Improved competitiveness will require collaboration between government, business and labourSouth Africa is fast losing ground to its emerging market peers in a number of critical areas of competitiveness and now has to make a series of strategic choices or risk being completely left behind in growth and competitiveness.

This is according to Mike Vincent, Deloitte West Africa Advisory leader and Africa Consulting industry leader for Manufacturing, Automotive and Construction at the professional services firm.

“Africa currently boasts 7 of the 12 fastest growing economies in the world and although South Africa remains leading and dominant in a range of measures, it faces the risk of losing its competitive advantage in a number of areas,” says Vincent.

He points to the emergence of Kenya, Ghana and Morrocco as a destinations of choice for the status of “Gateway to Africa” for multinational corporations and the emergence of Nigeria, set to grow at 7% this year compared to South Africa’s 2%, as examples of how the country is sliding down the competitiveness league table.

Vincent points out that a country’s competitiveness is created and sustained through a coordinated approach that is highly localised in a country. An industry’s ability to innovate and upgrade is an important building block for a nation’s competitiveness and it is highly unlikely that a nation can be competitive in all industries. History, culture, values, economic instruments and institutions can all play their part. But it is incumbent on a nation to make some strategic choices about which industries to compete in and then to ensure that the supporting macro and micro structures are in place to support these choices.

Vincent has now called for a consultative forum similar to the negotiations that ushered in South Africa’s democracy to discuss the country’s economic future, the so called “economic Codesa”. This can then be used to make what Vincent calls “a series of strategic choices,” in which the basic questions of what to produce, how best to produce it and for whom to produce it are debated and agreed.

While South Africa is endowed with minerals and other resources and infrastructure, much of its labour force is equipped to undertake low skilled economic activities. The challenges our country faces with regards to education exacerbates the situation – enabling learners to create and pursue technologically complex careers is where leading countries are actively competing, leaving menial roles to cheap labour pools in developing markets.

Government, the private sector, unions and civil society have a crucial role to play in setting the country’s economic aspirations. “The first question we have to ask is how big we need the economy to be over a specific period,” says Vincent. The economic size and the time it has to be achieved point to the required rate of growth.

Vincent says the next question is ‘where do we play?’ in the economic value chain to decide what goods and services South Africa should focus on. An example of countries and industries that have made these choices is in the motor manufacturing sector where Germany decided to focus on luxury car manufacturing and South Korea aimed for the affordable middle income market.

“Once we have decided where to play, we then have to decide ‘how we win?’” says Vincent, pointing out that this requires an integrated approach to national culture and work ethic, a pipeline of suitably skilled citizens, enabling legislation, structured incentive programmes and institutions that facilitate the achievement of the goals that the country has set itself.

“Initially this will most likely require a more responsive immigration policy to attract skilled foreign workers in the short term”. Vincent cites the example of Singapore which attracted internationally prominent scientists in the late 2000’s to lead the nation's biomedical sciences research and development efforts.”

Vincent notes that for all of this to happen, government has to provide leadership and create the right environment for business to pursue its goal of making a profit while labour sells its services at the fairest price possible. “But this can only happen through dialogue which is why an economic Codesa makes sense”.

“The important thing to realise is that this is not a 3 year strategy, but a 10 to 20 year strategy,” says Vincent, noting that Africa has to gear up for a rapidly growing population that will require a robust economy and excellent education and health systems so as to avoid social instability.