Global business confidence is recovering, encouraging a fresh attitude to risk-taking, according to the latest annual Sage Business Index.
For this year’s Index, Sage surveyed over 11 000 small and medium sized businesses in 17 countries across the world and found that businesses are now more confident than they have been for three years.
All global scores recorded this year were at their highest since the Business Index began in February 2011, suggesting that business confidence is recovering rapidly following the worst of the global economic crisis.
South African businesses are increasingly optimistic about their own prospects, rising 1,61 points to 65,80 points out of a 100. However, businesses are increasingly pessimistic about their country’s economy. Confidence in the South African economy has fallen 3,11 points from 433 in 2012 to 39,92 in 2013. In contrast confidence in the global economy is on the up, rising 2 points to 46,77 since 2012.
Business decision-makers identified risk-taking as key to growth. Nearly half (48%) of South African business leaders surveyed described themselves as risk takers, with 80% saying they needed to take risks in order to succeed. Only 32% of South African business decision-makers described themselves as risk averse.
According to 23% of South African businesses, the biggest challenge to doing business in the country is the preponderance of bureaucracy and business legislation.
Furthermore, 15% name the government’s handling of current economic challenges as an obstacle – more than any other country except Ireland. 48% argue that skills development and education are the most important issues the government should address in order to boost confidence, followed by bringing stability to exchange rates (47%) and reducing bureaucracy and business legislation (42%).
“We cannot make a dent in high unemployment without addressing education and training. The unemployment rate has been around 25% for the past several years and is furthermore not being assisted by weak economic growth,” says Rob Wilkie, CFO of Sage AAMEA
Most South African businesses feel that banks and the Government are behind the curve and are failing to make the most of opportunities for businesses. More than three-fifths (63%) of businesses agree that banks aren’t doing enough to make funding available to small businesses and nearly half (48%) think the Government should put more pressure on banks to lend.
Just over half (53%) of South African businesses agree that they need to look at alternative funding sources.
Wilkie goes on to add that ‘Interest rates at a 30 year low encourages businesses to spend and invest, thereby increasing economic growth. It is of little help however if banks are still reluctant to lend.’
Global statistics from the index show:
* Global confidence at a Business Index record high as businesses’ optimism about own prospects rises 5,5 points on 2012.
* UK businesses are increasingly confident about their own prospects (62,55, up from 58,46 in 2012). Business confidence in the UK is also higher than in all of the Eurozone countries, including France, Portugal, Spain and even Germany.
* 47% of business leaders describe themselves as ‘risk-takers’, with 73% saying risk is necessary to succeed.
* In Brazil, business decision-makers are more willing to take risk to succeed in business. Over half 56% of Brazilian respondents describe themselves as risk-taking – more than any other market and twice the number who describe themselves as risk-averse 24%.
* UK businesses describe themselves as among the most risk-averse (39% versus 32% globally). Austrians are the least likely to take risks, with nearly half 48% describing themselves as risk averse.
* 57% of small businesses agree they need to look to alternative sources of funding but only 42% feel positive about peer-to-peer funding.
* Banks aren’t doing enough to make funding available to small business, according to 69% of business leaders.
* Governments need to do more to support small businesses, with 63% agreeing they should put greater pressure on banks to lend.