JOHANNESBURG -- Up to 67 percent of private companies operating in South Africa are holding back investment decisions due to uncertainty about the nation's future political direction, international accounting firm Grant Thornton said on Monday.
The Grant Thornton International Business Report (IBR), released in Johannesburg, also indicated that a further 48 percent are looking at investing offshore rather than in South Africa, while 27 percent are contemplating selling their businesses and 14 percent are seriously considering emigrating.
The report reveals a drastic increase in uncertainty which is directly impacting business decisions and overall confidence of South Africa's privately owned business executives.
"There is no doubt that businesses are waiting for next year's elections hopefully to bring stability and clarity on the future direction of our country," Grant Thornton South Africa's National Chairman Deepak Nagar said at the launch of the report. "This is possibly one of the core reasons for delays in private business investment decisions which we are observing in our IBR results each quarter."
Nagar said that when businesses were asked in what ways had they been negatively affected by poor government service delivery, a massive 81 percent of respondents stated utilities as a core issue, such as water and electricity supply, while 69 percent said road concerns including potholes and traffic light issues and 58 percent lamented billing issues.
An additional 36 percent of respondents stated being impacted by a combination of red tape, transport inefficiencies, labor strikes, poor payment from government and tender fraud, quoted as core issues in the "other" category, he said.
"The economic slowdown is still extremely burdensome on the South African economy and additional local pressures are not helping at all. The battling BRIC region continues to directly impact business expansion for South African privately held businesses while local service delivery concerns and political uncertainty persistently lash organizational growth," Nagar said.
Grant Thornton said the impact of crime on South Africa businesses continues to be on the increase, with 61 percent of business executives, their staff or family of staff directly affected through a contact crime incident in the past 12 months.
Contact crime is defined in the research as housebreaking, violent crime, road rage or hijacking.
"It is a serious concern to see the figures rising so rapidly. We can no longer ignore this blight ? something just has to be done. Not tomorrow, not next week ? right now,"Nagar said.
In terms of the financial burden that crime has on South Africa businesses, the IBR data highlighted that a startling 72 percent of business leaders who stated crime as a real concern in the past year reported that they had experienced increased costs for security systems in their organizations.
"It's hard to understand how security costs for businesses just never seem to stabilize. Investing in securing your premises and protecting your staff is a massive cost outlay for South African companies and it is a sad state of affairs that crime is so financially burdensome," said Nagar.
When asked if any executives had given serious consideration to emigrating, only 19 percent stated that they were considering it.
In addition, when privately held business owners were asked to provide reasons why they were considering emigrating, 84 percent said it was the high crime rate, while 83 percent stated that the political climate was prompting them to consider emigrating and 58 percent said racial discrimination, with 54 percent blaming poor quality of education and healthcare.
