Political uncertainty hammers investments

Nearly 40% of South African business executives believe the future political direction of the country is affecting their business decisions and more than 65% of these executives say they are putting off investment decisions as a result‚ according to Grant Thornton's International Business Report.

By Evan Pickworth

6 May 2014

Grant Thornton's Chairman, Deepak Nagar says the lack of political certainty is affecting business and investment decisions. Image: Grant Thornton

In South Africa‚ 150 businesses were surveyed across all industries in the quarter‚ while the international report provides insight into the views and expectations of more than 12‚500 businesses a year across 44 economies.

A growing concern for local business executives was the effect that poor government service delivery has on the business environment.

During the first quarter of 2012‚ 42% of privately held business owners said that utilities had negatively affected their businesses and just three years later‚ this figure has nearly doubled to 78% for the first quarter of 2014.

The data showed that 34% of businesses globally were optimistic regarding the economic outlook - the highest percentage recorded since 2007 and a six percentage point increase since January 2013. In North America optimism was at its highest since 2004.

But South Africa's optimism for business prospects in the coming 12 months was significantly lower‚ at 30% for the first quarter in 2014‚ and far from the 60% recorded in the first quarter of 2010.

"When the next 12 months of business prospects are reviewed‚ it is concerning that our privately held business executives are so pessimistic‚" said Grant Thornton South Africa National Chairman Deepak Nagar.

Source: I-Net Bridge

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