SA businesses confident of growth in spite of stuttering economy

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South African businesses are confident about their own growth prospects in spite of being generally less optimistic about the state of the country’s economy than businesses elsewhere in the world.

The 2014 Sage Business Index reveals 65 per cent of South African businesses expect an increase in turnover of an average of 4.9 per cent over the next year, with confidence falling by only 0.11 points to 65.69 (out of a possible 100) in the last year.

However, confidence in the national economy dropped by 5.38 points to 34.54, the lowest of all countries surveyed by Sage this year.

“These results demonstrate the resilience of South Africa’s business sector, even in a year that has tested its tenacity. This year, businesses have been put to the test by labour unrest, a volatile currency, growing red-tape and regulatory pressure, and many other challenges,” said Ivan Epstein, co-founder of Softline and chief executive officer (CEO) of Sage Australia, Asia, Middle East and Africa (AAMEA).

“Yet they remain committed to growing their businesses and playing a positive role in the economy. It’s especially interesting to note how technologies such as mobility are creating new efficiencies and opportunities for them. The index reveals that they are enthusiastically embracing mobile solutions as a result.”

Epstein said, however, it was vital the South African government and other stakeholders worked together to arrest the decline in confidence in the country’s economy before it got worse.

“Since respondents indicated that government bureaucracy and its handling of the current economic situation are their biggest challenges, we believe there is more the government could do to build business confidence in the short to medium term,” he said.

On the job creation front, 51 per cent of South African businesses said they expected to employ more people in the next year, with only 12 per cent saying they planned to reduce staffing levels.

“We believe that the vibrant SME sector will lead the charge in creating new jobs which are required to stimulate the South African economy in the years to come,” Epstein said.

Business attitudes to risk also appear to be slowly changing, with 50 per cent of business decision makers describing themselves as risk-takers compared with 48 per cent in 2013.

“It is natural for companies to be cautious given the economic challenges South Africa faces,” said Epstein. “So it’s encouraging that many still have the appetite for calculated risk for the sake of growing their businesses.”

Sage also said mobile technology is transforming the way small South African businesses operate, with 50 per cent of respondents using a tablet or smartphone to communicate with customers, suppliers or colleagues. Meanwhile, more than 40 per cent think in the future tablets and smartphones will be of most use for accounting and/or payroll.

“Mobile technology is bringing new levels of efficiency to South African businesses, thanks to falling data tariffs and affordable smart devices. It is making them more responsive and giving business owners more flexibility than ever before. It is a development as significant as the dawn of the PC era,” said Epstein.

Globally, the index, which surveyed close to 14,000 small and medium sized businesses in 18 countries, reported business confidence had risen to a four-year high, with the majority of businesses around the world predicting growth in turnover and staff in the next twelve months.

Confidence in the global economy is also improving, perhaps explaining why South African businesses are looking to grow export business. 40 per cent of exporters saw their level of exports increase, while six out of ten South African exporters anticipate export turnover growth in the next year.

“The instability of our exchange rate, government bureaucracy and a lack of skills are the challenges constraining further growth of our export revenues, according to our respondents” said Epstein. “But on the whole, South African business has done well in integrating itself into the global economy over the past 20 years.”

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Passionate about the vibrant tech startups scene in Africa, Tom can usually be found sniffing out the continent's most exciting new companies and entrepreneurs, funding rounds and any other developments within the growing ecosystem.

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