South Africa: Over-Regulation Limits Business Expansion – Survey
Biz-Community (Cape Town)
25 January 2012
Grant Thornton’s latest quarterly survey on privately held business owner’s perceptions highlights that 37% of South African executives rate over-regulation and red tape as the biggest constraint to business expansion.
Deepak Nagar, managing partner at Grant Thornton Durban and the new national chairman for Grant Thornton South Africa effective 1 March 2012, yesterday released the fourth quarter data for the 2011 Grant Thornton International Business Report.
The Grant Thornton International Business Report (IBR) provides quarterly insight into the views and expectations of over 11 000 businesses surveyed in total per year across 39 economies.
Nagar revealed regional, national and global business owner perceptions regarding crime, service delivery, political climate and the Companies Act, for SA business owners.
“For the first time in five years, over-regulation as a business constraint now surpasses SA business owner frustrations relating to the lack of availability of a skilled workforce with 36% of business owners noting this as a challenge,” says Nagar. “But both concerns are ranked high by SA business owners in terms of constraints to expanding business operations.”
The BRIC countries have stated the same concerns as South Africa in terms of factors which constrain business performance but the lack of availability of a skilled workforce still tops the list at 39%. BRIC averages recorded during Q4 for IBR 2011 indicate that over-regulation is also a significant constraint for the region with 35% of business owners lamenting this concern.
Red tape
It is interesting to note that South Africa now tracks on a par with global trends with an average of 32% of business owners most constrained by over-regulation and red tape. The second biggest constraint globally, however, is a shortage of orders and reduced demand for products (31%).
“This is clearly a global concern right now as the world battles with what’s left of the worldwide recession and the ongoing Euro-Zone crisis,” Nagar adds.
Figure 1. Rank the constraints of expanding your businessclick to enlarge
Crime
When business owners were asked if they or any of their staff and immediate families had been directly affected by a threat to personal security (incl. road rage, hijackings, housebreakings and violent contact crime) in the past 12 months, 46% of South African businesses affirmed that they had been affected.
Nagar states however that this crime statistic continues on a downward trend, with the national data for 2011 being nearly 40% lower than what was recorded in 2007 (84%).
“The impact that crime has on SA business owners is still unacceptably high,” states Nagar. “While it is certainly pleasing to see this figure declining steadily over the past five years, we have a long way to go to see crime being properly eradicated from our daily lives.”
Gauteng topped KZN business owners marginally, with 52% of Gauteng businesses directly affected by crime during the past year, while 51% of KZN businesses affirmed this concern. Only 39% of both Western and Eastern Cape business owners responded that crime had affected them in the past 12 months.
As in previous years, the increased cost of security is ranked as the biggest financial impact that crime has on a business, with 45% of SA business owners affirming this. Business owners also cited decreased motivation (16%), declining productivity (16%) and decreased creativity (11%) as factors which crime directly affects in the workplace.
Figure 2. Regional breakdown – In what way has the threat to personal security affected your business?click to enlarge
Emigration
Grant Thornton’s IBR data for the fourth quarter of 2011 has revealed that 20% of SA business owners have given serious consideration to leaving the country with 62% of these respondents stating their core reasons for emigrating as the nation’s high crime rate (62%) and the political climate (47%).
Government service delivery
Grant Thornton’s IBR data for 2011 highlights that 53% of South Africa’s business owners are affected by poor Government service delivery, with the Eastern Cape region being affected the most (63%), followed by Gauteng (50%) and KZN (44%). Western Cape business owners are least impacted by poor Government Service Delivery (47%).
When asked which elements of government service delivery impacted businesses the most, utilities such as gas, electricity and water were rated as having the biggest impact on business function nationwide.
A startling 41% of businesses in South Africa rate utilities as the greatest negative impact on businesses. KZN business owners also rated the impact of roads (e.g. potholes and traffic lights) as having an affect on business function (20%) with 16% of Gauteng business owners, 12% of Western Cape and 10% of business owners being affected by roads in the Eastern Cape.
“Business owners are extremely frustrated that the taxes they pay as law abiding corporations, are not being used to improve Government Service Delivery but instead impede business function,” continues Nagar.
Figure 3. Regional breakdown – What is the greatest negative impact on your business in respect of government service delivery?click to enlarge
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Article source: http://allafrica.com/stories/201201261023.html
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