21 November 2008
The MasterCard Worldwide Centres of Commerce Emerging Markets Index, a list of 65 cities poised to drive long-term economic growth in more than 30 emerging markets, has ranked Johannesburg 11th, Cape Town 33rd and Durban in 37th place.
According to MasterCard, cities are generally considered to be the leading indicators for national economies, making the study an important barometer of larger global trends and growth potential over time.
“Given the current economic climate, MasterCard is focussed on providing valuable insights that assist our customers in identifying new market opportunities for the future – the Emerging Markets Index is key to that commitment,” MasterCard Worldwide Global Markets president Walt Macnee said in a statement this week.
“By evaluating 65 emerging market cities and their increasingly important role in global commerce, the index offers companies a roadmap for where commerce is headed next.”
South Africa has more cities represented in the index than any other country outside of the Bric (Brazil, Russia, India and China) cities, with MasterCard suggesting that Africa may be entering an era of growth in the global market.
“South Africa’s strong showing may reflect the ongoing opening of Africa to Western products, services and companies,” MasterCard says. “It is clearly a place to watch carefully for new opportunities.”
Presenting a breakdown of the index in Johannesburg this week, T-Sec economist Mike Schussler said that having three cities included underscored South Africa’s regional dominance.
Schussler expressed concern, however, about the high cost of internet and telephone services in South Africa, including downtimes. The cost of importing and exporting was also high, with high transport costs like constraints in the harbours, customs delays, rail and traffic congestion adding to business costs.
His biggest concern was education. He indicated that although the country spends 5.4% of GDP on education, above the world average of 4.7%, South Africa still has a lot of pupils dropping out of school between grades 10 and 12.
“Ghana and Botswana beat us on education. We don’t need more money, we need a better system,” he said.
The index measured cities’ performances based on eight emerging market dimensions:
With the International Monetary Fund expecting global economic growth to be primarily driven by emerging economies at an unprecedented rate of 12 to 1 compared to rich-world economies, MasterCard says that emerging markets are becoming increasingly important investment and business centres.
This is clear when one sees that China has 15 cities on the index, followed by India (with eight), Brazil (with five) and Russia (with four) – with the leading city in each country being Shanghai, Mumbai, Sao Paulo and Moscow respectively.
The Hungarian capital Budapest ranks third on the index, helped by its quick embrace of the free market system following the collapse of the Soviet Union and its influence in the region.
A former world capital, Budapest was among the first Eastern European cities to trade with the West following the Cold War, and is benefitting from its first mover initiatives, MasterCard says.
“As the current financial environment shows, globalisation is a part of today’s economic reality – capital, talent, technology and even intellectual property now move seamlessly across borders and nations,” said MasterCard Worldwide Centres of Commerce programme director Michael Goldberg.
“Emerging market cities will play an increasingly role in global commerce and may provide unique market opportunities for businesses in the face of changing economic times.”
SAinfo reporter and City of Johannesburg
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