Quarterly research highlights real hindrances to business growth are poor government service delivery, political uncertainty and crime
Grant Thornton’s tracker data for the second quarter of the assurance and advisory firm’s International Business Report (IBR) in 2012 continues to emphasise that poor government service delivery, especially utilities such as electricity concerns, is a real and continuous impediment to business growth in South Africa.
In light of this, Deepak Nagar, Grant Thornton South Africa’s national chairman, urges businesses to work together and with Government, to resolve service delivery concerns.
“Corporations have an obligation to meet shareholder objectives and stimulate economic growth. If they are unable to do this, the domino effect is insufficient employment opportunities which ultimately results in an increase in crime,” he says. “Only by addressing poor performance on service delivery concerns such as utilities, billing issues and road concerns directly with government, can business help to achieve the country’s goals to eliminate poverty and create and reduce inequality.”
The Grant Thornton International Business Report (IBR) provides quarterly tracker insights into the views and expectations of over 12000 businesses surveyed in total per year across 40 economies. The Q2 data for IBR 2012 also highlights regional and national business owner perceptions regarding crime, service delivery and political climate for SA business owners.
Second quarter IBR data for 2012 reveals that a startling 59% of all SA business owners surveyed are negatively affected by poor government service delivery. This figure is up from 53% recorded in the first quarter of 2012. Data by region highlights that businesses in the Eastern Cape are battling the most with this issue with 65% of business executives surveyed confirming that poor government service delivery is a concern (Gauteng – 54%; KZN – 52% and Western Cape – 50%).
“It is interesting to note that sentiment surrounding poor service delivery of utilities has improved by 16% since Q4 2011, from 48% to 32%,” adds Nagar, “On the contrary, issues relating to billing concerns is increasing dramatically from 10% in Q4 2011 to the 25% of responses recorded in this second quarter of 2012.”
Other items highlighted in relation to poor service delivery issues in Government include roads (potholes and traffic lights), lack of policing (linked to a high crime rate) and absenteeism due to public sector strike action.
Another macro-economic factor currently impacting SA privately held businesses is the issue of political uncertainly. Grant Thornton’s Q2 tracker data for 2012 reveals that sentiment is improving marginally in this regard, with 29% of respondents indicating that uncertainty about the political direction of the country is impacting business decisions (down from 32% in 2011 – rolling average).
Of the 29% affected by political uncertainly, 26% are putting off investment decisions and 24% are considering investing offshore rather than in SA.
Crime and emigration
Every quarter, business owners are asked whether they or their immediate family or staff have been directly affected by a threat to personal security (housebreaking, violent crime, road rage, hijacking). Grant Thornton’s IBR tracker for the second quarter of 2012 reveals that 46% of privately held businesses have been negatively affected by crime over the past 12 months (2011 rolling average: 46%).
Crime also brings an additional financial burden to privately held businesses. When executives were asked in what ways had a threat to personal security affected business operations 52% stated increased costs of security as the biggest burden, with decreased motivation (21%) and decreased productivity (19%) also highly ranked.
When business owners were asked what they see as the biggest constraint to business expansion, a lack of availability of a skilled workforce (38%) and overregulation and red tape (37%) are by far the biggest factors impeding growth for SA businesses. Countries in the BRIC region concur with both of these factors ranked at 36% by BRIC business owners.
Global tracker elements – Q4 economic update
Global perceptions from over 12 000 business owners in 40 economies are also tracked quarterly.
Business owners are asked each quarter to state how optimistic or pessimistic they are about their country’s economic for the next 12 months. The Q2 rolling average economic data relating to Grant Thornton International’s Optimism / Pessimism Index, shows that South Africa’s optimism balance for the second quarter of 2012 is +53% compared to +58% in 2011 and +60% recorded for the same period in 2010. This is against a global optimism balance of just +12% (2011: +16%) and BRIC optimism of +35% (2011: +40%).
An “optimism balance” is the proportion of business owners reporting they are optimistic less those executives reporting they are pessimistic.
South Africa ranks 7th in terms of global optimism, behind Peru (96%), Chile (90%), Philippines (90%), Georgia (83%), Canada (70%) and India (67%).
|IBR Quarterly tracker topic||Question asked||Q2 – 2012 rolling average perceptions|
|Crime||In the past 12 months have you, your staff or family of staff been affected by the threat to personal security?||Yes – 46%|
|In what way has the threat to personal security affected your business?||Increased cost of security: 52%Decreased motivation: 21%Decreased creativity: 13%Decreased productivity: 19%Loss of customers: 13%
Loss of staff: 13%
|Government service delivery||Has your business been negatively affected by poor government service delivery?||Yes – 55%
No – 45%
|What is the greatest negative impact on your business of government service delivery?||Utilities – i.e. gas, electricity, water – 41%
Billing issues e.g. rates and taxes – 16%
Roads e.g. potholes and traffic lights – 15%
Other – 26% (lack of policing | absenteeism due to strike action)
|Political climate||Is uncertainty about the future political direction of the country impacting your business decisions?||Yes – 29%
No – 71%
|In what ways has uncertainty about the future political direction of the country impacted your business decisions?||Putting off investment decisions – 26%
Considering investing in off shore rather than in South Africa – 24%Improving BEE status – 21%
Considering selling the business – 14%
Seriously considering emigration – 4%
Notes to editors
The Grant Thornton International Business Report (IBR) provides insight into the views and expectations of over 12,000 businesses per year across 40 economies. This unique survey draws upon 20 years of trend data for most European participants and 10 years for many non-European economies.
Data collection is managed by Grant Thornton International’s core research partner -Experian. Questionnaires are translated into local languages with each participating country having the option to ask a small number of country specific questions in addition to the core questionnaire. Fieldwork is undertaken on a quarterly basis. The research is carried out primarily by telephone.
IBR is a survey of both listed and privately held businesses. The data for this release are drawn from interviews with 3,000 businesses from all industry sectors across the globe conducted in May/June 2012. The target respondents are chief executive officers, managing directors, chairmen or other senior executives.
Notes to editors
You may quote freely from this publication, provided you acknowledge the source. This publication is an outline for information purposes and should not be relied upon for detailed planning. Readers are advised to consult professional advisors for guidance relating to new or existing legislation which might affect their business and personal decisions.
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