A report has found that 59% of business owners believe their businesses are being negatively affected by bad service delivery in the public sector. Meanwhile, according to the Agricultural Business Chamber (Agbiz), competitiveness in the agribusiness sector is being adversely affected not only by poor service delivery, but also by infrastructure constraints, distrust in government officials and the cost of crime.
In its latest quarterly International Business Report (IBR), international auditing firm Grant Thornton said poor government service delivery, especially utilities such as electricity concerns, was a real and continuous impediment to business growth in South Africa. “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,” according to the report.
Grant Thornton SA national chairperson, Deepak Nagar, said that when private business owners were asked to specify what has had the greatest negative impact on their business in terms of poor government service delivery, 32% stated that utilities (electricity and water) had the biggest impact while 25% stated that billing issues (such as rates and taxes) were affecting operations.
“But sentiment surrounding poor service delivery of utilities has improved by 16% since the fourth quarter of 2011, from 48% to 32%,” said Nagar. “On the contrary, issues relating to billing concerns is increasing dramatically from 10% in the fourth quarter of 2011 to the 25% of responses recorded in this second quarter of 2012,” he said. Other items highlighted in relation to poor service delivery included bad roads, lack of policing and absenteeism due to strikes.
Another macro-economic factor currently impacting local private businesses was the issue of political uncertainty, the report stated. It showed that 29% of respondents indicated that uncertainty about the political direction of the country was impacting business decisions. “Of the 29% affected by political uncertainty, 26% are putting off investment decisions and 24% are considering investing offshore rather than in SA,” according to the report.
Furthermore, Grant Thornton’s IBR tracker for the second quarter of 2012, revealed that 46% of privately held businesses have been negatively affected by crime over the past 12 months and when business owners were asked what they saw as the biggest constraint to business expansion, a lack of availability of a skilled workforce (38%) and overregulation and red tape (37%) were identified as the biggest factors impeding growth for SA businesses.
Most of the issues highlighted in Grant Thornton’s report were also having an impact in the competitiveness of agribusinesses, said Lindie Stroebel, manager of economic intelligence and finance at Agbiz. According to Stroebel, Agbiz conducts an executive opinion survey every two years to determine, among others, the impact of infrastructure, service delivery and the cost of crime on competitiveness in the agribusiness sector.
In recent surveys, conducted in 2008, 2010 and 2012, results showed that some of the most serious constraints on competitiveness in the agribusiness sector were the competence of public servants on national level and the effectiveness of public sector personnel at provincial and municipal levels respectively (which represent the impact of service delivery by government at all spheres), the cost and the reliability of electricity suppliers and the cost of crime.
Agribusinesses appear to be increasingly suffering the effects of the incompetence of public sector officials and resulting bad service delivery, said Stroebel. Distrust of politicians and officials was also severely limiting competitiveness of agribusinesses. The status and cost of infrastructure were also shown to have a constraining impact on competitiveness and have become a bigger concern over the past four years.
