2­­–3 3 GCI 2012–2013 (out of 144).......................................... 143....... 2.8 Factor Efficiency Innovation driven driven driven Basic requirements (60.0%)........................................ 141....... 3.1 Institutions Institutions..................................................................... 107....... 3.4 7 Infrastructure................................................................. 136....... 2.1 Innovation Infrastructure 6 Macroeconomic environment........................................ 117....... 3.9 5 Business Macroeconomic Health and primary education........................................ 142....... 3.2 sophistication 4 environment 3 Efficiency enhancers (35.0%)..................................... 136....... 3.1 2 Health and Higher education and training........................................ 137....... 2.4 Market size 1 primary Goods market efficiency ............................................... 117....... 4.0 education Labor market efficiency................................................... 95....... 4.0 Financial market development....................................... 116....... 3.4 Technological Higher education readiness and training Technological readiness................................................. 138....... 2.4 Market size.................................................................... 133....... 2.3 Financial market Goods market development efficiency Innovation and sophistication factors (5.0%)............ 130....... 2.9 Labor market efficiency Business sophistication ................................................ 128....... 3.3 Innovation...................................................................... 130....... 2.6  Sierra Leone     Sub-Saharan Africa The most problematic factors for doing business Access to financing.................................................................. 18.5 Corruption................................................................................ 14.5 Inadequate supply of infrastructure........................................... 10.7 Foreign currency regulations....................................................... 8.8 Tax rates..................................................................................... 8.8 Poor work ethic in national labor force....................................... 6.0 Inflation....................................................................................... 5.7 Inefficient government bureaucracy............................................ 5.4 Crime and theft.......................................................................... 4.9 Inadequately educated workforce............................................... 4.4 Policy instability.......................................................................... 3.1 Insufficient capacity to innovate.................................................. 2.6 Poor public health...................................................................... 2.2 Tax regulations........................................................................... 1.9 Restrictive labor regulations........................................................ 1.6 Government instability/coups..................................................... 0.8 0 5 10 15 20 25 30 Score 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 2015 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 (cont’d.) 1.01 Property rights........................................................ 3.4...........113 6.06 No. procedures to start a business*........................... 6.............57 1.02 Intellectual property protection................................ 3.2.............93 6.07 No. days to start a business*................................ 12.0.............62 1.03 Diversion of public funds......................................... 2.7...........100 6.08 Agricultural policy costs.......................................... 3.7.............78 1.04 Public trust in politicians.......................................... 2.6.............88 6.09 Prevalence of trade barriers.................................... 4.6.............32 1.05 Irregular payments and bribes................................. 2.7...........130 6.10 Trade tariffs, % duty*............................................. 13.8...........131 1.06 Judicial independence............................................. 2.8...........115 6.11 Prevalence of foreign ownership.............................. 5.1.............43 1.07 Favoritism in decisions of government officials........ 2.5...........118 6.12 Business impact of rules on FDI.............................. 4.3.............80 1.08 Wastefulness of government spending.................... 3.0.............75 6.13 Burden of customs procedures............................... 3.4...........110 1.09 Burden of government regulation............................ 3.6.............52 6.14 Imports as a percentage of GDP*......................... 55.3.............51 1.10 Efficiency of legal framework in settling disputes..... 3.4.............92 6.15 Degree of customer orientation............................... 3.7...........123 1.11 Efficiency of legal framework in challenging regs..... 2.3...........132 6.16 Buyer sophistication................................................ 2.6...........130 1.12 Transparency of government policymaking.............. 3.8.............91 1.13 Business costs of terrorism..................................... 5.0.............86 7th pillar: Labor market efficiency 1.14 Business costs of crime and violence..................... 3.8...........102 7.01 Cooperation in labor-employer relations.................. 4.1.............84 1.15 Organized crime...................................................... 4.0...........111 7.02 Flexibility of wage determination.............................. 5.0.............71 1.16 Reliability of police services..................................... 3.4...........110 7.03 Hiring and firing practices........................................ 4.5.............19 1.17 Ethical behavior of firms.......................................... 3.5...........113 7.04 Redundancy costs, weeks of salary*..................... 78.3...........141 1.18 Strength of auditing and reporting standards.......... 4.1...........107 7.05 Effect of taxation on incentives to work................... 3.8.............54 1.19 Efficacy of corporate boards................................... 4.5.............69 7.06 Pay and productivity................................................ 3.5...........105 1.20 Protection of minority shareholders’ interests.......... 3.6...........103 7.07 Reliance on professional management.................... 4.2.............70 1.21 Strength of investor protection, 0–10 (best)*........... 6.7.............22 7.08 Country capacity to retain talent.............................. 2.5...........124 7.09 Country capacity to attract talent............................ 3.3.............86 2nd pillar: Infrastructure 7.10 Women in labor force, ratio to men*...................... 0.97...............7 2.01 Quality of overall infrastructure................................ 2.9...........127 2.02 Quality of roads....................................................... 3.0...........111 8th pillar: Financial market development 2.03 Quality of railroad infrastructure........................ N/Appl.............n/a 8.01 Availability of financial services................................ 3.6...........124 2.04 Quality of port infrastructure.................................... 3.4...........105 8.02 Affordability of financial services.............................. 3.4...........124 2.05 Quality of air transport infrastructure....................... 2.7...........134 8.03 Financing through local equity market..................... 2.3...........124 2.06 Available airline seat km/week, millions*................ 10.7...........134 8.04 Ease of access to loans.......................................... 1.8...........130 2.07 Quality of electricity supply...................................... 2.0...........134 8.05 Venture capital availability........................................ 1.8...........137 2.08 Mobile telephone subscriptions/100 pop.*............ 44.1...........137 8.06 Soundness of banks............................................... 4.1...........117 2.09 Fixed telephone lines/100 pop.*.............................. 0.3...........139 8.07 Regulation of securities exchanges......................... 3.1...........120 8.08 Legal rights index, 0–10 (best)*.................................. 7.............43 3rd pillar: Macroeconomic environment 3.01 Government budget balance, % GDP*...................-2.2.............56 9th pillar: Technological readiness 3.02 Gross national savings, % GDP*............................. 0.7...........140 9.01 Availability of latest technologies............................. 3.5...........134 3.03 Inflation, annual % change*..................................... 9.8...........135 9.02 Firm-level technology absorption............................. 3.5...........137 3.04 General government debt, % GDP*...................... 32.6.............44 9.03 FDI and technology transfer.................................... 4.1...........104 3.05 Country credit rating, 0–100 (best)*....................... 17.7...........137 9.04 Individuals using Internet, %*.................................. 1.7...........140 9.05 Fixed broadband Internet subscriptions/100 pop.*.. 0.0...........143 4th pillar: Health and primary education 9.06 Int’l Internet bandwidth, kb/s per user*................... 2.0...........139 4.01 Malaria cases/100,000 pop.*......................... 18,398.6.............62 9.07 Mobile broadband subscriptions/100 pop.*............ n/a............n/a 4.02 Business impact of malaria..................................... 2.9.............74 4.03 Tuberculosis cases/100,000 pop.*...................... 674.0...........142 10th pillar: Market size 4.04 Business impact of tuberculosis.............................. 4.2...........121 10.01 Domestic market size index, 1–7 (best)*.................. 2.0...........132 4.05 HIV prevalence, % adult pop.*................................ 1.5...........120 10.02 Foreign market size index, 1–7 (best)*..................... 3.0...........134 4.06 Business impact of HIV/AIDS.................................. 4.3...........114 10.03 GDP (PPP$ billions)*............................................... 9.4...........132 4.07 Infant mortality, deaths/1,000 live births*............. 117.4...........144 10.04 Exports as a percentage of GDP*......................... 34.0.............81 4.08 Life expectancy, years*.......................................... 45.3...........144 4.09 Quality of primary education.................................... 2.9...........117 11th pillar: Business sophistication 4.10 Primary education enrollment, net %*..................... n/a............n/a 11.01 Local supplier quantity............................................ 4.4.............97 11.02 Local supplier quality............................................... 3.7...........122 5th pillar: Higher education and training 11.03 State of cluster development................................... 3.2...........114 5.01 Secondary education enrollment, gross %*........... 26.4...........140 11.04 Nature of competitive advantage............................. 2.7...........125 5.02 Tertiary education enrollment, gross %*.................. 2.0...........139 11.05 Value chain breadth................................................. 3.0...........134 5.03 Quality of the education system.............................. 3.0...........112 11.06 Control of international distribution.......................... 3.0...........137 5.04 Quality of math and science education................... 2.5...........134 11.07 Production process sophistication........................... 2.8...........132 5.05 Quality of management schools.............................. 3.1...........128 11.08 Extent of marketing................................................. 3.0...........134 5.06 Internet access in schools....................................... 2.4...........134 11.09 Willingness to delegate authority............................. 3.3...........111 5.07 Availability of research and training services............ 3.2...........125 5.08 Extent of staff training............................................. 3.6...........107 12th pillar: Innovation 12.01 Capacity for innovation............................................ 3.2...........117 6th pillar: Goods market efficiency 12.02 Quality of scientific research institutions.................. 2.5...........133 6.01 Intensity of local competition................................... 4.5...........116 12.03 Company spending on R&D.................................... 2.5...........124 6.02 Extent of market dominance................................... 3.3...........113 12.04 University-industry collaboration in R&D.................. 2.4...........134 6.03 Effectiveness of anti-monopoly policy...................... 3.6...........107 12.05 Gov’t procurement of advanced tech products....... 3.2.............94 6.04 Effect of taxation on incentives to invest.................. 3.6.............78 12.06 Availability of scientists and engineers..................... 3.0...........134 6.05 Total tax rate, % profits*........................................ 32.4.............47 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 89. The Africa Competitiveness Report 2015 | 167 Part 3: Competitiveness Profiles South Africa Key indicators, 2013 Population (millions)...............................................53.0 GDP (PPP) per capita (int’l $), 1990–2013 GDP (US$ billions)*..............................................350.8 15,000  South Africa     Sub-Saharan Africa GDP per capita (US$).......................................6,621.1 GDP (PPP) as share (%) of world total...................0.65 12,000 Sectoral value-added (% GDP), 2013 9,000 Agriculture...............................................................2.4 Industry.................................................................27.6 6,000 Services................................................................70.0 3,000 Human Development Index, 2013 0 Score, (0–1) best...................................................0.66 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012 Rank (out of 187 economies)..................................118 Sources: IMF; UNFPA; UNDP; World Bank Global Competitiveness Index Rank Score Stage of development (out of 144) (1–7) GCI 2014–2015................................................... 56...... 4.4 Transition Transition GCI 2013–2014 (out of 148)............................................ 53....... 4.4 1 1–2 2 2­­–3 3 GCI 2012–2013 (out of 144)............................................ 52....... 4.4 Factor Efficiency Innovation driven driven driven Basic requirements (40.0%).......................................... 89....... 4.3 Institutions Institutions....................................................................... 36....... 4.5 7 Infrastructure................................................................... 60....... 4.3 Innovation Infrastructure 6 Macroeconomic environment.......................................... 89....... 4.5 5 Business Macroeconomic Health and primary education........................................ 132....... 4.0 sophistication 4 environment 3 Efficiency enhancers (50.0%)....................................... 43....... 4.4 2 Health and Higher education and training.......................................... 86....... 4.0 Market size 1 primary Goods market efficiency ................................................. 32....... 4.7 education Labor market efficiency................................................. 113....... 3.8 Financial market development........................................... 7....... 5.4 Technological Higher education readiness and training Technological readiness................................................... 66....... 3.9 Market size...................................................................... 25....... 4.9 Financial market Goods market development efficiency Innovation and sophistication factors (10.0%)............ 37....... 4.1 Labor market efficiency Business sophistication .................................................. 31....... 4.5 Innovation........................................................................ 43....... 3.6  South Africa     Sub-Saharan Africa The most problematic factors for doing business Restrictive labor regulations...................................................... 19.8 Inadequately educated workforce............................................. 16.9 Inefficient government bureaucracy.......................................... 14.8 Corruption................................................................................ 11.0 Inadequate supply of infrastructure............................................. 9.8 Policy instability.......................................................................... 7.4 Poor work ethic in national labor force....................................... 5.2 Insufficient capacity to innovate.................................................. 3.0 Crime and theft.......................................................................... 2.5 Access to financing.................................................................... 2.2 Foreign currency regulations....................................................... 2.1 Inflation....................................................................................... 1.5 Tax regulations........................................................................... 1.5 Poor public health...................................................................... 1.2 Tax rates..................................................................................... 1.0 Government instability/coups..................................................... 0.2 0 5 10 15 20 25 30 Score 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 2015 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 (cont’d.) 1.01 Property rights........................................................ 5.6.............20 6.06 No. procedures to start a business*........................... 5.............32 1.02 Intellectual property protection................................ 5.3.............22 6.07 No. days to start a business*................................ 19.0.............90 1.03 Diversion of public funds......................................... 2.8.............96 6.08 Agricultural policy costs.......................................... 3.9.............65 1.04 Public trust in politicians.......................................... 2.6.............90 6.09 Prevalence of trade barriers.................................... 4.8.............23 1.05 Irregular payments and bribes................................. 4.5.............48 6.10 Trade tariffs, % duty*............................................... 6.0.............76 1.06 Judicial independence............................................. 5.4.............24 6.11 Prevalence of foreign ownership.............................. 5.1.............42 1.07 Favoritism in decisions of government officials........ 2.6...........104 6.12 Business impact of rules on FDI.............................. 4.0...........104 1.08 Wastefulness of government spending.................... 2.8.............89 6.13 Burden of customs procedures............................... 4.1.............62 1.09 Burden of government regulation............................ 2.8...........120 6.14 Imports as a percentage of GDP*......................... 40.7.............85 1.10 Efficiency of legal framework in settling disputes..... 5.2.............15 6.15 Degree of customer orientation............................... 4.6.............67 1.11 Efficiency of legal framework in challenging regs..... 4.9...............9 6.16 Buyer sophistication................................................ 4.0.............31 1.12 Transparency of government policymaking.............. 4.5.............35 1.13 Business costs of terrorism..................................... 6.0.............30 7th pillar: Labor market efficiency 1.14 Business costs of crime and violence..................... 2.8...........133 7.01 Cooperation in labor-employer relations.................. 2.5...........144 1.15 Organized crime...................................................... 4.3.............99 7.02 Flexibility of wage determination.............................. 2.7...........139 1.16 Reliability of police services..................................... 3.6...........102 7.03 Hiring and firing practices........................................ 2.1...........143 1.17 Ethical behavior of firms.......................................... 4.7.............35 7.04 Redundancy costs, weeks of salary*....................... 9.3.............33 1.18 Strength of auditing and reporting standards.......... 6.7...............1 7.05 Effect of taxation on incentives to work................... 4.5.............15 1.19 Efficacy of corporate boards................................... 6.0...............3 7.06 Pay and productivity................................................ 2.7...........136 1.20 Protection of minority shareholders’ interests.......... 6.1...............2 7.07 Reliance on professional management.................... 5.5.............21 1.21 Strength of investor protection, 0–10 (best)*........... 8.0.............10 7.08 Country capacity to retain talent.............................. 3.7.............50 7.09 Country capacity to attract talent............................ 3.9.............39 2nd pillar: Infrastructure 7.10 Women in labor force, ratio to men*...................... 0.77.............84 2.01 Quality of overall infrastructure................................ 4.5.............59 2.02 Quality of roads....................................................... 4.9.............37 8th pillar: Financial market development 2.03 Quality of railroad infrastructure............................... 3.4.............44 8.01 Availability of financial services................................ 6.1...............6 2.04 Quality of port infrastructure.................................... 4.9.............46 8.02 Affordability of financial services.............................. 5.3.............21 2.05 Quality of air transport infrastructure....................... 6.0.............11 8.03 Financing through local equity market..................... 5.4...............3 2.06 Available airline seat km/week, millions*........... 1,117.0.............28 8.04 Ease of access to loans.......................................... 3.5.............32 2.07 Quality of electricity supply...................................... 3.6.............99 8.05 Venture capital availability........................................ 3.2.............37 2.08 Mobile telephone subscriptions/100 pop.*.......... 147.5.............25 8.06 Soundness of banks............................................... 6.5...............6 2.09 Fixed telephone lines/100 pop.*.............................. 9.2.............90 8.07 Regulation of securities exchanges......................... 6.4...............1 8.08 Legal rights index, 0–10 (best)*.................................. 7.............43 3rd pillar: Macroeconomic environment 3.01 Government budget balance, % GDP*...................-4.3.............97 9th pillar: Technological readiness 3.02 Gross national savings, % GDP*........................... 13.5...........119 9.01 Availability of latest technologies............................. 5.5.............39 3.03 Inflation, annual % change*..................................... 5.8...........102 9.02 Firm-level technology absorption............................. 5.4.............29 3.04 General government debt, % GDP*...................... 45.2.............77 9.03 FDI and technology transfer.................................... 4.8.............50 3.05 Country credit rating, 0–100 (best)*....................... 59.1.............51 9.04 Individuals using Internet, %*................................ 48.9.............69 9.05 Fixed broadband Internet subscriptions/100 pop.*.. 3.1.............89 4th pillar: Health and primary education 9.06 Int’l Internet bandwidth, kb/s per user*................... 3.7...........126 4.01 Malaria cases/100,000 pop.*................................ 32.5.............27 9.07 Mobile broadband subscriptions/100 pop.*.......... 25.2.............74 4.02 Business impact of malaria..................................... 5.1.............30 4.03 Tuberculosis cases/100,000 pop.*................... 1,003.0...........143 10th pillar: Market size 4.04 Business impact of tuberculosis.............................. 3.7...........136 10.01 Domestic market size index, 1–7 (best)*.................. 4.8.............24 4.05 HIV prevalence, % adult pop.*.............................. 17.9...........140 10.02 Foreign market size index, 1–7 (best)*..................... 5.3.............34 4.06 Business impact of HIV/AIDS.................................. 3.4...........136 10.03 GDP (PPP$ billions)*........................................... 596.5.............25 4.07 Infant mortality, deaths/1,000 live births*............... 33.3...........105 10.04 Exports as a percentage of GDP*......................... 31.3.............92 4.08 Life expectancy, years*.......................................... 56.1...........129 4.09 Quality of primary education.................................... 2.4...........133 11th pillar: Business sophistication 4.10 Primary education enrollment, net %*................... 85.0...........118 11.01 Local supplier quantity............................................ 4.8.............47 11.02 Local supplier quality............................................... 4.9.............38 5th pillar: Higher education and training 11.03 State of cluster development................................... 4.2.............44 5.01 Secondary education enrollment, gross %*......... 101.9.............24 11.04 Nature of competitive advantage............................. 3.7.............62 5.02 Tertiary education enrollment, gross %*................ 19.2.............93 11.05 Value chain breadth................................................. 3.8.............68 5.03 Quality of the education system.............................. 2.2...........140 11.06 Control of international distribution.......................... 4.4.............35 5.04 Quality of math and science education................... 1.9...........144 11.07 Production process sophistication........................... 4.5.............38 5.05 Quality of management schools.............................. 5.2.............24 11.08 Extent of marketing................................................. 5.2.............24 5.06 Internet access in schools....................................... 3.2...........117 11.09 Willingness to delegate authority............................. 4.5.............27 5.07 Availability of research and training services............ 4.5.............44 5.08 Extent of staff training............................................. 4.9.............18 12th pillar: Innovation 12.01 Capacity for innovation............................................ 4.3.............35 6th pillar: Goods market efficiency 12.02 Quality of scientific research institutions.................. 4.7.............34 6.01 Intensity of local competition................................... 5.5.............36 12.03 Company spending on R&D.................................... 3.4.............48 6.02 Extent of market dominance................................... 4.0.............48 12.04 University-industry collaboration in R&D.................. 4.5.............31 6.03 Effectiveness of anti-monopoly policy...................... 5.1.............14 12.05 Gov’t procurement of advanced tech products....... 3.0...........112 6.04 Effect of taxation on incentives to invest.................. 4.3.............26 12.06 Availability of scientists and engineers..................... 3.5...........102 6.05 Total tax rate, % profits*........................................ 30.1.............41 12.07 PCT patents, applications/million pop.*................... 6.5.............45 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 89. The Africa Competitiveness Report 2015 | 169 Part 3: Competitiveness Profiles Swaziland Key indicators, 2013 Population (millions).................................................1.1 GDP (PPP) per capita (int’l $), 1990–2013 GDP (US$ billions)*..................................................3.8 8,000  Swaziland     Sub-Saharan Africa GDP per capita (US$).......................................3,473.4 7,000 GDP (PPP) as share (%) of world total...................0.01 6,000 Sectoral value-added (% GDP), 2011 5,000 Agriculture...............................................................7.5 4,000 Industry.................................................................47.7 Services................................................................44.8 3,000 2,000 Human Development Index, 2013 Score, (0–1) best...................................................0.53 1,000 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012 Rank (out of 187 economies)..................................148 Sources: IMF; UNFPA; UNDP; World Bank Global Competitiveness Index Rank Score Stage of development (out of 144) (1–7) GCI 2014–2015................................................. 123...... 3.6 Transition Transition GCI 2013–2014 (out of 148).......................................... 124....... 3.5 1 1–2 2 2­­–3 3 GCI 2012–2013 (out of 144).......................................... 135....... 3.3 Factor Efficiency Innovation driven driven driven Basic requirements (40.0%)........................................ 108....... 3.9 Institutions Institutions....................................................................... 61....... 3.9 7 Infrastructure................................................................... 97....... 3.3 Innovation Infrastructure 6 Macroeconomic environment.......................................... 60....... 4.8 5 Business Macroeconomic Health and primary education........................................ 134....... 3.7 sophistication 4 environment 3 Efficiency enhancers (50.0%)..................................... 126....... 3.3 2 Health and Higher education and training........................................ 120....... 3.2 Market size 1 primary Goods market efficiency ................................................. 98....... 4.1 education Labor market efficiency................................................. 105....... 3.9 Financial market development......................................... 71....... 4.0 Technological Higher education readiness and training Technological readiness................................................. 125....... 2.7 Market size.................................................................... 136....... 2.1 Financial market Goods market development efficiency Innovation and sophistication factors (10.0%).......... 108....... 3.2 Labor market efficiency Business sophistication ................................................ 101....... 3.6 Innovation...................................................................... 112....... 2.9  Swaziland     Sub-Saharan Africa The most problematic factors for doing business Access to financing.................................................................. 20.7 Inefficient government bureaucracy.......................................... 13.6 Corruption................................................................................ 12.8 Tax rates................................................................................... 11.6 Inadequate supply of infrastructure........................................... 10.6 Insufficient capacity to innovate.................................................. 5.5 Inflation....................................................................................... 4.8 Poor work ethic in national labor force....................................... 4.8 Restrictive labor regulations........................................................ 3.8 Tax regulations........................................................................... 3.5 Inadequately educated workforce............................................... 3.0 Poor public health...................................................................... 3.0 Foreign currency regulations....................................................... 1.0 Crime and theft.......................................................................... 0.8 Government instability/coups..................................................... 0.5 Policy instability.......................................................................... 0.0 0 5 10 15 20 25 30 Score 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 2015 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 (cont’d.) 1.01 Property rights........................................................ 4.3.............58 6.06 No. procedures to start a business*......................... 12...........131 1.02 Intellectual property protection................................ 3.8.............59 6.07 No. days to start a business*................................ 38.0...........124 1.03 Diversion of public funds......................................... 3.4.............62 6.08 Agricultural policy costs.......................................... 3.6.............95 1.04 Public trust in politicians.......................................... 3.3.............54 6.09 Prevalence of trade barriers.................................... 4.6.............36 1.05 Irregular payments and bribes................................. 3.8.............73 6.10 Trade tariffs, % duty*............................................... 6.1.............79 1.06 Judicial independence............................................. 3.5.............83 6.11 Prevalence of foreign ownership.............................. 4.8.............58 1.07 Favoritism in decisions of government officials........ 3.2.............64 6.12 Business impact of rules on FDI.............................. 3.9...........106 1.08 Wastefulness of government spending.................... 3.0.............81 6.13 Burden of customs procedures............................... 3.5...........102 1.09 Burden of government regulation............................ 3.6.............60 6.14 Imports as a percentage of GDP*......................... 68.8.............33 1.10 Efficiency of legal framework in settling disputes..... 3.9.............55 6.15 Degree of customer orientation............................... 4.1...........104 1.11 Efficiency of legal framework in challenging regs..... 3.5.............59 6.16 Buyer sophistication................................................ 3.4.............78 1.12 Transparency of government policymaking.............. 3.9.............79 1.13 Business costs of terrorism..................................... 5.3.............71 7th pillar: Labor market efficiency 1.14 Business costs of crime and violence..................... 4.5.............69 7.01 Cooperation in labor-employer relations.................. 4.3.............72 1.15 Organized crime...................................................... 4.8.............68 7.02 Flexibility of wage determination.............................. 4.5...........109 1.16 Reliability of police services..................................... 4.6.............50 7.03 Hiring and firing practices........................................ 3.8.............81 1.17 Ethical behavior of firms.......................................... 4.1.............59 7.04 Redundancy costs, weeks of salary*..................... 14.6.............67 1.18 Strength of auditing and reporting standards.......... 4.8.............64 7.05 Effect of taxation on incentives to work................... 3.6.............69 1.19 Efficacy of corporate boards................................... 4.5.............75 7.06 Pay and productivity................................................ 3.7.............93 1.20 Protection of minority shareholders’ interests.......... 4.3.............56 7.07 Reliance on professional management.................... 4.3.............62 1.21 Strength of investor protection, 0–10 (best)*........... 4.3...........105 7.08 Country capacity to retain talent.............................. 2.8...........114 7.09 Country capacity to attract talent............................ 3.2.............87 2nd pillar: Infrastructure 7.10 Women in labor force, ratio to men*...................... 0.62...........110 2.01 Quality of overall infrastructure................................ 4.0.............78 2.02 Quality of roads....................................................... 4.9.............41 8th pillar: Financial market development 2.03 Quality of railroad infrastructure............................... 3.5.............43 8.01 Availability of financial services................................ 4.4.............66 2.04 Quality of port infrastructure.................................... 4.0.............79 8.02 Affordability of financial services.............................. 4.2.............60 2.05 Quality of air transport infrastructure....................... 4.0.............88 8.03 Financing through local equity market..................... 3.5.............66 2.06 Available airline seat km/week, millions*.................. 0.3...........144 8.04 Ease of access to loans.......................................... 2.7.............81 2.07 Quality of electricity supply...................................... 4.1.............90 8.05 Venture capital availability........................................ 2.7.............74 2.08 Mobile telephone subscriptions/100 pop.*............ 71.5...........119 8.06 Soundness of banks............................................... 4.9.............65 2.09 Fixed telephone lines/100 pop.*.............................. 3.7...........108 8.07 Regulation of securities exchanges......................... 4.0.............77 8.08 Legal rights index, 0–10 (best)*.................................. 6.............63 3rd pillar: Macroeconomic environment 3.01 Government budget balance, % GDP*...................-0.7.............33 9th pillar: Technological readiness 3.02 Gross national savings, % GDP*........................... 15.5...........102 9.01 Availability of latest technologies............................. 3.9...........121 3.03 Inflation, annual % change*..................................... 5.6.............99 9.02 Firm-level technology absorption............................. 3.9...........119 3.04 General government debt, % GDP*...................... 18.8.............17 9.03 FDI and technology transfer.................................... 3.8...........118 3.05 Country credit rating, 0–100 (best)*....................... 22.8...........124 9.04 Individuals using Internet, %*................................ 24.7.............97 9.05 Fixed broadband Internet subscriptions/100 pop.*.. 0.3...........115 4th pillar: Health and primary education 9.06 Int’l Internet bandwidth, kb/s per user*................... 3.2...........129 4.01 Malaria cases/100,000 pop.*................................ 43.1.............30 9.07 Mobile broadband subscriptions/100 pop.*............ 0.7...........126 4.02 Business impact of malaria..................................... 4.1.............52 4.03 Tuberculosis cases/100,000 pop.*................... 1,349.0...........144 10th pillar: Market size 4.04 Business impact of tuberculosis.............................. 2.4...........144 10.01 Domestic market size index, 1–7 (best)*.................. 1.8...........138 4.05 HIV prevalence, % adult pop.*.............................. 26.5...........143 10.02 Foreign market size index, 1–7 (best)*..................... 3.1...........130 4.06 Business impact of HIV/AIDS.................................. 2.1...........144 10.03 GDP (PPP$ billions)*............................................... 6.8...........137 4.07 Infant mortality, deaths/1,000 live births*............... 55.7...........127 10.04 Exports as a percentage of GDP*......................... 55.8.............37 4.08 Life expectancy, years*.......................................... 48.9...........141 4.09 Quality of primary education.................................... 4.4.............49 11th pillar: Business sophistication 4.10 Primary education enrollment, net %*................... 84.7...........119 11.01 Local supplier quantity............................................ 3.9...........125 11.02 Local supplier quality............................................... 3.9...........102 5th pillar: Higher education and training 11.03 State of cluster development................................... 3.4...........100 5.01 Secondary education enrollment, gross %*........... 59.9...........114 11.04 Nature of competitive advantage............................. 3.3.............82 5.02 Tertiary education enrollment, gross %*.................. 6.0...........125 11.05 Value chain breadth................................................. 3.3...........108 5.03 Quality of the education system.............................. 3.8.............64 11.06 Control of international distribution.......................... 3.5...........114 5.04 Quality of math and science education................... 4.0.............78 11.07 Production process sophistication........................... 3.6.............85 5.05 Quality of management schools.............................. 3.4...........122 11.08 Extent of marketing................................................. 3.6...........111 5.06 Internet access in schools....................................... 3.1...........119 11.09 Willingness to delegate authority............................. 3.8.............63 5.07 Availability of research and training services............ 3.3...........121 5.08 Extent of staff training............................................. 3.9.............79 12th pillar: Innovation 12.01 Capacity for innovation............................................ 3.5.............93 6th pillar: Goods market efficiency 12.02 Quality of scientific research institutions.................. 2.9...........116 6.01 Intensity of local competition................................... 4.5...........115 12.03 Company spending on R&D.................................... 2.8...........104 6.02 Extent of market dominance................................... 3.3...........111 12.04 University-industry collaboration in R&D.................. 3.3.............85 6.03 Effectiveness of anti-monopoly policy...................... 3.4...........116 12.05 Gov’t procurement of advanced tech products....... 3.3.............87 6.04 Effect of taxation on incentives to invest.................. 3.8.............62 12.06 Availability of scientists and engineers..................... 2.7...........141 6.05 Total tax rate, % profits*........................................ 36.5.............67 12.07 PCT patents, applications/million pop.*................... 0.2.............92 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 89. The Africa Competitiveness Report 2015 | 171 Part 3: Competitiveness Profiles Tanzania Key indicators, 2013 Population (millions)...............................................46.3 GDP (PPP) per capita (int’l $), 1990–2013 GDP (US$ billions)*................................................33.3 4,000  Tanzania     Sub-Saharan Africa GDP per capita (US$)..........................................719.3 3,500 GDP (PPP) as share (%) of world total...................0.08 3,000 Sectoral value-added (% GDP), 2013 2,500 Agriculture.............................................................27.0 2,000 Industry.................................................................25.2 Services................................................................47.8 1,500 1,000 Human Development Index, 2013 Score, (0–1) best...................................................0.49 500 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012 Rank (out of 187 economies)..................................159 Sources: IMF; UNFPA; UNDP; World Bank Global Competitiveness Index Rank Score Stage of development (out of 144) (1–7) GCI 2014–2015................................................. 121...... 3.6 Transition Transition GCI 2013–2014 (out of 148).......................................... 125....... 3.5 1 1–2 2 2­­–3 3 GCI 2012–2013 (out of 144).......................................... 120....... 3.6 Factor Efficiency Innovation driven driven driven Basic requirements (60.0%)........................................ 124....... 3.7 Institutions Institutions....................................................................... 93....... 3.5 7 Infrastructure................................................................. 130....... 2.3 Innovation Infrastructure 6 Macroeconomic environment........................................ 109....... 4.1 5 Business Macroeconomic Health and primary education........................................ 108....... 4.9 sophistication 4 environment 3 Efficiency enhancers (35.0%)..................................... 114....... 3.4 2 Health and Higher education and training........................................ 134....... 2.4 Market size 1 primary Goods market efficiency ............................................... 122....... 3.9 education Labor market efficiency................................................... 47....... 4.4 Financial market development......................................... 96....... 3.7 Technological Higher education readiness and training Technological readiness................................................. 131....... 2.5 Market size...................................................................... 75....... 3.6 Financial market Goods market development efficiency Innovation and sophistication factors (5.0%)............ 107....... 3.3 Labor market efficiency Business sophistication ................................................ 112....... 3.5 Innovation........................................................................ 98....... 3.0  Tanzania     Sub-Saharan Africa The most problematic factors for doing business Corruption................................................................................ 17.0 Access to financing.................................................................. 16.7 Inefficient government bureaucracy.......................................... 11.3 Tax rates................................................................................... 10.3 Inadequate supply of infrastructure........................................... 10.0 Tax regulations........................................................................... 6.7 Inflation....................................................................................... 6.6 Inadequately educated workforce............................................... 6.2 Poor work ethic in national labor force....................................... 4.7 Crime and theft.......................................................................... 2.8 Insufficient capacity to innovate.................................................. 2.7 Restrictive labor regulations........................................................ 1.6 Poor public health...................................................................... 1.1 Policy instability.......................................................................... 1.0 Foreign currency regulations....................................................... 0.7 Government instability/coups..................................................... 0.5 0 5 10 15 20 25 30 Score 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 2015 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 (cont’d.) 1.01 Property rights........................................................ 3.5...........105 6.06 No. procedures to start a business*........................... 9...........106 1.02 Intellectual property protection................................ 3.3.............91 6.07 No. days to start a business*................................ 26.0...........105 1.03 Diversion of public funds......................................... 2.8.............91 6.08 Agricultural policy costs.......................................... 3.4...........101 1.04 Public trust in politicians.......................................... 2.9.............78 6.09 Prevalence of trade barriers.................................... 3.9...........125 1.05 Irregular payments and bribes................................. 2.9...........124 6.10 Trade tariffs, % duty*............................................... 9.7...........104 1.06 Judicial independence............................................. 3.2.............96 6.11 Prevalence of foreign ownership.............................. 4.1...........104 1.07 Favoritism in decisions of government officials........ 3.2.............61 6.12 Business impact of rules on FDI.............................. 4.3.............82 1.08 Wastefulness of government spending.................... 2.9.............84 6.13 Burden of customs procedures............................... 3.2...........123 1.09 Burden of government regulation............................ 3.6.............61 6.14 Imports as a percentage of GDP*......................... 45.2.............76 1.10 Efficiency of legal framework in settling disputes..... 3.7.............64 6.15 Degree of customer orientation............................... 3.9...........117 1.11 Efficiency of legal framework in challenging regs..... 3.3.............78 6.16 Buyer sophistication................................................ 3.1...........101 1.12 Transparency of government policymaking.............. 3.6...........111 1.13 Business costs of terrorism..................................... 4.7.............99 7th pillar: Labor market efficiency 1.14 Business costs of crime and violence..................... 4.1.............88 7.01 Cooperation in labor-employer relations.................. 3.8...........117 1.15 Organized crime...................................................... 4.7.............77 7.02 Flexibility of wage determination.............................. 4.6...........105 1.16 Reliability of police services..................................... 3.5...........108 7.03 Hiring and firing practices........................................ 3.9.............73 1.17 Ethical behavior of firms.......................................... 3.5...........116 7.04 Redundancy costs, weeks of salary*....................... 9.3.............33 1.18 Strength of auditing and reporting standards.......... 3.8...........119 7.05 Effect of taxation on incentives to work................... 3.2...........105 1.19 Efficacy of corporate boards................................... 4.0...........116 7.06 Pay and productivity................................................ 3.3...........122 1.20 Protection of minority shareholders’ interests.......... 3.6...........106 7.07 Reliance on professional management.................... 3.7...........106 1.21 Strength of investor protection, 0–10 (best)*........... 5.0.............83 7.08 Country capacity to retain talent.............................. 3.0.............98 7.09 Country capacity to attract talent............................ 3.3.............84 2nd pillar: Infrastructure 7.10 Women in labor force, ratio to men*...................... 0.99...............6 2.01 Quality of overall infrastructure................................ 3.2...........117 2.02 Quality of roads....................................................... 3.0...........112 8th pillar: Financial market development 2.03 Quality of railroad infrastructure............................... 2.0.............88 8.01 Availability of financial services................................ 3.7...........122 2.04 Quality of port infrastructure.................................... 3.3...........106 8.02 Affordability of financial services.............................. 3.6...........116 2.05 Quality of air transport infrastructure....................... 2.8...........131 8.03 Financing through local equity market..................... 3.2.............82 2.06 Available airline seat km/week, millions*................ 81.9.............87 8.04 Ease of access to loans.......................................... 2.7.............86 2.07 Quality of electricity supply...................................... 2.5...........125 8.05 Venture capital availability........................................ 2.6.............81 2.08 Mobile telephone subscriptions/100 pop.*............ 55.7...........135 8.06 Soundness of banks............................................... 4.2...........107 2.09 Fixed telephone lines/100 pop.*.............................. 0.3...........136 8.07 Regulation of securities exchanges......................... 3.5...........104 8.08 Legal rights index, 0–10 (best)*.................................. 7.............43 3rd pillar: Macroeconomic environment 3.01 Government budget balance, % GDP*...................-5.6...........115 9th pillar: Technological readiness 3.02 Gross national savings, % GDP*........................... 19.9.............69 9.01 Availability of latest technologies............................. 3.8...........126 3.03 Inflation, annual % change*..................................... 7.9...........125 9.02 Firm-level technology absorption............................. 3.8...........129 3.04 General government debt, % GDP*...................... 41.0.............65 9.03 FDI and technology transfer.................................... 4.2.............99 3.05 Country credit rating, 0–100 (best)*....................... 31.9...........103 9.04 Individuals using Internet, %*.................................. 4.4...........133 9.05 Fixed broadband Internet subscriptions/100 pop.*.. 0.1...........128 4th pillar: Health and primary education 9.06 Int’l Internet bandwidth, kb/s per user*................... 6.5...........111 4.01 Malaria cases/100,000 pop.*......................... 17,370.2.............59 9.07 Mobile broadband subscriptions/100 pop.*............ 2.7...........117 4.02 Business impact of malaria..................................... 3.0.............72 4.03 Tuberculosis cases/100,000 pop.*...................... 165.0...........111 10th pillar: Market size 4.04 Business impact of tuberculosis.............................. 4.2...........120 10.01 Domestic market size index, 1–7 (best)*.................. 3.5.............71 4.05 HIV prevalence, % adult pop.*................................ 5.1...........132 10.02 Foreign market size index, 1–7 (best)*..................... 4.0.............89 4.06 Business impact of HIV/AIDS.................................. 3.8...........131 10.03 GDP (PPP$ billions)*............................................. 79.4.............76 4.07 Infant mortality, deaths/1,000 live births*............... 37.7...........109 10.04 Exports as a percentage of GDP*......................... 24.6...........115 4.08 Life expectancy, years*.......................................... 60.8...........124 4.09 Quality of primary education.................................... 2.5...........132 11th pillar: Business sophistication 4.10 Primary education enrollment, net %*................... 97.6.............38 11.01 Local supplier quantity............................................ 4.1...........115 11.02 Local supplier quality............................................... 3.8...........112 5th pillar: Higher education and training 11.03 State of cluster development................................... 3.4.............98 5.01 Secondary education enrollment, gross %*........... 35.0...........132 11.04 Nature of competitive advantage............................. 3.0...........108 5.02 Tertiary education enrollment, gross %*.................. 3.9...........134 11.05 Value chain breadth................................................. 3.5...........102 5.03 Quality of the education system.............................. 3.0...........109 11.06 Control of international distribution.......................... 3.5...........119 5.04 Quality of math and science education................... 2.4...........137 11.07 Production process sophistication........................... 3.2...........111 5.05 Quality of management schools.............................. 3.2...........126 11.08 Extent of marketing................................................. 3.5...........117 5.06 Internet access in schools....................................... 2.8...........124 11.09 Willingness to delegate authority............................. 3.4...........105 5.07 Availability of research and training services............ 3.5...........109 5.08 Extent of staff training............................................. 3.5...........116 12th pillar: Innovation 12.01 Capacity for innovation............................................ 3.4...........102 6th pillar: Goods market efficiency 12.02 Quality of scientific research institutions.................. 3.6.............80 6.01 Intensity of local competition................................... 4.3...........123 12.03 Company spending on R&D.................................... 3.0.............86 6.02 Extent of market dominance................................... 3.5.............95 12.04 University-industry collaboration in R&D.................. 3.4.............83 6.03 Effectiveness of anti-monopoly policy...................... 3.8.............96 12.05 Gov’t procurement of advanced tech products....... 3.3.............84 6.04 Effect of taxation on incentives to invest.................. 3.4.............96 12.06 Availability of scientists and engineers..................... 3.6.............98 6.05 Total tax rate, % profits*........................................ 44.9...........101 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 89. The Africa Competitiveness Report 2015 | 173 Part 3: Competitiveness Profiles Tunisia Key indicators, 2013 Population (millions)...............................................10.9 GDP (PPP) per capita (int’l $), 1990–2013 GDP (US$ billions)*................................................47.0 15,000  Tunisia     Middle East, North Africa, and Pakistan GDP per capita (US$).......................................4,316.8 GDP (PPP) as share (%) of world total...................0.12 12,000 Sectoral value-added (% GDP), 2013 Agriculture...............................................................8.7 9,000 Industry.................................................................29.4 Services................................................................61.9 6,000 Human Development Index, 2013 3,000 Score, (0–1) best...................................................0.72 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012 Rank (out of 187 economies)....................................90 Sources: IMF; UNFPA; UNDP; World Bank Global Competitiveness Index Rank Score Stage of development (out of 144) (1–7) GCI 2014–2015................................................... 87...... 4.0 Transition Transition GCI 2013–2014 (out of 148)............................................ 83....... 4.1 1 1–2 2 2­­–3 3 GCI 2012–2013 (out of 144)........................................... n/a....... n/a Factor Efficiency Innovation driven driven driven Basic requirements (40.0%).......................................... 85....... 4.4 Institutions Institutions....................................................................... 81....... 3.7 7 Infrastructure................................................................... 79....... 3.8 Innovation Infrastructure 6 Macroeconomic environment........................................ 111....... 4.0 5 Business Macroeconomic Health and primary education.......................................... 53....... 6.0 sophistication 4 environment 3 Efficiency enhancers (50.0%)....................................... 94....... 3.7 2 Health and Higher education and training.......................................... 73....... 4.3 Market size 1 primary Goods market efficiency ............................................... 107....... 4.0 education Labor market efficiency................................................. 129....... 3.5 Financial market development....................................... 117....... 3.4 Technological Higher education readiness and training Technological readiness................................................... 90....... 3.4 Market size...................................................................... 64....... 3.9 Financial market Goods market development efficiency Innovation and sophistication factors (10.0%)............ 93....... 3.4 Labor market efficiency Business sophistication .................................................. 88....... 3.8 Innovation........................................................................ 99....... 3.0  Tunisia     Middle East, North Africa, and Pakistan The most problematic factors for doing business Inefficient government bureaucracy.......................................... 12.7 Access to financing.................................................................. 12.3 Policy instability........................................................................ 11.8 Restrictive labor regulations........................................................ 8.3 Inadequate supply of infrastructure............................................. 7.6 Corruption.................................................................................. 6.7 Poor work ethic in national labor force....................................... 6.4 Government instability/coups..................................................... 5.4 Tax regulations........................................................................... 5.3 Inadequately educated workforce............................................... 4.6 Tax rates..................................................................................... 4.5 Foreign currency regulations....................................................... 4.4 Inflation....................................................................................... 4.1 Insufficient capacity to innovate.................................................. 4.0 Crime and theft.......................................................................... 1.9 Poor public health...................................................................... 0.1 0 5 10 15 20 25 30 Score 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 2015 Part 3: Competitiveness Profiles Tunisia The Global Competitiveness Index in detail INDICATOR VALUE RANK/144 INDICATOR VALUE RANK/144 1st pillar: Institutions 6th pillar: Goods market efficiency (cont’d.) 1.01 Property rights........................................................ 4.0.............76 6.06 No. procedures to start a business*......................... 10...........118 1.02 Intellectual property protection................................ 3.1...........102 6.07 No. days to start a business*................................ 11.0.............57 1.03 Diversion of public funds......................................... 3.5.............56 6.08 Agricultural policy costs.......................................... 3.4...........105 1.04 Public trust in politicians.......................................... 3.1.............63 6.09 Prevalence of trade barriers.................................... 3.9...........124 1.05 Irregular payments and bribes................................. 3.8.............77 6.10 Trade tariffs, % duty*............................................. 16.3...........138 1.06 Judicial independence............................................. 3.6.............75 6.11 Prevalence of foreign ownership.............................. 4.4.............81 1.07 Favoritism in decisions of government officials........ 3.2.............60 6.12 Business impact of rules on FDI.............................. 4.6.............49 1.08 Wastefulness of government spending.................... 3.3.............64 6.13 Burden of customs procedures............................... 3.4...........106 1.09 Burden of government regulation............................ 3.5.............66 6.14 Imports as a percentage of GDP*......................... 58.0.............44 1.10 Efficiency of legal framework in settling disputes..... 3.6.............75 6.15 Degree of customer orientation............................... 4.3.............89 1.11 Efficiency of legal framework in challenging regs..... 3.4.............63 6.16 Buyer sophistication................................................ 3.2.............91 1.12 Transparency of government policymaking.............. 3.8.............90 1.13 Business costs of terrorism..................................... 3.3...........133 7th pillar: Labor market efficiency 1.14 Business costs of crime and violence..................... 3.6...........107 7.01 Cooperation in labor-employer relations.................. 3.8...........118 1.15 Organized crime...................................................... 4.2...........103 7.02 Flexibility of wage determination.............................. 4.2...........119 1.16 Reliability of police services..................................... 4.1.............70 7.03 Hiring and firing practices........................................ 3.5.............97 1.17 Ethical behavior of firms.......................................... 3.9.............75 7.04 Redundancy costs, weeks of salary*..................... 12.1.............52 1.18 Strength of auditing and reporting standards.......... 4.5.............78 7.05 Effect of taxation on incentives to work................... 3.6.............71 1.19 Efficacy of corporate boards................................... 4.1...........108 7.06 Pay and productivity................................................ 3.6.............97 1.20 Protection of minority shareholders’ interests.......... 4.0.............82 7.07 Reliance on professional management.................... 3.8.............94 1.21 Strength of investor protection, 0–10 (best)*........... 6.0.............45 7.08 Country capacity to retain talent.............................. 3.0.............95 7.09 Country capacity to attract talent............................ 2.8...........104 2nd pillar: Infrastructure 7.10 Women in labor force, ratio to men*...................... 0.36...........134 2.01 Quality of overall infrastructure................................ 3.9.............83 2.02 Quality of roads....................................................... 3.7.............83 8th pillar: Financial market development 2.03 Quality of railroad infrastructure............................... 3.3.............48 8.01 Availability of financial services................................ 3.7...........120 2.04 Quality of port infrastructure.................................... 3.9.............83 8.02 Affordability of financial services.............................. 3.9.............91 2.05 Quality of air transport infrastructure....................... 4.2.............77 8.03 Financing through local equity market..................... 3.6.............57 2.06 Available airline seat km/week, millions*.............. 190.7.............67 8.04 Ease of access to loans.......................................... 2.8.............70 2.07 Quality of electricity supply...................................... 5.0.............65 8.05 Venture capital availability........................................ 2.7.............68 2.08 Mobile telephone subscriptions/100 pop.*.......... 115.6.............63 8.06 Soundness of banks............................................... 3.5...........128 2.09 Fixed telephone lines/100 pop.*.............................. 9.3.............89 8.07 Regulation of securities exchanges......................... 3.7.............90 8.08 Legal rights index, 0–10 (best)*.................................. 3...........113 3rd pillar: Macroeconomic environment 3.01 Government budget balance, % GDP*...................-5.9...........121 9th pillar: Technological readiness 3.02 Gross national savings, % GDP*........................... 14.9...........106 9.01 Availability of latest technologies............................. 4.7.............79 3.03 Inflation, annual % change*..................................... 6.1...........108 9.02 Firm-level technology absorption............................. 4.5.............79 3.04 General government debt, % GDP*...................... 44.4.............75 9.03 FDI and technology transfer.................................... 4.4.............84 3.05 Country credit rating, 0–100 (best)*....................... 44.4.............73 9.04 Individuals using Internet, %*................................ 43.8.............78 9.05 Fixed broadband Internet subscriptions/100 pop.*.. 4.8.............81 4th pillar: Health and primary education 9.06 Int’l Internet bandwidth, kb/s per user*................. 19.1.............84 4.01 Malaria cases/100,000 pop.*................................. S.L.............n/a 9.07 Mobile broadband subscriptions/100 pop.*.......... 26.1.............71 4.02 Business impact of malaria.............................. N/Appl.............n/a 4.03 Tuberculosis cases/100,000 pop.*........................ 31.0.............60 10th pillar: Market size 4.04 Business impact of tuberculosis.............................. 5.6.............73 10.01 Domestic market size index, 1–7 (best)*.................. 3.6.............63 4.05 HIV prevalence, % adult pop.*................................ 0.1...............1 10.02 Foreign market size index, 1–7 (best)*..................... 4.6.............69 4.06 Business impact of HIV/AIDS.................................. 5.7.............67 10.03 GDP (PPP$ billions)*........................................... 108.4.............67 4.07 Infant mortality, deaths/1,000 live births*............... 13.8.............70 10.04 Exports as a percentage of GDP*......................... 46.5.............53 4.08 Life expectancy, years*.......................................... 75.1.............56 4.09 Quality of primary education.................................... 3.9.............72 11th pillar: Business sophistication 4.10 Primary education enrollment, net %*................... 98.9.............13 11.01 Local supplier quantity............................................ 4.6.............75 11.02 Local supplier quality............................................... 4.1.............89 5th pillar: Higher education and training 11.03 State of cluster development................................... 3.5.............88 5.01 Secondary education enrollment, gross %*........... 91.1.............67 11.04 Nature of competitive advantage............................. 3.2.............91 5.02 Tertiary education enrollment, gross %*................ 35.2.............73 11.05 Value chain breadth................................................. 3.8.............70 5.03 Quality of the education system.............................. 3.7.............68 11.06 Control of international distribution.......................... 4.0.............68 5.04 Quality of math and science education................... 4.7.............32 11.07 Production process sophistication........................... 3.5.............96 5.05 Quality of management schools.............................. 4.4.............61 11.08 Extent of marketing................................................. 3.8...........101 5.06 Internet access in schools....................................... 3.6.............96 11.09 Willingness to delegate authority............................. 3.4...........103 5.07 Availability of research and training services............ 3.8.............89 5.08 Extent of staff training............................................. 3.7.............99 12th pillar: Innovation 12.01 Capacity for innovation............................................ 3.3...........107 6th pillar: Goods market efficiency 12.02 Quality of scientific research institutions.................. 3.1...........109 6.01 Intensity of local competition................................... 4.8.............92 12.03 Company spending on R&D.................................... 2.9.............95 6.02 Extent of market dominance................................... 3.7.............77 12.04 University-industry collaboration in R&D.................. 2.9...........117 6.03 Effectiveness of anti-monopoly policy...................... 4.0.............71 12.05 Gov’t procurement of advanced tech products....... 3.1...........103 6.04 Effect of taxation on incentives to invest.................. 3.8.............69 12.06 Availability of scientists and engineers..................... 4.7.............26 6.05 Total tax rate, % profits*........................................ 62.4...........129 12.07 PCT patents, applications/million pop.*................... 1.2.............68 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 89. The Africa Competitiveness Report 2015 | 175 Part 3: Competitiveness Profiles Uganda Key indicators, 2013 Population (millions)...............................................36.8 GDP (PPP) per capita (int’l $), 1990–2013 GDP (US$ billions)*................................................22.9 4,000  Uganda     Sub-Saharan Africa GDP per capita (US$)..........................................622.6 3,500 GDP (PPP) as share (%) of world total...................0.06 3,000 Sectoral value-added (% GDP), 2013 2,500 Agriculture.............................................................25.0 2,000 Industry.................................................................28.7 Services................................................................46.2 1,500 1,000 Human Development Index, 2013 Score, (0–1) best...................................................0.48 500 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012 Rank (out of 187 economies)..................................164 Sources: IMF; UNFPA; UNDP; World Bank Global Competitiveness Index Rank Score Stage of development (out of 144) (1–7) GCI 2014–2015................................................. 122...... 3.6 Transition Transition GCI 2013–2014 (out of 148).......................................... 129....... 3.4 1 1–2 2 2­­–3 3 GCI 2012–2013 (out of 144).......................................... 123....... 3.5 Factor Efficiency Innovation driven driven driven Basic requirements (60.0%)........................................ 126....... 3.6 Institutions Institutions..................................................................... 115....... 3.3 7 Infrastructure................................................................. 129....... 2.3 Innovation Infrastructure 6 Macroeconomic environment.......................................... 96....... 4.4 5 Business Macroeconomic Health and primary education........................................ 122....... 4.4 sophistication 4 environment 3 Efficiency enhancers (35.0%)..................................... 110....... 3.5 2 Health and Higher education and training........................................ 129....... 2.7 Market size 1 primary Goods market efficiency ............................................... 119....... 3.9 education Labor market efficiency................................................... 27....... 4.7 Financial market development......................................... 81....... 3.8 Technological Higher education readiness and training Technological readiness................................................. 119....... 2.8 Market size...................................................................... 86....... 3.3 Financial market Goods market development efficiency Innovation and sophistication factors (5.0%)............ 104....... 3.3 Labor market efficiency Business sophistication ................................................ 109....... 3.5 Innovation........................................................................ 96....... 3.1  Uganda     Sub-Saharan Africa The most problematic factors for doing business Corruption................................................................................ 22.5 Access to financing.................................................................. 14.0 Tax rates................................................................................... 13.5 Inadequate supply of infrastructure........................................... 11.5 Inflation....................................................................................... 8.4 Inefficient government bureaucracy............................................ 7.6 Poor work ethic in national labor force....................................... 6.1 Tax regulations........................................................................... 3.2 Crime and theft.......................................................................... 2.8 Poor public health...................................................................... 2.3 Insufficient capacity to innovate.................................................. 1.8 Inadequately educated workforce............................................... 1.7 Policy instability.......................................................................... 1.6 Foreign currency regulations....................................................... 1.4 Restrictive labor regulations........................................................ 1.1 Government instability/coups..................................................... 0.6 0 5 10 15 20 25 30 Score 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 2015 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 (cont’d.) 1.01 Property rights........................................................ 3.4...........112 6.06 No. procedures to start a business*......................... 15...........141 1.02 Intellectual property protection................................ 2.7...........124 6.07 No. days to start a business*................................ 32.0...........112 1.03 Diversion of public funds......................................... 2.0...........134 6.08 Agricultural policy costs.......................................... 3.8.............71 1.04 Public trust in politicians.......................................... 2.5.............94 6.09 Prevalence of trade barriers.................................... 4.4.............62 1.05 Irregular payments and bribes................................. 2.8...........128 6.10 Trade tariffs, % duty*............................................... 9.0.............99 1.06 Judicial independence............................................. 3.0...........106 6.11 Prevalence of foreign ownership.............................. 5.2.............33 1.07 Favoritism in decisions of government officials........ 2.6...........103 6.12 Business impact of rules on FDI.............................. 4.9.............30 1.08 Wastefulness of government spending.................... 2.5...........109 6.13 Burden of customs procedures............................... 3.8.............84 1.09 Burden of government regulation............................ 3.7.............42 6.14 Imports as a percentage of GDP*......................... 36.2...........100 1.10 Efficiency of legal framework in settling disputes..... 3.8.............61 6.15 Degree of customer orientation............................... 4.1...........102 1.11 Efficiency of legal framework in challenging regs..... 3.2.............84 6.16 Buyer sophistication................................................ 2.4...........136 1.12 Transparency of government policymaking.............. 3.9.............80 1.13 Business costs of terrorism..................................... 3.6...........131 7th pillar: Labor market efficiency 1.14 Business costs of crime and violence..................... 3.4...........118 7.01 Cooperation in labor-employer relations.................. 4.1.............91 1.15 Organized crime...................................................... 4.1...........108 7.02 Flexibility of wage determination.............................. 6.2...............2 1.16 Reliability of police services..................................... 3.7.............95 7.03 Hiring and firing practices........................................ 4.9.............10 1.17 Ethical behavior of firms.......................................... 3.8.............83 7.04 Redundancy costs, weeks of salary*....................... 8.7.............26 1.18 Strength of auditing and reporting standards.......... 3.9...........114 7.05 Effect of taxation on incentives to work................... 3.6.............74 1.19 Efficacy of corporate boards................................... 4.6.............63 7.06 Pay and productivity................................................ 3.2...........126 1.20 Protection of minority shareholders’ interests.......... 3.4...........123 7.07 Reliance on professional management.................... 3.9.............88 1.21 Strength of investor protection, 0–10 (best)*........... 4.7.............98 7.08 Country capacity to retain talent.............................. 2.8...........113 7.09 Country capacity to attract talent............................ 3.0.............95 2nd pillar: Infrastructure 7.10 Women in labor force, ratio to men*...................... 0.96...............9 2.01 Quality of overall infrastructure................................ 3.5...........104 2.02 Quality of roads....................................................... 3.2...........105 8th pillar: Financial market development 2.03 Quality of railroad infrastructure............................... 1.5...........101 8.01 Availability of financial services................................ 4.1.............86 2.04 Quality of port infrastructure.................................... 2.8...........118 8.02 Affordability of financial services.............................. 3.5...........121 2.05 Quality of air transport infrastructure....................... 3.2...........124 8.03 Financing through local equity market..................... 3.1.............85 2.06 Available airline seat km/week, millions*................ 49.6...........101 8.04 Ease of access to loans.......................................... 2.5.............93 2.07 Quality of electricity supply...................................... 2.9...........114 8.05 Venture capital availability........................................ 2.2...........106 2.08 Mobile telephone subscriptions/100 pop.*............ 44.1...........138 8.06 Soundness of banks............................................... 4.6.............83 2.09 Fixed telephone lines/100 pop.*.............................. 0.6...........132 8.07 Regulation of securities exchanges......................... 3.7.............92 8.08 Legal rights index, 0–10 (best)*.................................. 7.............43 3rd pillar: Macroeconomic environment 3.01 Government budget balance, % GDP*...................-3.7.............87 9th pillar: Technological readiness 3.02 Gross national savings, % GDP*........................... 14.7...........109 9.01 Availability of latest technologies............................. 4.3.............98 3.03 Inflation, annual % change*..................................... 5.4.............97 9.02 Firm-level technology absorption............................. 4.1...........110 3.04 General government debt, % GDP*...................... 33.9.............49 9.03 FDI and technology transfer.................................... 4.7.............56 3.05 Country credit rating, 0–100 (best)*....................... 32.2...........101 9.04 Individuals using Internet, %*................................ 16.2...........110 9.05 Fixed broadband Internet subscriptions/100 pop.*.. 0.1...........126 4th pillar: Health and primary education 9.06 Int’l Internet bandwidth, kb/s per user*................... 4.2...........121 4.01 Malaria cases/100,000 pop.*......................... 24,487.0.............65 9.07 Mobile broadband subscriptions/100 pop.*............ 7.4...........102 4.02 Business impact of malaria..................................... 3.3.............65 4.03 Tuberculosis cases/100,000 pop.*...................... 179.0...........115 10th pillar: Market size 4.04 Business impact of tuberculosis.............................. 4.3...........115 10.01 Domestic market size index, 1–7 (best)*.................. 3.2.............82 4.05 HIV prevalence, % adult pop.*................................ 7.2...........134 10.02 Foreign market size index, 1–7 (best)*..................... 3.7...........105 4.06 Business impact of HIV/AIDS.................................. 3.1...........141 10.03 GDP (PPP$ billions)*............................................. 54.6.............87 4.07 Infant mortality, deaths/1,000 live births*............... 45.4...........117 10.04 Exports as a percentage of GDP*......................... 19.2...........131 4.08 Life expectancy, years*.......................................... 58.6...........125 4.09 Quality of primary education.................................... 2.9...........115 11th pillar: Business sophistication 4.10 Primary education enrollment, net %*................... 90.9...........100 11.01 Local supplier quantity............................................ 4.7.............59 11.02 Local supplier quality............................................... 3.5...........129 5th pillar: Higher education and training 11.03 State of cluster development................................... 3.5.............86 5.01 Secondary education enrollment, gross %*........... 27.6...........138 11.04 Nature of competitive advantage............................. 2.8...........121 5.02 Tertiary education enrollment, gross %*.................. 9.1...........118 11.05 Value chain breadth................................................. 3.6.............93 5.03 Quality of the education system.............................. 3.6.............78 11.06 Control of international distribution.......................... 3.7...........100 5.04 Quality of math and science education................... 3.1...........117 11.07 Production process sophistication........................... 3.2...........115 5.05 Quality of management schools.............................. 3.8.............96 11.08 Extent of marketing................................................. 3.4...........119 5.06 Internet access in schools....................................... 3.2...........116 11.09 Willingness to delegate authority............................. 3.1...........124 5.07 Availability of research and training services............ 3.7.............98 5.08 Extent of staff training............................................. 3.6...........110 12th pillar: Innovation 12.01 Capacity for innovation............................................ 3.5.............90 6th pillar: Goods market efficiency 12.02 Quality of scientific research institutions.................. 3.6.............78 6.01 Intensity of local competition................................... 5.2.............55 12.03 Company spending on R&D.................................... 2.9.............97 6.02 Extent of market dominance................................... 3.1...........124 12.04 University-industry collaboration in R&D.................. 3.7.............62 6.03 Effectiveness of anti-monopoly policy...................... 4.5.............40 12.05 Gov’t procurement of advanced tech products....... 3.4.............72 6.04 Effect of taxation on incentives to invest.................. 3.4.............94 12.06 Availability of scientists and engineers..................... 3.5...........105 6.05 Total tax rate, % profits*........................................ 36.6.............68 12.07 PCT patents, applications/million pop.*................... 0.0...........112 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 89. The Africa Competitiveness Report 2015 | 177 Part 3: Competitiveness Profiles Zambia Key indicators, 2013 Population (millions)...............................................14.5 GDP (PPP) per capita (int’l $), 1990–2013 GDP (US$ billions)*................................................26.8 4,000  Zambia     Sub-Saharan Africa GDP per capita (US$).......................................1,845.4 GDP (PPP) as share (%) of world total...................0.06 3,500 3,000 Sectoral value-added (% GDP), 2013 Agriculture.............................................................17.7 2,500 Industry.................................................................37.3 2,000 Services................................................................45.1 1,500 Human Development Index, 2013 Score, (0–1) best...................................................0.56 1,000 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012 Rank (out of 187 economies)..................................141 Sources: IMF; UNFPA; UNDP; World Bank Global Competitiveness Index Rank Score Stage of development (out of 144) (1–7) GCI 2014–2015................................................... 96...... 3.9 Transition Transition GCI 2013–2014 (out of 148)............................................ 93....... 3.9 1 1–2 2 2­­–3 3 GCI 2012–2013 (out of 144).......................................... 102....... 3.8 Factor Efficiency Innovation driven driven driven Basic requirements (60.0%)........................................ 109....... 3.9 Institutions Institutions....................................................................... 52....... 4.1 7 Infrastructure................................................................. 118....... 2.7 Innovation Infrastructure 6 Macroeconomic environment........................................ 103....... 4.2 5 Business Macroeconomic Health and primary education........................................ 118....... 4.6 sophistication 4 environment 3 Efficiency enhancers (35.0%)....................................... 86....... 3.9 2 Health and Higher education and training.......................................... 80....... 4.2 Market size 1 primary Goods market efficiency ................................................. 37....... 4.6 education Labor market efficiency................................................... 88....... 4.1 Financial market development......................................... 50....... 4.4 Technological Higher education readiness and training Technological readiness................................................. 105....... 3.0 Market size.................................................................... 110....... 2.9 Financial market Goods market development efficiency Innovation and sophistication factors (5.0%).............. 57....... 3.8 Labor market efficiency Business sophistication .................................................. 60....... 4.1 Innovation........................................................................ 54....... 3.4  Zambia     Sub-Saharan Africa The most problematic factors for doing business Access to financing.................................................................. 23.7 Corruption................................................................................ 14.8 Tax rates..................................................................................... 9.9 Poor work ethic in national labor force....................................... 9.1 Inadequate supply of infrastructure............................................. 8.6 Inefficient government bureaucracy............................................ 6.3 Inflation....................................................................................... 4.6 Policy instability.......................................................................... 3.7 Foreign currency regulations....................................................... 3.5 Insufficient capacity to innovate.................................................. 3.0 Inadequately educated workforce............................................... 2.8 Tax regulations........................................................................... 2.6 Restrictive labor regulations........................................................ 2.3 Poor public health...................................................................... 2.1 Crime and theft.......................................................................... 1.9 Government instability/coups..................................................... 1.2 0 5 10 15 20 25 30 Score 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 2015 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 (cont’d.) 1.01 Property rights........................................................ 4.6.............44 6.06 No. procedures to start a business*........................... 5.............32 1.02 Intellectual property protection................................ 4.0.............50 6.07 No. days to start a business*.................................. 6.5.............31 1.03 Diversion of public funds......................................... 3.3.............65 6.08 Agricultural policy costs.......................................... 4.1.............35 1.04 Public trust in politicians.......................................... 3.0.............73 6.09 Prevalence of trade barriers.................................... 4.5.............52 1.05 Irregular payments and bribes................................. 3.7.............83 6.10 Trade tariffs, % duty*............................................. 10.7...........110 1.06 Judicial independence............................................. 3.7.............69 6.11 Prevalence of foreign ownership.............................. 5.3.............26 1.07 Favoritism in decisions of government officials........ 3.4.............51 6.12 Business impact of rules on FDI.............................. 5.0.............24 1.08 Wastefulness of government spending.................... 3.6.............46 6.13 Burden of customs procedures............................... 4.2.............59 1.09 Burden of government regulation............................ 3.9.............35 6.14 Imports as a percentage of GDP*......................... 48.6.............70 1.10 Efficiency of legal framework in settling disputes..... 4.4.............33 6.15 Degree of customer orientation............................... 4.7.............56 1.11 Efficiency of legal framework in challenging regs..... 3.3.............71 6.16 Buyer sophistication................................................ 3.4.............74 1.12 Transparency of government policymaking.............. 4.5.............36 1.13 Business costs of terrorism..................................... 6.0.............29 7th pillar: Labor market efficiency 1.14 Business costs of crime and violence..................... 4.6.............62 7.01 Cooperation in labor-employer relations.................. 4.4.............60 1.15 Organized crime...................................................... 5.5.............47 7.02 Flexibility of wage determination.............................. 5.1.............63 1.16 Reliability of police services..................................... 4.0.............79 7.03 Hiring and firing practices........................................ 4.5.............16 1.17 Ethical behavior of firms.......................................... 4.0.............66 7.04 Redundancy costs, weeks of salary*..................... 50.6...........138 1.18 Strength of auditing and reporting standards.......... 4.7.............67 7.05 Effect of taxation on incentives to work................... 4.2.............26 1.19 Efficacy of corporate boards................................... 4.9.............47 7.06 Pay and productivity................................................ 3.6.............96 1.20 Protection of minority shareholders’ interests.......... 4.7.............36 7.07 Reliance on professional management.................... 4.7.............38 1.21 Strength of investor protection, 0–10 (best)*........... 5.3.............68 7.08 Country capacity to retain talent.............................. 3.4.............67 7.09 Country capacity to attract talent............................ 3.9.............43 2nd pillar: Infrastructure 7.10 Women in labor force, ratio to men*...................... 0.85.............53 2.01 Quality of overall infrastructure................................ 3.7.............92 2.02 Quality of roads....................................................... 3.6.............86 8th pillar: Financial market development 2.03 Quality of railroad infrastructure............................... 2.0.............87 8.01 Availability of financial services................................ 4.3.............74 2.04 Quality of port infrastructure.................................... 2.7...........124 8.02 Affordability of financial services.............................. 3.9.............94 2.05 Quality of air transport infrastructure....................... 3.5...........111 8.03 Financing through local equity market..................... 3.7.............52 2.06 Available airline seat km/week, millions*................ 37.6...........108 8.04 Ease of access to loans.......................................... 2.5.............99 2.07 Quality of electricity supply...................................... 3.3...........104 8.05 Venture capital availability........................................ 2.4.............95 2.08 Mobile telephone subscriptions/100 pop.*............ 71.5...........118 8.06 Soundness of banks............................................... 5.1.............59 2.09 Fixed telephone lines/100 pop.*.............................. 0.8...........129 8.07 Regulation of securities exchanges......................... 4.7.............44 8.08 Legal rights index, 0–10 (best)*.................................. 9.............11 3rd pillar: Macroeconomic environment 3.01 Government budget balance, % GDP*...................-8.6...........137 9th pillar: Technological readiness 3.02 Gross national savings, % GDP*........................... 25.5.............38 9.01 Availability of latest technologies............................. 4.6.............82 3.03 Inflation, annual % change*..................................... 7.0...........119 9.02 Firm-level technology absorption............................. 4.7.............67 3.04 General government debt, % GDP*...................... 35.1.............51 9.03 FDI and technology transfer.................................... 4.7.............64 3.05 Country credit rating, 0–100 (best)*....................... 35.9.............90 9.04 Individuals using Internet, %*................................ 15.4...........114 9.05 Fixed broadband Internet subscriptions/100 pop.*.. 0.1...........131 4th pillar: Health and primary education 9.06 Int’l Internet bandwidth, kb/s per user*................... 4.2...........122 4.01 Malaria cases/100,000 pop.*......................... 26,650.2.............68 9.07 Mobile broadband subscriptions/100 pop.*............ 0.7...........125 4.02 Business impact of malaria..................................... 3.9.............57 4.03 Tuberculosis cases/100,000 pop.*...................... 427.0...........135 10th pillar: Market size 4.04 Business impact of tuberculosis.............................. 4.3...........116 10.01 Domestic market size index, 1–7 (best)*.................. 2.6...........113 4.05 HIV prevalence, % adult pop.*.............................. 12.7...........137 10.02 Foreign market size index, 1–7 (best)*..................... 3.8...........101 4.06 Business impact of HIV/AIDS.................................. 3.9...........129 10.03 GDP (PPP$ billions)*............................................. 25.5...........111 4.07 Infant mortality, deaths/1,000 live births*............... 56.4...........129 10.04 Exports as a percentage of GDP*......................... 47.8.............50 4.08 Life expectancy, years*.......................................... 57.0...........128 4.09 Quality of primary education.................................... 3.8.............77 11th pillar: Business sophistication 4.10 Primary education enrollment, net %*................... 93.7.............74 11.01 Local supplier quantity............................................ 4.9.............34 11.02 Local supplier quality............................................... 4.2.............80 5th pillar: Higher education and training 11.03 State of cluster development................................... 4.1.............46 5.01 Secondary education enrollment, gross %*......... 100.8.............32 11.04 Nature of competitive advantage............................. 3.8.............49 5.02 Tertiary education enrollment, gross %*.................. 2.4...........137 11.05 Value chain breadth................................................. 3.9.............59 5.03 Quality of the education system.............................. 4.3.............36 11.06 Control of international distribution.......................... 3.8.............93 5.04 Quality of math and science education................... 4.3.............62 11.07 Production process sophistication........................... 3.8.............74 5.05 Quality of management schools.............................. 4.7.............42 11.08 Extent of marketing................................................. 4.1.............75 5.06 Internet access in schools....................................... 3.6.............97 11.09 Willingness to delegate authority............................. 4.0.............48 5.07 Availability of research and training services............ 4.4.............48 5.08 Extent of staff training............................................. 4.1.............63 12th pillar: Innovation 12.01 Capacity for innovation............................................ 4.1.............45 6th pillar: Goods market efficiency 12.02 Quality of scientific research institutions.................. 3.4.............89 6.01 Intensity of local competition................................... 5.6.............25 12.03 Company spending on R&D.................................... 3.4.............49 6.02 Extent of market dominance................................... 4.2.............38 12.04 University-industry collaboration in R&D.................. 3.5.............75 6.03 Effectiveness of anti-monopoly policy...................... 4.5.............36 12.05 Gov’t procurement of advanced tech products....... 4.0.............25 6.04 Effect of taxation on incentives to invest.................. 3.9.............56 12.06 Availability of scientists and engineers..................... 4.3.............51 6.05 Total tax rate, % profits*........................................ 15.1...............8 12.07 PCT patents, applications/million pop.*................... 0.0...........124 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 89. The Africa Competitiveness Report 2015 | 179 Part 3: Competitiveness Profiles Zimbabwe Key indicators, 2013 Population (millions)...............................................13.1 GDP (PPP) per capita (int’l $), 1990–2013 GDP (US$ billions)*................................................13.2 4,000  Zimbabwe     Sub-Saharan Africa GDP per capita (US$).......................................1,006.8 3,500 GDP (PPP) as share (%) of world total...................0.03 3,000 Sectoral value-added (% GDP), 2013 2,500 Agriculture.............................................................12.4 2,000 Industry.................................................................31.3 1,500 Services................................................................56.3 1,000 500 Human Development Index, 2013 Score, (0–1) best...................................................0.49 0 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012 Rank (out of 187 economies)..................................156 Sources: IMF; UNFPA; UNDP; World Bank Global Competitiveness Index Rank Score Stage of development (out of 144) (1–7) GCI 2014–2015................................................. 124...... 3.5 Transition Transition GCI 2013–2014 (out of 148).......................................... 131....... 3.4 1 1–2 2 2­­–3 3 GCI 2012–2013 (out of 144).......................................... 132....... 3.3 Factor Efficiency Innovation driven driven driven Basic requirements (60.0%)........................................ 114....... 3.8 Institutions Institutions..................................................................... 113....... 3.3 7 Infrastructure................................................................. 124....... 2.5 Innovation Infrastructure 6 Macroeconomic environment.......................................... 87....... 4.5 5 Business Macroeconomic Health and primary education........................................ 106....... 5.0 sophistication 4 environment 3 Efficiency enhancers (35.0%)..................................... 133....... 3.1 2 Health and Higher education and training........................................ 118....... 3.2 Market size 1 primary Goods market efficiency ............................................... 133....... 3.6 education Labor market efficiency................................................. 137....... 3.2 Financial market development....................................... 112....... 3.4 Technological Higher education readiness and training Technological readiness................................................. 109....... 2.9 Market size.................................................................... 132....... 2.3 Financial market Goods market development efficiency Innovation and sophistication factors (5.0%)............ 127....... 3.0 Labor market efficiency Business sophistication ................................................ 130....... 3.3 Innovation...................................................................... 125....... 2.6  Zimbabwe     Sub-Saharan Africa The most problematic factors for doing business Access to financing.................................................................. 24.6 Policy instability........................................................................ 19.7 Inadequate supply of infrastructure........................................... 15.0 Inefficient government bureaucracy.......................................... 11.9 Corruption................................................................................ 11.4 Restrictive labor regulations...................................................... 10.8 Tax regulations........................................................................... 2.1 Tax rates..................................................................................... 1.5 Government instability/coups..................................................... 0.9 Insufficient capacity to innovate.................................................. 0.7 Poor work ethic in national labor force....................................... 0.7 Crime and theft.......................................................................... 0.3 Poor public health...................................................................... 0.3 Inadequately educated workforce............................................... 0.1 Foreign currency regulations....................................................... 0.0 Inflation....................................................................................... 0.0 0 5 10 15 20 25 30 Score 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 2015 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 (cont’d.) 1.01 Property rights........................................................ 2.4...........142 6.06 No. procedures to start a business*........................... 9...........106 1.02 Intellectual property protection................................ 2.9...........116 6.07 No. days to start a business*................................ 90.0...........137 1.03 Diversion of public funds......................................... 2.6...........109 6.08 Agricultural policy costs.......................................... 2.5...........142 1.04 Public trust in politicians.......................................... 1.9...........132 6.09 Prevalence of trade barriers.................................... 4.9.............17 1.05 Irregular payments and bribes................................. 3.4...........101 6.10 Trade tariffs, % duty*............................................. 21.0...........142 1.06 Judicial independence............................................. 2.5...........120 6.11 Prevalence of foreign ownership.............................. 4.3.............94 1.07 Favoritism in decisions of government officials........ 2.5...........117 6.12 Business impact of rules on FDI.............................. 1.8...........142 1.08 Wastefulness of government spending.................... 2.1...........135 6.13 Burden of customs procedures............................... 3.0...........133 1.09 Burden of government regulation............................ 2.8...........119 6.14 Imports as a percentage of GDP*......................... 50.1.............65 1.10 Efficiency of legal framework in settling disputes..... 3.4.............93 6.15 Degree of customer orientation............................... 3.6...........127 1.11 Efficiency of legal framework in challenging regs..... 2.5...........120 6.16 Buyer sophistication................................................ 2.9...........115 1.12 Transparency of government policymaking.............. 3.5...........115 1.13 Business costs of terrorism..................................... 6.5...............8 7th pillar: Labor market efficiency 1.14 Business costs of crime and violence..................... 4.7.............58 7.01 Cooperation in labor-employer relations.................. 3.9...........112 1.15 Organized crime...................................................... 5.7.............31 7.02 Flexibility of wage determination.............................. 2.6...........141 1.16 Reliability of police services..................................... 3.0...........122 7.03 Hiring and firing practices........................................ 2.2...........142 1.17 Ethical behavior of firms.......................................... 3.6...........106 7.04 Redundancy costs, weeks of salary*..................... 82.3...........142 1.18 Strength of auditing and reporting standards.......... 5.2.............38 7.05 Effect of taxation on incentives to work................... 3.3...........101 1.19 Efficacy of corporate boards................................... 4.3.............88 7.06 Pay and productivity................................................ 2.3...........143 1.20 Protection of minority shareholders’ interests.......... 4.1.............74 7.07 Reliance on professional management.................... 4.7.............41 1.21 Strength of investor protection, 0–10 (best)*........... 4.3...........105 7.08 Country capacity to retain talent.............................. 2.7...........120 7.09 Country capacity to attract talent............................ 2.8...........102 2nd pillar: Infrastructure 7.10 Women in labor force, ratio to men*...................... 0.93.............16 2.01 Quality of overall infrastructure................................ 3.1...........121 2.02 Quality of roads....................................................... 3.3...........100 8th pillar: Financial market development 2.03 Quality of railroad infrastructure............................... 2.2.............82 8.01 Availability of financial services................................ 3.8...........107 2.04 Quality of port infrastructure.................................... 3.6.............96 8.02 Affordability of financial services.............................. 3.1...........131 2.05 Quality of air transport infrastructure....................... 3.3...........116 8.03 Financing through local equity market..................... 3.2.............80 2.06 Available airline seat km/week, millions*................ 19.0...........124 8.04 Ease of access to loans.......................................... 1.7...........135 2.07 Quality of electricity supply...................................... 2.1...........131 8.05 Venture capital availability........................................ 1.6...........140 2.08 Mobile telephone subscriptions/100 pop.*............ 96.3.............99 8.06 Soundness of banks............................................... 3.1...........136 2.09 Fixed telephone lines/100 pop.*.............................. 2.1...........119 8.07 Regulation of securities exchanges......................... 4.3.............63 8.08 Legal rights index, 0–10 (best)*.................................. 7.............43 3rd pillar: Macroeconomic environment 3.01 Government budget balance, % GDP*...................-0.1.............26 9th pillar: Technological readiness 3.02 Gross national savings, % GDP*............................-5.7...........143 9.01 Availability of latest technologies............................. 4.3...........101 3.03 Inflation, annual % change*..................................... 1.6...............1 9.02 Firm-level technology absorption............................. 4.1...........111 3.04 General government debt, % GDP*...................... 54.7.............90 9.03 FDI and technology transfer.................................... 3.5...........133 3.05 Country credit rating, 0–100 (best)*......................... 6.0...........143 9.04 Individuals using Internet, %*................................ 18.5...........105 9.05 Fixed broadband Internet subscriptions/100 pop.*.. 0.7...........111 4th pillar: Health and primary education 9.06 Int’l Internet bandwidth, kb/s per user*................... 3.5...........127 4.01 Malaria cases/100,000 pop.*........................... 8,452.6.............56 9.07 Mobile broadband subscriptions/100 pop.*.......... 37.8.............56 4.02 Business impact of malaria..................................... 4.9.............36 4.03 Tuberculosis cases/100,000 pop.*...................... 562.0...........139 10th pillar: Market size 4.04 Business impact of tuberculosis.............................. 4.3...........118 10.01 Domestic market size index, 1–7 (best)*.................. 2.1...........131 4.05 HIV prevalence, % adult pop.*.............................. 14.7...........139 10.02 Foreign market size index, 1–7 (best)*..................... 3.1...........131 4.06 Business impact of HIV/AIDS.................................. 3.9...........126 10.03 GDP (PPP$ billions)*............................................. 10.3...........131 4.07 Infant mortality, deaths/1,000 live births*............... 55.7...........127 10.04 Exports as a percentage of GDP*......................... 35.1.............79 4.08 Life expectancy, years*.......................................... 58.0...........127 4.09 Quality of primary education.................................... 4.3.............54 11th pillar: Business sophistication 4.10 Primary education enrollment, net %*................... 95.6.............59 11.01 Local supplier quantity............................................ 3.7...........133 11.02 Local supplier quality............................................... 3.5...........126 5th pillar: Higher education and training 11.03 State of cluster development................................... 2.9...........131 5.01 Secondary education enrollment, gross %*........... 51.9...........120 11.04 Nature of competitive advantage............................. 2.5...........137 5.02 Tertiary education enrollment, gross %*.................. 5.9...........126 11.05 Value chain breadth................................................. 2.9...........138 5.03 Quality of the education system.............................. 4.2.............43 11.06 Control of international distribution.......................... 3.7...........101 5.04 Quality of math and science education................... 4.2.............66 11.07 Production process sophistication........................... 2.5...........135 5.05 Quality of management schools.............................. 4.1.............80 11.08 Extent of marketing................................................. 3.4...........124 5.06 Internet access in schools....................................... 3.1...........118 11.09 Willingness to delegate authority............................. 3.6.............91 5.07 Availability of research and training services............ 3.5...........107 5.08 Extent of staff training............................................. 3.9.............84 12th pillar: Innovation 12.01 Capacity for innovation............................................ 3.1...........121 6th pillar: Goods market efficiency 12.02 Quality of scientific research institutions.................. 3.0...........112 6.01 Intensity of local competition................................... 4.9.............77 12.03 Company spending on R&D.................................... 2.3...........129 6.02 Extent of market dominance................................... 3.3...........102 12.04 University-industry collaboration in R&D.................. 2.8...........121 6.03 Effectiveness of anti-monopoly policy...................... 3.7.............99 12.05 Gov’t procurement of advanced tech products....... 2.4...........140 6.04 Effect of taxation on incentives to invest.................. 3.5.............88 12.06 Availability of scientists and engineers..................... 3.6.............99 6.05 Total tax rate, % profits*........................................ 35.3.............62 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 89. The Africa Competitiveness Report 2015 | 181 About the Authors El-hadj M. Bah Attilio Di Battista El-hadj M. Bah is a Principal Research Economist in Attilio Di Battista is a Junior Quantitative Economist with the Development Research Department at the African The Global Competitiveness and Risks Team at the Development Bank. His two main functions are conducting World Economic Forum. He works on the development research on development issues and evaluating the and computation of a range of indexes and is the co- development outcomes of private-sector operations. Before author of various studies, including the flagship Global joining the Bank, he was Lecturer of Economics at the Competitiveness Report. His areas of expertise include University of Auckland. He received his BSc in Industrial international trade and competitiveness, institutions and Engineering with a specialization in Project Management development, investment flows, and financial stability. Prior from Mohammadia School of Engineers (Rabat, Morocco). to joining the Forum, he worked at the International Trade He obtained an MSE in Industrial Engineering and a PhD Centre (UNCTAD/WTO) on export strategy, policy, and trade in Economics from Arizona State University. His research competitiveness analysis. He has a Bachelor’s degree in interests are in the areas of Macroeconomics, Economic International and Diplomatic Sciences from Università degli Development, Labor Economics, and International Studi di Trieste in Gorizia and a Master’s in International Economics. Dr Bah has published numerous journal articles Economics from the Graduate Institute of International and made several paper presentations. His research and Development Studies in Geneva, where he conducted has been published in journals such as the Journal of research on the attractiveness of Italian provinces for foreign Development Economics, Macroeconomic Dynamics, the direct investments, focusing on the role of institutions and Journal of Comparative Economics, the B.E. Journal of economic geography. Macroeconomics, the Journal of Comparative Economics, Comparative Economic Studies, and Emerging Markets Margareta Drzeniek Hanouz Finance and Trade. Margareta Drzeniek Hanouz is Head of The Global Competitiveness and Risks Team and Lead Economist Carlos Conde at the World Economic Forum, where she leads the work Carlos Conde is Head of the Middle East and Africa Division related to Competitiveness and Global Risks. In this in the Global Relations Secretariat of the Organisation for capacity, she is lead author of The Global Competitiveness Economic Co-operation and Development (OECD). In this Report and The Global Risks Report, two flagship capacity, he leads the implementation of the MENA-OECD publications of the World Economic Forum. Previously she Initiative on Governance and Investment for Development. oversaw the economic modeling for some of the Forum’s Since 2005, the Initiative has promoted policy dialogue on scenario projects and was charged with developing the governance, investment, and private-sector development economics section of the program for the World Economic between MENA and OECD countries. During this period Forum’s Annual Meeting in Davos. Before joining the the MENA Initiative introduced the process of OECD Forum, Dr Drzeniek Hanouz worked for several years peer reviewing in the MENA region, promoted country with the International Trade Centre in Geneva, where programs of reform (e.g., with the governments of Tunisia, she was in charge of relations with Central and Eastern the Palestinian Authority, and most recently with Morocco). European countries. Her areas of expertise include national Carlos Conde is also responsible for the coordination and competitiveness, private-sector development, international promotion of OECD initiatives in sub-Saharan Africa, as trade, economics of the MENA and CIS regions, and risks well as the collaboration with South Africa as key partner and resilience. Dr Drzeniek Hanouz received a Diploma in of the OECD. Before joining the OECD, Mr Conde was Economics from the University of Münster and holds a PhD Associate Professor of Political Science and Public Policy in International Economics from the University of Bochum, at the University of Granada in Spain. In this role he led both in Germany. several projects of academic cooperation, research, and network building between Arab and European universities. Mr Conde had visiting positions at Harvard University and Al Akhawayn University of Morocco, where he lectured between 2001 and 2003. He holds a PhD in Political Science and Public Administration from the Complutense University of Madrid. The Africa Competitiveness Report 2015 | 183 About the Authors Caroline Galvan Jennifer Mbabazi Moyo Caroline Galvan is an Economist with The Global Jennifer Mbabazi Moyo is Principal Research Economist Competitiveness and Risks Team at the World in the Development Research Department of the African Economic Forum. She researches and writes on national Development Bank, having joined the Bank in March 2012 competitiveness issues in sub-Saharan Africa and Europe, as part of the Additionality and Development Outcomes leading the work on The Africa Competitiveness Report (ADOA) team. She previously worked at the International and The Europe 2020 Competitiveness Report. She also Monetary Fund (IMF) in Washington, DC, in the Monetary works on the World Economic Forum’s Global Risks and Capital Markets Department and the Middle East Report. Prior to joining the Forum, she worked for a UK- and Central Asia Department. She has also undertaken based economic policy consultancy and the Directorate- consultancy assignments on financial markets, training General for Economic and Financial Affairs of the European and other capacity-building issues for the IMF, the African Commission. She holds an undergraduate degree in Development Bank, and Deutsche Gesellschaft für Economics from the University of Groningen and an MSc Internationale Zusammenarbeit (GIZ, formerly GTZ). She has in Economics from the University of Tilburg, both in the also taught at Makerere University in Uganda. She holds Netherlands. a PhD in Economics from the University of Nottingham in the United Kingdom. Her research interests include Philipp Heinrigs financial market issues, trade, poverty, income inequality, Philipp Heinrigs is Advisor for Sub-Saharan Africa and and growth, areas in which she has published widely. She South Africa to the Global Relations Secretariat at the contributed to the 2013 Africa Competitiveness Report. Organisation for Economic Co-operation and Development (OECD). Mr Heinrigs has over 10 years’ experience working Anthony O’Sullivan on African economies with a focus on regional integration, Anthony O’Sullivan is Deputy Director of the Global agricultural development, structural transformation, and Relations Secretariat at the Organisation for Economic human geography. Prior to joining the OECD he worked Co-operation and Development (OECD). He started his in the Economic Policy Department of GIZ and the Kiel career as a Strategy Consultant at Accenture, specializing Institute for World Economics. He studied Economics at the in mergers and acquisitions and post-merger integration, School of Oriental and African Studies in London and the and then joined Michael Porter’s Monitor Group, where Kiel Institute for the World Economy. he developed his credentials on country competitiveness. Mr O’Sullivan went on to become a founding partner of Barak Hoffman Cell Strategy, specializing in due diligence and business Barak Hoffman is a Public Sector Specialist at the World creation for high-tech investment funds. Before moving to Bank. His work focuses on the political economy of the OECD in 2005, he was a senior manager in strategy development in Africa. Prior to joining the World Bank, he for A.T. Kearney and the European representative for the was the Director of the Center for Democracy and Civil Global Business Policy Council, a leading global think tank Society at Georgetown University. He also has worked as on government strategy and country competitiveness. Mr an Economist at the United States Agency for International O’Sullivan has contributed to a number of publications Development, the United States Department of the on competitiveness, business climate, and investment Treasury, and the United States Federal Reserve Bank, and in emerging markets. He holds an Honor’s degree in was a Research Fellow at Stanford University’s Center on Economics, Finance, and Political Science from McGill Democracy, Development, and the Rule of Law. He holds University in Canada and an MSc in Development Studies a PhD in Political Science from the University of California, from the London School of Economics. San Diego. Sebastian Sáez Miles McKenna Sebastian Sáez is a Senior Trade Economist working at the Miles McKenna is a Consultant working within the Trade and Competitiveness Global Practice of the World World Bank Group’s Trade and Competitiveness Global Bank. Between 1990 and 1994, he served as Advisor to Practice. His recent work explores the role of standards the Minister of Finance and was involved in the GATT´s and sustainability in global value chains, with a focus on Uruguay Round negotiations. Subsequently, between 1994 agribusiness. His interests include the evolution of World and 1997, he was a member of the Chilean Mission to Trade Organization agreements on green goods and the World Trade Organization (WTO), where he served as services, and other cross-cutting linkages between trade Deputy Permanent Representative. In 1998, as an official and climate issues. A recent graduate of SOAS, University of the Ministry of Foreign Affairs of Chile, he was Head of London, Mr McKenna holds an MSc in Global Energy of the Department FTAA-North America, where he was and Climate Policy. responsible for the Free Trade Agreement of the Americas negotiations. From August 2001 to July 2003 he was Head of the Department of Foreign Trade, Ministry of Economy of Chile. In this capacity, he participated in trade negotiations with the European Union, the Republic of Korea, and the United States. In 2005 he joined the International Trade and Integration Division at UN-ECLAC. In January 2009, he joined the World Bank Group to work Trade in Services. He is the co-author of Regulatory Assessment Toolkit: A Practical Methodology to Assess Services Trade and Investment Regulations (2014) and Valuing Services in Trade: A Competitiveness Diagnostic Toolkit (2014). 184 | The Africa Competitiveness Report 2015 About the Authors John Speakman John Speakman is presently a Manager in the World Bank’s Trade and Competitiveness Practice with a focus on West and Central Africa. He has worked at the World Bank for 20 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 qualified in Law, Accounting, and Economics. Audrey Verdier-Chouchane Audrey Verdier-Chouchane is Chief Research Economist in the North Africa Regional 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’s in Macro-dynamics and International Finance. Apart from her previous publications on financial development and growth, her research interests include the analysis and measurement of poverty and inequalities in Africa, areas in which she has extensively published. 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. The Africa Competitiveness Report 2015 | 185 The publication of this year’s Africa Competitiveness Report comes out at a promising moment: the continent has shown solid average growth rates of 5 percent over the past 15 years. Vast natural resources and a young and growing population present powerful enablers for sustained growth. Yet growth has not been equitable and broad-based and productivity levels across sectors have remained low. What is more, data suggest that Africa is diverging from the path of development followed by other regions. A large agrarian society employing every second African citizen stands opposite a growing service sector both in terms of GDP and employment, and all the while the role of the manufacturing sector remains minimal. Yet the region’s high growth rates are largely driven by resource-rich economies that show the lowest levels of competitiveness. The aim of this Report is to explore viable paths for Africa’s development by discussing the challenges and barriers to improving productivity in the agriculture and service sectors. It also investigates the potential of regional and global value chains for helping Arica’s economies develop and expand to new activities. In doing so, it aims to inform the debate about Africa’s path of development and whether it will be successful in departing from the experience of other regions, where manufacturing played a central role. Published on a biennial basis, this is the fifth Report on areas requiring policy action and investment to ensure that Africa lays the foundation for sustained growth. It leverages the knowledge and expertise of the African Development Bank, the Organisation for Economic Co-operation and Development, the World Bank, and the World Economic Forum, presenting a unified vision that maps out the policy challenges that must be met if Africa is to succeed in boosting its competitiveness and transforming its economies. Also included are detailed competitiveness profiles for 40 African countries, providing a comprehensive summary of their competitive strengths and weaknesses. The Africa Competitiveness Report 2015 is an invaluable tool for policymakers, business strategists, development partners, and other key stakeholders, as well as essential reading for all those with an interest in the region. 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