In addition to nationwide strikes and instability in the local mining sector, political insecurity, regulatory concerns and public policy issues were further pressuring South Africa’s businesses, advisory firm Grant Thornton revealed in a recent research report.

The organisation’s quarterly tracker data for the fourth quarter of 2012 revealed that 48% of South African business leaders felt that uncertainty about the future political direction of the country was impacting on longer-term business decisions. 

Business owners admitted to delaying important business judgments around upcoming prospects, with 26% seriously considering investing offshore.

Additional core constraints to business expansion included socioeconomic factors, such as crime and corruption, the lack of available skills in the current workforce and poor service delivery by government.

Grant Thornton South Africa national chairperson Deepak Nagar said the constraints highlighted by South African business executives each quarter remained consistent.

“The fact that these results indicate such similar business concerns each and every quarter emphasises just how critical these issues are for South African business owners,” he added.

The lack of skilled workers was cited as the key growth constraint to business expansion and growth implementation, while 58% of medium-sized businesses had been affected by poor government service delivery.

“In addition, 42% of executives in South Africa agree that overregulation and ‘red tape’ also constrict business growth, which highlights how stifling regulatory systems and processes affect the daily functions of a company,” Nagar commented.

Moreover, the data highlighted that, while 63% of business leaders believed that crime was a concern, only 22% had considered emigrating as a result.

Prospects

Nagar added that the data did indicate some expected improvements in local markets, with the international exposure of key sectors, such as mining and manufacturing, weighing positively on growth.

“Some legislation, systems and processes are certainly working to improve business trading conditions nationwide,” he added.

South Africa’s gross domestic product growth was expected to accelerate to 3.1% in 2013 and 3.8% in 2014, in line with a modest global recovery, despite potential further strikes representing a major downside risk.

“Expected growth improvements are anticipated to pick up even further in South Africa between 2015 and 2017, as the ranks of the black middle class swell, boosting consumer spending on durable goods and services, such as telecommunications and banking,” said Nagar.