For the first time since 2007, overregulation and the lack of a skilled workforce are no longer the top concerns constraining business growth in South Africa – second-quarter data from advisory firm Grant Thornton revealed that 52% of South African business executives cited rising energy costs and 45% ranked exchange rate fluctuations as the biggest factors currently hampering growth and expansion in the country.

“Increased energy costs and fears about the long-term sustainability of energy for business [are] growing concern[s] in South Africa,” outlined Grant Thornton South Africa national chairperson Deepak Nagar.

“Dramatic fluctuations in exchange rates and, particularly, the recent collapse of the rand do not help matters either,” he added.

Grant Thornton’s ‘International Business Report’ analysed the business perceptions of over 150 South African executives between April and June, highlighting regional and national perceptions of privately held businesses regarding crime, service delivery and the current political climate.

Despite slipping from pole position, the lack of a skilled workforce continued to restrict business growth, with 39% of South African business executives ranking this concern as a key constraint.

The issue of overregulation and excessive red tape also remained high on the list of factors constraining business growth worldwide, with 35% of South African businesses and 39% of businesses in Brazil, Russia, India and China highlighting this as a major concern.

“The world is plagued with red tape matters. Stifling regulatory controls and too many systems and processes affect the day-to-day functions within a company and they have a long-term impact on the growth and expansion prospects of an organisation too,” Nagar commented.
Worryingly, the impact of crime on businesses and the direct effect on individuals were also rapidly climbing, in line with past trends.

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

“We started surveying the impact of crime on South African businesses in 2007, when an astonishing 84% had been directly affected by crime during the 12 months under review.

“We were very pleased during 2011 when this figure dropped to [a] low of 46%, which was almost 40% lower than 2007. But to see crime statistics on the increase again is extremely concerning,” he cautioned.

The second-quarter data highlighted that Gauteng was most affected by crime, with 70% of respondents considering it a concern, followed by KwaZulu-Natal, at 69%, the Eastern Cape, at 62%, and the Western Cape, at 60%.

When asked to list the ways in which their businesses were affected by crime, 74% of business people stated that the increased costs for security were a “grave financial burden”.

Other factors include decreased motivation, productivity and creativity, and a loss of staff.

The study further revealed that government service delivery concerns were growing, with the negative impact of poor government service delivery weighing on business.

A “startling” 62% of all business owners surveyed were negatively affected by poor government service delivery, increasing from 59% in 2013, 57% in 2012 and 53% in 2011.

“Poor government service delivery is a real and continuous impediment to business growth in South Africa. I urge the newly elected local government constituencies to make this concern a priority to be properly resolved over the next four years.

“Let us not be lamenting these matters again to such an enormous extent when we vote again in 2018,” Nagar appealed.

Some 78% of respondents stated that the service delivery of utilities was their greatest concern, while 65% lamented road issues and 57% cited billing issues related to rates and taxes.

When asked how optimistic they were about the outlook of the country’s economy in the next 12 months, research revealed a “pessimistic” outlook, with only 27% of privately held businesses expressing optimism for the second quarter of the year.

South Africa’s optimistic outlook had, thus, steadily declined since 2010’s high of 60%.

“There are a multitude of factors influencing domestic business executives’ outlook. The global economic crisis has played a major role in the pessimistic expectations, as have labour issues, currency fluctuations and general political uncertainty ahead of the elections earlier this year,” he noted.

In contrast, global optimism was “sky- rocketing”, with a record high of 46% achieved for the second quarter.