SA investment climate still positive – EU survey

EU surveys show much positivity towards SA.Problems, however, include government inefficiency and electricity supply.More than half of EU firms in SA were spooked by the July unrest last year.Two recent surveys of EU companies show that SA is still favourably regarded as an investment destination, although more than half of those surveyed say that the July unrest impacted on their future investment decisions. The EU Chamber of Commerce and Industry for Southern Africa published the results on Tuesday. In the first survey of potential investors, which included 82 companies, about half of which had invested in SA in the past, the investment climate in the country was rated better than most other emerging markets. SA and Thailand were similarly rated followed by Malaysia. Other markets, such as Brazil, Indonesia and Nigeria, lagged significantly. SA was favourably regarded because of its large markets, abundant raw materials and good infrastructure. A second survey of EU 328 companies already invested in SA found that most had increased their turnover over the past two years. While 32% had also increased their number of employees over the past two years, 73% said they planned to hire more people in the next two years.Forty-two percent of companies said they intended to employ more or transfer expatriate staff over the next two years for a variety of reasons, top of which was the lack of quality and suitable skills and experience in SA.READ | SA leaving trade money on the table, says the EUThe top three problems in the investment environment were government inefficiency, the energy supply and corruption. The fourth-biggest problem was the political environment. Fifty-two percent of firms said that the July violence last year had impacted on their investment decisions.Says the survey report:”The strong interest in South Africa from existing and potential investors presents an opportunity for South Africa to attract further investment from Europe and to deepen existing relations.”However, “the on-the-ground reality, as expressed by EU businesses in South Africa, raises numerous challenges. This includes serious concerns around economic governance and the delivery of critical services, such as transport infrastructure and electricity; as well as extreme difficulties in accessing critical labour and skills from either within or outside of South Africa,” reads an EU presentation of survey results. To overcome these barriers will require substantial public investment and reforms, it says. As this will take time to deliver results, more should be done in the short term, to raise the incentive for investing and doing business in South Africa, it concludes. Get the biggest business stories emailed to you every weekday.Go to the Fin24 front page.