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Red tape chases firms from SA

Jul 10 2012 09:42 Sapa

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Johannesburg - An engineering company is shifting its focus towards other African countries because of restrictions on doing business, rather than suppressed demand, Business Day reported on Tuesday.

Stephen Meijers, chief executive of ELB Engineering, a division of JSE-listed ELB Group [JSE:ELR], said on Monday many of the company's negotiated deals were in Africa because there were often fewer hurdles.

He believed the South African market was depressed currently, but blamed first world restrictions for making it more difficult, especially for smaller businesses, to get projects off the ground.

South Africa has the ability to compete with the rest of the continent for the business of any engineering firm. However, the rules and regulations in other African countries are easier to manage, which draws South African firms.

"Demand is down in SA and there is a lot of demand in Africa. For any engineering company, Africa is the place to be," said Meijers.

The government acknowledged at the end of June there were problems with red tape which need to be tackled to unlock investment spending, according to the Business Report at the time.

"It discourages the appetite for projects," Economic Development Minister Ebrahim Patel told a business breakfast at the ANC's policy conference in Midrand.

Old Mutual's Crispen Sonn said at the event that the cash equivalent sitting on the balance sheets of large corporates had reached more than R500bn. This was not flowing to big capital projects, he said.

"Why is that cash not flowing more effectively into the economy and what is the government's analysis of this?" Sonn asked.

Patel said firms sought a mix of opportunity and return on capital.

"We recognise the speed with which we move to unlock some of these constraints on investment... is just too slow."

He acknowledged businesses faced yards of red tape.

"We are learning where some of the systemic challenges are," Business Report quoted Patel saying.

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africa  |  engineering  |  business
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