Gauteng Business News

Send  Share  RSS  Twitter  18 Nov 2011

GOVERNMENT: Business Owners Satisfied with Government Service Delivery


Recent Gauteng Business News

Neil Miller, joint managing partner at Grant Thornton Cape, this morning released Grant ThorntonÂ’s third quarter data for the 2011 International Business Report on business ownersÂ’ perceptions. 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.
“It is encouraging that over half of the province’s business owners are content with government service delivery,” said Miller. “But it is still concerning that 49% of Western Cape executives have been negatively affected by poor government service delivery.”

Over a third of Western Cape businesses were specifically negatively affected in the area of utilities, i.e. water and electricity and 21% stated that billing issues were impacting normal business function.
The percentage of businesses negatively affected by government service delivery is even worse in the Eastern Cape and KwaZulu-Natal where 59% and 51% respectively stated that poor government service delivery was impacting business operations. In Gauteng, 46% of businesses were hampered by poor government service delivery.

Western Cape business owners seem to be set on staying in South Africa. When asked whether business owners are considering emigrating from South Africa, only 10% of Western Cape business owners have given serious thought to emigrating. This is in comparison to 22% in Gauteng, 23% in KwaZulu-Natal and 19% in the Eastern Cape.
“It is particularly encouraging that the number of Western Cape respondents considering emigration has come down dramatically in the past three years, from 27% in 2009 to 10% this year,” says Miller.

However, of the 10% in the Western Cape who have considered emigrating, 69% stated they would do so because of the high crime rate.

Notwithstanding this, IBR 2011Â’s third quarter data reveals that the Western Cape has the lowest number (42%) of businesses whose staff or immediate family members of staff have been affected by crime compared to other provinces. This statistic is on a downward trend, with 2011 data 7% lower than what was recorded last year.

Miller believes the five-year downward trend for businesses affected by crime nationwide is very encouraging, with data for South Africa indicating a 35% drop since 2007, but he points out that the national average of 49% recorded for 2011, is still too high.

Political direction
Despite the countryÂ’s daily news headlines, the majority of business owners in South Africa (70%) do not feel that the political uncertainty in the country is having an impact on their business decisions. However, of the 30% who do believe that political uncertainty is having a negative impact on business decisions, 38% say that it is causing them to delay making important business investment decisions.
“At this fragile stage of the economic recovery, a growing economy such as South Africa cannot afford any indecision regarding investment in business,” says Miller.

Business Owners and the New Companies Act

Decision making as to how to respond to the New Companies Act still seems a confusing issue for most businesses. During the second quarter of 2011, 46% of business owners in South Africa consider themselves well informed about the Act, which came into effect on 1 May 2011. This is an improvement compared to Q2 IBR, when this question was first raised and 40% of private business owners admitted to being well informed.

When asked if business owners believe they should be audited or reviewed under the New Act, 57% of businesses owners believed they require an audit and 8% believe they need a review. A total of 35% of SA business owners surveyed during Q3 believe that neither form of financial reporting is required.
“This is an indication of confusion and lack of knowledge in the business environment that is not conducive to the growth and sustainability of businesses,” said Miller.

Global Tracker Elements for Business Owners – Q3 Economic Update

Global perceptions from over 11 000 business owners are tracked quarterly.

The Q3 rolling average economic data relating to Grant Thornton InternationalÂ’s Optimism / Pessimism Index, shows that South AfricaÂ’s optimism balance of +63% recorded during the third quarter of 2011 has improved from the +60% recorded for the same period last year. This is against a global optimism balance of just +22% and BRIC optimism of +47%.

When executives were asked to explain why theyÂ’re optimistic about future business prospects, data reveals that 69% of SA business owners expect an increase in revenue, 59% expect improvements in profitability and 57% predict that selling prices will improve in the months ahead.

“Businesses were expecting a slump in South Africa following a buoyant 2010 FIFA World Cup year, but IBR data indicates business sentiment remains positive,” said Miller.

For the fifth consecutive year, the greatest constraint to business expansion in South Africa continues to be the lack of availability of a skilled workforce with 36% of business owners noting this as a challenge. Over-regulation is the second biggest constraint (34%) for businesses in South Africa.

The BRIC countries have stated the same concerns as South Africa in terms of factors which constrain business performance. BRIC averages recorded during Q3 for IBR 2011 indicate that 41% of business owners lament the lack of available skills and 35% view over-regulation as a constraint.

Globally an average of 32% of business owners are most constrained by a shortage of orders and reduced demand for products. The number of business owners struggling with a lack of a skilled workforce (26%), increased from last year when 21% cited this as a constraint.


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