Consistent ratings of South Africa as an investment market as well as a strong ranking against emerging markets – and specifically the BRIC nations of Brazil, Russia, India and China – underpin the country’s performance in the annual Ease of Doing Business Index results announced by the World Bank in Washington.
The Ease of Doing Business Index is an index created by the international financial institution, and uses empirical research to justify its work by showing the effect of improving regulations on economic growth.
Higher rankings indicate better, usually simpler, regulations for businesses and stronger protection of property rights.
The index is meant to measure regulations directly affecting businesses and does not directly measure more general conditions such as a nation’s proximity to large markets, quality of infrastructure, inflation, or crime.
South Africa lost two places in the latest index results and is now placed 34 out of 183 economies.
“As with other indices issued of late, South Africa has not lost place as a result of declining scores, but rather as a result of other economies improving at a more rapid rate,” said Brand South Africa CEO Miller Matola.
“Our consistent ratings are underpinned by improvements in areas such as closing a business, where we are up three places to 74; as well as in enforcing contracts where we improved on position to 85, from 86. In contrast to this South Africa lost ground in areas such as starting a business, registering a company and trading across borders,” he said.
Globally competitive investment destination
Matola added that Brand South Africa will continue to prioritise efforts to promote the country’s reputation as a globally competitive investment destination, guided by indices such as the World Bank’s Doing Business Index and others.
“It is critical that we align all the recent indices with our own strategic priorities and measure the direct impact of our efforts in these regions on a market by market basis,” he said.
Within the World Bank’s latest index this holds true. In areas such as investor protection South Africa outperformed the Organisation for Economic Cooperation and Development averages in all four pillars. This includes extent of disclosure, extent of direct liability, shareholder suits and investor protection itself.
“South Africa’s role as an emerging market which can compete comparatively with some of the BRIC nations and act as a credible connector to the 1-billion consumers on the continent has been boosted by the recent results where all four BRIC nations lost ground and where sub-Saharan Africa made the greatest improvements,” said Matola.
“The credibility of South Africa being ranked as one of the top emerging economies in terms of its ease of doing business has a significant impact on its competitiveness as a country with which investors would want to do business in the future. Studies and reports such as these are key to our understanding and efforts to position and profile South Africa as a trade, investment and tourism destination of choice.”