Many South African businesses moving parts overseas

A new survey by Sakeliga revealed that business owners view the current political risk in South Africa as being worse today than three years ago under president Jacob Zuma.

Sakeliga is an independent business community which consists of a network of businesspeople, small businesses and medium-sized enterprises.

A survey among Sakeliga’s members revealed that many local businesses are diversifying internationally to hedge against local political risk.

Other findings from the Sakeliga business survey include:

  • 84% of business owners consider current political risk in South Africa worse than three years ago.
  • 25% of respondents have completed or begun to diversify operations internationally because of local political risk.
  • 24% of respondents intend to diversify operations internationally within the next three years.
  • 21% of businesses have completed or begun registering parts of their companies in foreign jurisdictions because of local political risk.
  • 25% of businesses are planning to register parts of their companies overseas because of local political risk.

Sakeliga CEO Piet le Roux said the internationalisation of South African businesses should be welcomed considering the political risk in the country.

“State-proofing enables businesses to continue local operations and protects the economy against an intensifying political storm,” said Le Roux.

“While true that some businesses and executives are exiting South Africa altogether, we do not yet find evidence of a wholesale exodus.”

“Rather, we see numerous signs of healthy strategic hedging against political risk,” he said.

Ramaphosa presidency not delivering the goods

Le Roux says that, despite much hope, planning, and rhetoric, the Cyril Ramaphosa presidency is not delivering the goods.

“The scoreboard says president Ramaphosa’s term has seen increasing social instability, riots and disruptions,” Le Roux said.

He added that the country has seen worsening business conditions, weakening property rights, doubling-down on race-discrimination like BEE, and continued fiscal profligacy.

“It comes therefore as no surprise that businesspeople are deciding to mitigate their exposure to political risk, rather than wait on unkept promises of better business conditions,” he said.

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Many South African businesses moving parts overseas