Wednesday, November 13, 2013

South African business outlook at its gloomiest

SOUTH African businesses’ outlook for their prospects over the next 12 months are at their worst levels yet, according to Grant Thornton’s International Business Report (IBR) quarterly tracker survey.
The survey also found that rising political uncertainty is making more business owners than ever defer investments decisions. A startling two-thirds (66%) said they were deferring investment decisions, compared with just 27% in the third quarter of 2012.
According to the survey, South Africa’s optimism for business prospects for the coming 12 months was at its lowest level on record, at 18%. This figure has been steadily declining since the first quarter of 2011, when it was at 71%, the accounting and auditing firm said.
Grant Thornton surveyed 600 South African business owners on their views and expectations.
"The low sentiment among South African business owners could be ascribed to the flight of foreign funds following initial indications from the US Federal Reserve earlier this year that it would start tapering its economic stimulus programme," says Deepak Nagar, national chairman of Grant Thornton SA.
The flight of privately held business owners from South Africa also appears to have picked up pace as a result of political instability in the country, and although the figure of 14% of respondents considering emigration is fairly low, this has climbed 10 percentage points from the third quarter of 2012.
The proportion of business owners considering selling their businesses almost tripled, to 31% from 12% a year earlier.
The lack of a skilled workforce has been flagged once again as a significant constraint to operating a business in South Africa, with 39% of business owners stating this issue as a constraint to business growth and expansion.
"It is painfully ironic that we have chronic levels of unemployment, yet organisations are constrained from growing their business, and the economy, because we lack the right skills," says Mr Nagar.
Of even bigger concern was the impact of failing government services, with 59% saying it was an issue.
According to the survey, concern over basic utility services (water and electricity supply) has increased to 79% from 42% a year ago. Road infrastructure concerns (such as potholes and traffic light issues) and their negative impact on South African business executives has climbed to 64% from just 17% last year.
"Clearly, the state of service delivery and infrastructure is not restricted to disaffected communities that have risen up in protest over the past number of years," says Mr Nagar.
Crime remains an issue for business owners with 74% flagging it as the biggest financial burden they face.

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