South African business executives’ optimism about growth over the next year had waned significantly, mostly owing to continuing challenges impacting business.

The latest report by Grant Thornton showed that the lack of availability of a skilled workforce, poor government service delivery, crime and political instability continue to affect businesses.

The International Business Report (IBR) highlighted that business executives in Gauteng and the Western Cape were the most pessimistic about business prospects in the next 12 months.

Only 31% and 30% of business executives in Gauteng and the Western Cape respectively, were optimistic about growth in the year ahead, while KwaZulu-Natal, at 53%, and the Eastern Cape, at 41%, were the most optimistic, said Grant Thornton Johannesburg CEO Andrew Hannington.

Only 39% of business executives across South Africa as a whole were optimistic about growth in the coming year.

Concern surrounding the potential impact of political uncertainty on business had increased to 38%, from 30% a year ago, resulting in 66% of business leaders deferring investment decisions during the September quarter, compared with just 27% in the third quarter of 2012.

“This has had a direct effect of pushing 47% of businesses to consider offshore investments, [up] from only 23% a year ago,” he explained.

The IBR survey revealed that 31% of business owners were considering selling their businesses – triple the number from a year ago.

The impact of corruption, however, registered low on the list of concerns for business executives, with only 12% of respondents indicating that this had a strong negative effect on their business and 31% saying the effect was mild.

A lack of skills was again flagged as directly impacting business growth, with 39% of businesses stating this was a concern, followed by regulation and red tape, with 38% of business executives – on par with global sentiment – stating this was a constraint to business expansion in South Africa.

Just under 60% of business respondents identified ailing government services as having an impact on the success of privately held businesses.

“As a national concern, discontent regarding basic utility services (water and electricity supply) has increased to 79% from 42% a year ago,” Hannington stated.

Further, concerns about the negative impact of deteriorating road infrastructure, including potholes, climbed to 64% from just 17% last year.

Fifty-eight per cent of businesses also noted rates and taxes as a constraint to doing business.

The report noted that crime continued to impact South African business, with 62% of executives indicating that they or their immediate families have been affected by the threat to personal security as a result of contact crime events.

“The greatest impact has been the increased cost of security, which 74% of South African businesses flag as the biggest financial burden they face," he added.