A Growing Economy that benefits all Accelerated and Shared Growth Initiative for South Africa ASGISA

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South African Investment Climate Survey Key
issues
Presentation to Portfolio Committee on Trade and
IndustryThe Department of Trade Industry
14 March 2006
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South African Investment Climate Survey

• World Bank-managed survey
• Based upon survey of 803 firms completed in 2004
  (mainly larger, manufacturing firms)
• Similar surveys have been completed by the World
  Bank in over 50 low and middle income countries
• Final report for South African ICS delivered to
  the dti in August 2005

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South Africa Investment Climate Sample

• Enterprise Size
• Micro (1-9 workers) 5
• Small (10-49 workers) 27
• Medium (50-99 workers) 23
• Large (100-499 workers) 31
• Very Large (Over 500) 14
• Ownership
• Corporation 40
• Indiv. - European/Caucasian 49
• Indiv. Asian 6
• Indiv. African/Other 5

• Total Number of Firms 803
• Geographic Distribution
• Gauteng 63
• KwaZulu/Natal 9
• Western Cape 23
• Eastern Cape 5
• Sectors
• Manufacturing 75
• Construction 14
• Trade 11

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Confidence in the court system is high in South
Africa

5
Overdue payments cases are resolved quickly in
South Africa
6
South African firms spend less on energy
7
Burden of regulation is not especially high
8
Few firms in South Africa report that bribes are
needed to get things done
9
Time for imports and exports through customs and
port facilities
10
Inflation has been moderate over the past decade
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Firm owners perceptions of obstacles to growth
12
Concerns about exchange instability
13
Crime and security is costly to firms, but not
comparable to the worst
14
South African labour productivity is high
15
Even though productivity is high, labour costs
remain high after controlling for this
16
Monthly wages are highest for managers
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Conclusion

• ICS generally positive about investment climate
• Areas of concern, related to constraints to
  growth, being addressed as part of ASGI-SA
• Future work on investment climate would need to
  develop more detailed analysis on the following
• SMEs
• BEE
• Market concentration
• Service industries
• South Africas comparative advantages

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2. Achieving balanced sustainable growth
Isolating key constraints
Binding constraints that inhibit movement to a
higher range of investment, job-creation and thus
economic growth
Cost and efficiency of national logistics system
and some infrastructure
Deficiencies in state organisation, capacity and
strategic leadership
Barriers to entry and competition in sectors of
the economy
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