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Impact of crime on SA business at dire levels

Johannesburg - SA business optimism plummeted to a meagre 3% in terms of how optimistic SA business executives were about the coming 12 months as at September 30 2014, according to Grant Thornton’s third quarter tracker research for 2014.   

This figure has declined from 35% as at June 30 2014, in the quarter-on-quarter findings of Grant Thornton’s International Business Report (IBR).

The third quarter IBR data to end September 2014 also highlighted that a barrage of factors are constraining business growth.

About 51% of South African businesses are lamenting rising energy costs, 47% are frustrated by exchange rate fluctuations, 37% are struggling with a lack of availability of a skilled workforce, 36% expressed concern regarding economic uncertainty and 35% stated that over-regulation and red tape are restricting business expansion.

"With no sign of economic reforms taking shape on the South African horizon and current issues relating to land grabs, 'Nkandla-gate' and continued rubble rousing in parliament not helping matters either, local business optimism plummeted," Grant Thornton said in a statement issued on Wednesday.

Crime distress for SA business

Unfortunately, the impact of crime on SA businesses and the direct impact on individuals are reaching dire levels once again, according to the research.

When SA business owners were asked if, in the last 12 months, they had directly been affected, or whether their staff or family of staff had been affected by the threat to personal security such as house breaking, hijacking, violent crime and road rage, the results were very disturbing with a massive 65% stating yes.

“South Africa is infamous for its terrible crime statistics,” said Nagar. “During 2011, we were so pleased to see this figure drop to its record low of 46%, but the slow increase again to this quarter’s 64% is devastating.”

Grant Thornton’s third quarter data for 2014 highlights that Gauteng is most affected by crime (67%), with KZN following closely behind at 66%. The Western Cape (62%) and Eastern Cape (60%) regions seem to be marginally better protected against crime, according to the data.

When South Africans were asked to list the ways in which their businesses were affected by crime, 75% stated that the increased costs for security are a serious financial burden.


“Strikes, such as the post office strike, continue to impact negatively on economic performance,” said Deepak Nagar, national chair of Grant Thornton South Africa.

“In addition, renewed fears about the long term sustainability of energy are a serious concern for business.”

Government service delivery an ongoing battle

Third Quarter IBR data for 2014 reveal that 63% of all business owners surveyed are affected by poor government service delivery. This has increased from 59% during the third quarter of 2013, from 56% in the third quarter of 2012 and from 51% during the third quarter of 2011.

When businesses were asked to list the types of government service delivery that currently negatively affect their businesses, utilities was once again the greatest factor, with 78% of businesses stating this as a concern.

About 62% lamented road issues and 53% complained about billing issues (rates and taxes).

Eurozone woes

Global data for the third quarter of 2014 shows that the economic balance of the eurozone is undergoing significant change as German business confidence took a sharp nosedive in the last quarter, threatening to drag the world’s biggest trading block downwards.

Global figures reveal that in the last three months optimism across the eurozone fell from net 35% to just 5%, as business optimism in Germany plummeted from net 79% to just net 36%.

This follows a contraction in the German economy in the second quarter, amid fears of the impact of the Ukraine crisis on trade and the energy supply. A continued slide in optimism in France, the bloc’s second biggest economy, is also contributing to the eurozone malaise.

The biggest constraint to business expansion globally is anxiety regarding economic uncertainty with 40% of businesses worldwide ranking this factor as a core inhibiter.

Business executives in the Bric economic region (excluding SA) concur with 39% of respondents expressing concern about uncertainty about the economy (SA – 36%).  

But the issue of overregulation and excessive red tape remains very high on the list of factors constraining business growth worldwide with 35% of SA businesses, 38% of businesses in the Bric region (excluding SA) and 34% of privately held organisations globally highlighting this as a major concern.

“Regulations have a cost impact on businesses which is often underestimated,” said Nagar.  “Having to constantly comply with stifling regulatory controls places an additional financial burden on businesses in an already-difficult economic environment.”

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