On the 26th September 2006, the World Economic Forum released The Global Competitiveness Report 2006-2007 which analyses over 100 factors to find the world’s most competitive economies.

The Report is a valuable tool to help understand the key factors which determine economic growth, and explain why some countries are much more successful than others in raising income levels and opportunities for their respective populations. By providing detailed assessments of the economic conditions of nations worldwide, the Report offers policymakers and business leaders an important tool in the formulation of improved economic policies and institutional reforms.

ClickAfrique took a look at the Report to find out how African countries fared and we have profiled the ten most competitive economies on the continent.

10. Gambia – World Ranking: 102 (2005 Ranking: 109) Score: 3.43
Gambia slipped 7 places down its 2005 position. Unemployment and underemployment continues to hinder economic growth, and while announcements have been made privatise some of the key parastatals, no plans have been made as yet of when that is going to happen.

9. Nigeria – World Ranking: 101 (2005 Ranking: 83) Score: 3.45
One of the worst performances in 2006, Nigeria slipped down 18 places to 101, on the back of poor macroeconomic management despite the surge in oil export revenues. It also lost ground on the basic requirement sub-index, falling 34 places to rank 112, which highlights the fundamentals for achieving sustained growth namely strong institutions, adequate infrastructure, a supportive macroeconomic environment, and good basic health and education.

However, the country did improve on innovation, improving its position vis-à-vis last year by with improved company spending on R&D and university/industry research collaboration. Nigeria has also boosted its technological readiness, especially in the areas of FDI and technology transfer and firm-level technology absorption.

“To boost the country’s growth potential, Nigerian policy-makers must focus on getting the basic priorities right. While most other oil exporters saw their rankings soar for their macroeconomy, Nigeria slipped 35 places as it struggled to contain double-digit inflation and a widening of interest rate spreads, reflecting distortions in the financial system.

There are also serious gaps in the quality of its institutions – especially public ones – as the country remains afflicted by perceived graft and security problems, as well as insufficient protection of property rights. As in other developing countries, infrastructure has not received sufficient policy prioritization and school enrolment rates are very low by international standards.

Finally, more needs to be done to reduce trade barriers, to increase competition, improve labour-employer relations and counter the loss of human capital through brain drain,” noted Augusto Lopez-Claros, Chief Economist and Head of the World Economic Forum’s Global Competitiveness Network.

8. Kenya – World Ranking: 94 (2005 Ranking: 93) Score: 3.57
Slips down 1 place from its position last year, Kenya competitiveness is still hampered by the alleged corruption of government officials and its reliance upon several primary goods whose prices have remained low.

7. Namibia – World Ranking: 84 (2005 Ranking: 79) Score: 3.74
Namibia has slipped from 5 places down from its 2005 position. Privatisation is still ongoing in the country but not at a rate that would stimulate much needed foreign investments. The Namibian economy is still closely linked to it more economically dominant South Africa.

6. Botswana – World Ranking: 81 (2005 Ranking: 72) Score: 3.79
Botswana has succeeded in using its wealth from key natural resources to boost the growth rate and key to its success have been its reliable and legitimate institutions, the prudence of government spending and public trustworthiness of its politicians. The transparency and accountability of public institutions have contributed to a stable macroeconomic environment, efficient bureaucracy and market-friendly regulation.

5. Algeria – World Ranking: 76 (2005 Ranking: 82) Score: 3.90
The first of the three improved African countries in the top ten and this was mainly due in to significant improvements in its institutions. The government has continued efforts to diversify the economy by attracting foreign and domestic investment outside the energy sector, which is currently the country’s economic backbone.

4. Morocco – World Ranking: 70 (2005 Ranking: 76) Score: 4.01
The second of the three improved African countries from last year, which was also thanks in part to significant improvements in institutions. Morocco continues to implement economic policies which in part brought about most of the macroeconomic stability experienced for most of the 1990s. Improving education and job opportunities for its populace has been given significant impetus by the current regime.

3. Mauritius – World Ranking: 55 (2005 Ranking: 55) Score: 4.20
A non-mover from its previous raking last year, the tropical island of Mauritius has developed a middle-income diversified economy with growing industrial, financial, and tourist sectors.

2. South Africa - World Ranking: 45 (2005 Ranking: 40) Score: 4.36
One of the 50 most competitive economies in the world, South Africa does particularly well in a number of areas typically reserved for rich, innovation-driven economies. The country has also displayed economic sophistication which is reflected in high ranks for property rights, private institutions, goods and financial market efficiency, business sophistication and innovation.

Its main weaknesses concern those areas which are fundamental for achieving sustained growth, namely strong institutions, adequate infrastructure, a supportive macroeconomic environment, and good basic health and education.

South Africa ranks only 103rd in the world for basic health and education, extremely low for a country at this level of development. The country has one of the highest levels of income inequality, which acts as a deterrent to growth. The labour market also suffers from very high unemployment and a lack of labour market flexibility. Moreover businesses are increasingly constrained by the short supply of skilled labour and by high levels of crime, which add to business costs.

“The past decade has seen major changes in the economic, political and social landscape of South Africa. Through prudent policies and sound economic management, the government has made impressive steps to manage the transition.

However, much remains to be done before the country can achieve its full potential. In particular, boosting basic and advanced education and training, doing more to counter the spread of HIV/AIDS, and implementing measures to increase labour market flexibility and improve security should remain high on the policy agenda as a means of tackling the unemployment problem, increasing the supply of skilled labour, and creating a more business friendly environment, all of which should ultimately help to reduce inequality and poverty,” said Augusto Lopez- Claros

1. Tunisia – World Ranking: 30 (2005 Ranking: 37) Score: 4.71
Africa’s most competitive country and its best mover on the World index; Tunisia improvement is also in part thanks to significant improvements in its institutions. Tunisia’s competitiveness has been aided by lesser governmental control of economic affairs with increasing privatization, simplification of the tax structure, and a prudent approach to debt.