Last week, the World Economic Forum published the Global Competitiveness Report which is used as an international benchmark on how each country competes globally in various aspects. To shed more light on this subject, Herald Senior Business Reporter Martin Kadzere (MK) had a one-on-one with trade and competitiveness expert Dr Gift Mugano (GM).
MK: Dr Mugano can you shed some light on the World Economic Forum (WEF) and the reliability of its report.
GM: The WEF was established in 1979, that is 36 years ago, with a mandate of carrying out comprehensive research into global competitiveness. Its work is published in a report, the Global Competitiveness Report, which shed light on the key factors and their mechanisms and interrelations that determine economic growth and the level of present and future prosperity in a country.
Since its inception, the report aims at building a shared understanding of the main strengths and weaknesses of each of the economies covered, so that stakeholders can work together on shaping economic agendas that can address challenges and create enhanced opportunities.
The report provides an overview of the competitiveness performance of 144 economies. It contains a detailed profile for each of the economies included in the study, as well as an extensive section of data tables with global rankings covering over 100 indicators.
With respect to rigour and reliability, the report is built on hard facts and wide opinions of over 20 000 from participating countries.
This is complemented by support from over 160 partner institutes worldwide who are involved in the research. The partner institutes are instrumental in carrying out the Executive Opinion Survey, which provides the foundation data of the report as well as imparting the results of the report at the national level.
MK: In your opinion, why is the Global Competitive Report (GCR) important?
GM: As I have said before, the GCR helps nations to build a shared understanding of the main strengths and weaknesses of their respective economies. In this way, it helps stakeholders to work together on shaping economic agendas aimed at addressing challenges and creating enhanced opportunities. Most importantly, the GCR once published, becomes the “international Commissioner of Oaths” on issues of competitiveness. In this respect, countries must take the outcomes of the GCR seriously as it informs investors’ decision-making.
MK: Let’s come home. Basing on this report, what are the major highlights for Zimbabwe?
GM: The major highlight from this report for Zimbabwe is that we moved seven rungs up the ladder to 124th this year from 131st position from the previous year out of 144 economies. This is a welcome development but we can do better.
Actually, Zimbabwe’s competitiveness was weighed down by public institutions which continued to receive a weak assessment, particularly in issues like corruption, government favouritism, and the protection of property rights, reducing the incentive for businesses to invest.
The public institutions pillar was ranked 138th out of 144 economies. Zimbabwe could have been ranked highly on the overall macroeconomic environment if the inflation and interest rates fighting is anything to go by. The country received a low rank in this pillar, that is 87th position, because of high Government debt, a negative savings rate, and policy inconsistency. Weaknesses in other areas include health (129th in the health sub pillar); low education enrolment rates, with only every second child participating in secondary education; and formal markets that continue to function with difficulties, particularly goods and labour markets, which rank 133rd and 137th, respectively.
These are generalised categories which gives us some insights on how we have performed overall.
However, a closer introspection into specific indicators gives us a better understanding of where we stand. There are areas which call for celebrations and some requires attention, which I can call positives and negatives.
MK: Can you elaborate on these positives and negatives?
GM: With respect to positives, Zimbabwe was ranked number one in the world on inflation fighting under the macroeconomic pillar.
Well, this is an achievement but I am not sure if this is still working to our advantage as this is now affecting the bottom line.
Still under the macroeconomic pillar, Zimbabwe was ranked number 26th out of 144 economies in balancing the National Budget. This is a great achievement particularly under the tight fiscal space. This demonstrates the Government fiscal discipline which must be commended. Still on the positives, Zimbabwe was ranked highly in combating crimes with the business costs of terrorism and organised crime ranked number 8th and 31st, respectively under the institutions pillar even though the overall pillar was ranked 138th.
Finally, we scored high on the quality of education system, reliance on professional management indicators (under the labour market pillar) and the women in labour force ratio to men pillar indicators we were ranked number 43rd, 41st and 16th out of 144 countries, respectively.
With respect to the negatives, we performed badly in areas of infrastructure provision especially on the quality of electricity, labour market rigidities when it comes to hiring and firing as well as flexibility in wage determination, access to finance, national savings and the country’s credit ratings. In most of these areas we were ranked around 142-143 out of 144.
MK: What needs to be done to correct these areas of concern?
GM: We need to accept these outcomes as a true reflection of our economic situation as a first step in solving our problems. The second step is to come up with a shared vision in crafting solutions to areas where we are uncompetitive. Naturally, in many instances, the blame is squarely put on the Government or private sector in some instances as being the major culprit in inhibiting business growth yet it is a shared responsibility which requires commitment and concessions to come from labour (in addressing labour market rigidities), business (in addressing business sophistication, efficiency and competitiveness) and the Government (in addressing reforms and strengthening of institutions).
On a refreshing note, the Government is making sterling effort in addressing infrastructure problems particularly in the areas of electricity generation, water and sewer as well as road rehabilitation.
Again, efforts in reforming the labour laws are at advanced stage which is much welcome. And, on a much more exciting note, the Government is working on the development of a national competitiveness report which will provide a fact-driven basis for dialogue, prioritisation and action planning regarding the economy.
To spice it up, the Government is establishing the National Competitiveness Commission whose mandate will be to identify cross-cutting constraints to growth and productivity and provide solutions.
Obviously, these efforts if sustained will be reflected in the future reviews of the country’s competitiveness by the World Economic Forum. I feel that we can do more. We need to much more engaged and be more inclusive in addressing these issues. The challenge we face today is that we have travelled more than one and half decade in a rough patch and it is kind of tiring but as they say the generals are made during the war we must soldier on and not lose hope.