According to the World Bank's Ease of Doing Business Index, which ranks 185 countries on how conducive their regulatory environments are for businesses, South Africa scored 41 in 2012, down two places from the previous year.
Adam Orlin, CEO of Blue Strata, the integrated end-to-end import and working capital specialist, said that crucial to improving local business conditions is the need for more capital expenditure investment: "Many governments around the world are doing far more to ensure they improve the ease of doing business, particularly to foreign investors. This is especially true of other emerging markets that are competing with each other to attract foreign capital.
"If South Africa doesn't follow suit by making the process easier for companies to conduct business, attract foreign investment and ease the burden of red tape then we face the prospect of some of our key industries losing out to competitors in other regions."
He said that a key issue that needs to be addressed is the imposition of high import duties on certain industries. "This is a particularly emotive issue, given the need to bolster certain sectors in South Africa. However, the reality is that some industries still face very high duties despite the fact that South Africa does not have a thriving industry to compete and the local industry has not kept up with changing technological advancements.
"It is crucial that the government engages with the local industry before deciding to impose duties on certain imports. For example, import duties as high as 45% are being imposed on product lines that we do not produce in South Africa, particularly in the clothing and textile space."
He said that we need to make sure that high duties on components of items that are not produced locally are removed. "This has a significant impact on South African businesses selling these products, as they are forced to pay more to import goods that cannot be sourced locally, thereby pushing up the cost for consumers and eroding profit margins for local retailers and wholesalers.
"At the same time, it is also critical that South Africa ascertains where it has the optimum chance of becoming a specialist in certain industries, with the relevant import duties imposed to protect local businesses.
"For example, South Africa has an excellent track record and skills base in the automotive industry as the government prioritised this sector and drove programmes to attract new investment. As a result, we have witnessed massive investment by international original equipment manufacturers (OEMs)."
He noted that there are myriad opportunities for a number of industries, particularly bearing in mind Africa's requirement as a hub to international business. "More industry-specific hubs need to be developed in order to service the EMEA region. South Africa could take this position as the go-to hub, but if we don't act soon, we face losing out to other countries such as Nigeria or Kenya.
"Furthermore, removing obstacles to business, such as high labour costs, and placing an increased focus on skills training in order to develop a skilled labour force in specific sectors is key to improving our competitiveness and assisting those industries chosen as crucial to our economy," he concluded.
