Instability paralyses business leaders

Feb 18 2013 13:16
I-Net Bridge

Johannesburg - Nearly half of South African business leaders say that they are delaying making important decisions about the future because of uncertainty about the political direction for the country‚ according to a survey from global consultancy Grant Thornton.

Around a quarter of companies surveyed during the fourth quarter of last year also said they are seriously considering investing offshore in a country seen as more stable‚ the business consultancy said.

"Over and above post-recessional blows‚ nationwide strikes and instability in our mining sector‚ additional issues - particularly political insecurity‚ regulatory concerns and public policy issues - are adding further unnecessary pressure to the stability of South Africa’s business environment‚" Grant Thornton said in a statement.

The survey's results suggest that efforts by the ANC to reassure business have failed to dispel private sector concerns about crime and corruption‚ skills availability and poor government service delivery.

South African companies are hoarding more than R530bn in cash and low yielding instruments because of their reluctance to invest‚ according to estimates last year from Nedgroup Investments.

Core constraints which directly impact SA business expansion plans include socio-economic factors such as crime and corruption‚ the lack of available skills in the current workforce and poor government service delivery‚ the survey showed.

Deepak Nagar‚ national chairperson of Grant Thornton SA said that these constraints have consistently been the same for an extended period of time‚ emphasising just how critical these issues were for local business.

When SA business owners were asked what barriers or constraints were affecting business growth and expansion for the future‚ a lack of skilled workers (47%) continued to be cited as the key growth constraint‚ well above the average for the Bric group of emerging economies (36%)‚ the survey showed.

The group includes Brazil‚ Russia‚ India and China‚ with SA a recent addition‚ although this is not widely recognised.

“In line with Bric business leaders‚ 42% of executives in South Africa agree that overregulation and complex red tape also constricts business growth and this highlights how stifling regulatory systems and processes affect the day-to-day functions within a company‚” Mr. Nagar said.

However the survey showed that businesses were as optimistic about prospects for this year as their peers in the Bric group‚ with about 38% of companies positive compared to an average of 39% for its peers in the group and a global average of 4%

But South African business confidence was sharply down from 60% in 2010‚ Grant Thornton said. 

“Next year – 2014 – is a national election year for South Africa. Those who successfully formulate feasible solutions to these concerns would certainly take the lead on next year’s electoral battle ground‚” Mr. Nagar said. 

The Grant Thornton International Business Report (IBR) provides quarterly tracker insights into the views and expectations of over 12 000 businesses surveyed in total per year across 44 economies. The Q4 data for IBR to December 2012 also highlights regional and national business owner perceptions regarding crime‚ service delivery and political climate for SA business owners.


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business leaders  |  strikes  |  sa economy



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