Despite encouraging signs of recovery in the world economy, including gains in South Africa’s Gross Domestic Product (GDP) in 2021 and the easing of COVID-19 restrictions, tough times still lie ahead for the country, according to research by global accounting firm Grant Thornton.
SNG Grant Thornton’s Business Pulse report provides a complete view of the health and prospects of mid-market companies – those employing between 50 and 500 staff - at a global, regional, sector and country level. In South Africa, approximately 100 business leaders, including chief executive officers, managing directors, chairpersons, and other senior decision-makers from various industry sectors, were surveyed in the last half of 2021.
“The further easing of Covid-19 restrictions by President Ramaphosa was a timely and necessary intervention to improve optimism and market sentiment in an economy that has been depressed since the onset of the pandemic. The potential end, to the State of Disaster will have an added boost to the economy” says Mr. Oupa Mbokodo, Managing Director of Advisory at SNG Grant Thornton
According to the survey, optimism for the outlook of the country’s economy over the remainder of 2021 was at 44,7% - well below the global average of 70%. By the end of 2021, revenue expectations had declined by 12,1 percentage points with only 64,9% of companies expecting an upswing in 2022. Profit expectations also plummeted greatly in the second half of 2021, from 71% to 59,6%, same with expectations for exports, which nose-dived. “These are key indicators of business health,” Mbokodo asserts. “We measure both positive and negative elements of health affecting mid-market businesses. Notably, we report on key expectations, key constraints, and intention to increase investment,” he explains further.
The survey results show that investment intentions among mid-market businesses have dropped, showing the opposite movement required to bolster business processes and ensure recovery.
“There were some green shoots, though,” Mbokodo enthuses, “particularly in financial services, oil and gas, mining, and technology, media, and telecoms. The entertainment industry, which is among those hardest hit by the effects of Covid-19, might also get a much-needed reprieve with the return of spectators at sporting events, attendance at music concerts, theatre performances, conferences, and other events. This gives hope in the long-term rebound of the economy,” he concludes.
At the recent 4th SA Investment Conference (SAIC) hosted by President Cyril Ramaphosa, new investments to the value of R332 billion pledged at the conference, which took the President’s haul to R1.14-trillion since he announced an ambitious goal in 2018 to raise R1.2 trillion over five years. It’s almost certain that the President will achieve this target at next year’s investment conference.
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