Botswana was ranked on Wednesday as Africa's most competitive economy, even though it stands in only 36th place in the world league. Ghana is ranked tenth in Africa, but 71st in the world

The World Economic Forum's African Competitiveness Report 2004, released in the Mozambique capital to coincide with the opening of the forum's annual African economic summit, said the rankings underscored the continent's generally poor performance and its "serious economic and institutional problems".

Botswana took top place for the first time among 25 African countries evaluated in the study, based on a combination of official economic and social statistics and other data on factors such as corruption, the impact of HIV/Aids, infrastructure and access to financing.

South Africa, ranked seventh in the two previous reports in 1998 and 2000, has moved up to third place in the organisation's "growth competitiveness index".

Ironically, some of the continent's fastest-growing economies fill the bottom places, with oil producers Chad and Angola ranked 25th and 24th respectively. Host country Mozambique, also one of the continent's best performers with growth averaging over 7 per cent annually in recent years, slips down the table two places to 20th spot.

Zimbabwe, which scores poorly on most of the indicators used and is the world's fastest-shrinking economy with GDP down an estimated 40 per cent since 1999, actually moves up a place to 22nd from 23rd.

Perhaps most surprising is Gambia's rating, ranked for the first time in sixth place ahead of Egypt, Morocco, Tanzania and Ghana.

While some rankings such as South Africa's evidently make sense in the light of political and economic changes, others seem odder. Malawi's sharp improvement is certainly not justified by economic fundamentals, while Botswana's promotion to top spot comes at a time when with most economic forecasts point to a marked slowdown in economic growth, due primarily to the impact of HIV/Aids.

World Economic Forum economist Augusto Lopez-Claros notes that African countries score poorly globally, mostly falling into the bottom third of world rankings. Most of the places at the foot of the global league table are filled by African countries. These poor rankings, he says, pinpoint the areas where policy reforms are urgently needed.

Arguably, the most striking chapter of the report, on how Africa should position itself in the global trading system, warns that preferential trading systems among African countries have failed to increase regional trade or lead to greater international trade.

This is unlikely to be well received at the meeting. Much emphasis has been placed on regional integration schemes and specifically on the New Partnership for Africa's Development (Nepad), which will be high on the agenda during the three-day summit of political and business leaders.

The authors, Maria Oliva of the European Central Bank and Luis Rivera-Batiz of Columbia University in the US, conclude that trade agreements with developed countries show "greater promise at the present time". This is despite the fact that African agricultural products are often "excluded or penalised" in such north-south trading schemes.

The authors suggest that African countries need to participate more actively in multilateral trading negotiations while also considering unilateral liberalisation which, they say, worked well in Chile in the 1980s.

In his contribution on the impact of HIV/Aids, Alan Whiteside of the University of Natal in South Africa, describes the epidemic as a hidden tax on trade and investment, which will decrease economic growth.

"Africa is not, and cannot be competitive unless this issue is firmly addressed," he concludes.