Picture: THINKSTOCK
Picture: THINKSTOCK

SOUTH Africa is losing ground to its Brics (Brazil, Russia, India, China and South Africa) partners and other countries in Africa as instability spooks investors and a lack of skills limits growth potential, according to a survey of 12,000 global business leaders in 40 economies.

The survey, by Grant Thornton, was released on Thursday.

South African executives were found to be among the most stressed people in the world. Nearly half of senior executives said they were taking on too much responsibility due to the shortage of skilled staff, which had also resulted in increased operating costs.

Foreign direct investment flows plummeted 43.6% in the first half of last year, according to United Nations (UN) statistics, and the survey by Grant Thornton leaves little reason to think a turnaround is imminent.

The survey gave South Africa a particularly poor rating, as only 12% of global business leaders said they were looking at the country as a potential investment hot spot this year. Africa as a whole achieved a 13% response, but 57% of business leaders chose the five biggest emerging economies of China, India, Russia, Brazil and Mexico as the preferred destinations for their money.

The fall in foreign direct investment to South Africa was the largest decline among all developing economies surveyed in the UN report, whereas African foreign direct investment as a whole was up 5%.

The South African government was seen as hostile to foreign companies after three departments opposed the R16.5bn Walmart investment in South Africa in 2011. Since then, social upheaval — service delivery strikes and violent wage protests — has further dented South Africa’s reputation.

The Grant Thornton survey comes in the wake of ratings downgrades of South Africa by major ratings agencies and the rand weakening to its worst level in four years as foreigners reduce holdings of the country’s assets.

The perceptions of foreign investors do not match those of South African businesses, however.

Of the 41 countries included in Grant Thornton’s annual optimism survey, South Africa’s business owners were the 11th-most positive about business prospects for the next 12 months.

Meanwhile, Russian Foreign Minister Sergey Lavrov and his trade and defence colleagues will visit South Africa next month to start raising the less than stellar level of bilateral trade and other ties ahead of the March 26-27 Brics summit in Durban, the Department of International Relations and Co-operation said yesterday.