Crime, rising energy costs, a volatile exchange rate and policy as well as economic uncertainty are some of the factors that have knocked at least 30 percentage points off South Africa’s business confidence index, a survey of business executives by Grant Thornton has revealed.
According to the Grant Thornton survey local business confidence has fallen from 39 percent to nine percent.
Coming amidst a slew of other negative outlooks on the economy from agencies including AT Kearney, the survey indicated increased pessimism over the country’s economy despite whatever positives there are.
Not surprising
Analysts said yesterday it was not much of a surprise that the index had shrunk so much and that the index had probably not included the xenophobic attacks and more intense electricity outages last month.
They agreed that confidence might very well decline still further.
Econometrix chief economist Azar Jammine said in a word, the problems needed stronger leadership.
“The government must decide if it wants to take over the economy or leave it to the private sector to do it. We are in a no man’s land right now and achieving very little,” he said.
He also suggested that a move by the government to improve education would help address the myriad of problems including xenophobia.
The International Business Report (IBR) survey announced findings for the first quarter to March 2015 and included findings from 10 000 business executives and 400 senior businessmen in South Africa.
“If you drive around Sandton, there is a huge number of properties that are being built, the property sector is buoyant and the people are looking at other areas. They are looking at hotels, tourism and various areas. It’s not like people aren’t looking at mining. They are looking at factories but they are just not making the final investment decision because of this uncertainty.
“So we are not in a situation like other countries in Africa. We are way way better than other countries in Africa and we just need clear government direction,” Grant Thorton chief executive Andrew Hannington said.
According to the survey, the first quarter IBR data for 2015 revealed that a startling 68 percent of all business owners were affected by poor government service delivery, which has increased from 60 percent during the first quarter of 2014, from 57 percent in the first quarter of 2013 and from 53 percent during the same period in 2012.
The data showed that 55 percent of South African businesses lamented rising energy costs, about 42 percent were frustrated by exchange rate fluctuations, 39 percent expressed concern regarding economic uncertainty, 37 percent struggled with a lack of availability of a skilled workforce, and 36 percent stated that over-regulation and red tape were restricting business expansion.
Grant Thornton said the greatest service delivery issue for local businesses was basic utility services, that is water and electricity supply.
During the first quarter of 2013, 41 percent business owners stated that utilities had negatively affected their businesses. Just two years later, this figure has more than doubled, to 83 percent in the first quarter of 2015.
The Expropriation Bill, Promotion and Protection of Investment Bill, Private Security Industry Regulatory Amendment Bill, Land Act Amendment Bill and the Mineral and Petroleum Resources Act all feature legislation in one form or another which will force both local and foreign-owned companies to relinquish a significant part of their shareholding either to the government or to a designated group.
“We need certainty, we need clear direction from the government about what are these regulations... we can’t have a Minister for Finance standing up in February to say there will be no Unemployment Insurance Fund (UIF) for a year and then in the same quarter saying no they are not going to have that, they will leave UIF as it is, that’s a small example of the uncertainty,” Hannington said.
House breaking, hijacking, violent crime, road rage also contributed to safety concerns, with 63.5 percent of survey respondents confirming to have directly been affected, or whether their staff or family of staff had been affected by the threat to personal security.
“We are not as bad as other countries. Our 10 percent (confidence figure) is still a good number in other countries. A multiple of countries are below us,” Hannington said.