South Africa still has an edge

South Africa has been ranked 23rd out of 33 countries in PwC’s latest Europe, Middle East and Africa (EMEA) Private Business Attractiveness Index.

While the country’s score of 40.7/100 in the 2023 index is slightly down from 42.1 in 2022, it is significantly higher than its score of 33.6 in 2021, pointing to an improving trend, PwC said.

PwC Africa private leader Duncan Adriaans said that the research “shows that South Africa, despite its many operational challenges, is becoming a more attractive location for private business compared to countries in the EMEA region.”

“In fact, South Africa ranks as a more attractive operating environment for private business compared to several members of the European Union (EU),” he added.

This includes Hungary (24), Latvia (25), Slovenia (26), Greece (27), Romania (28), Bulgaria (29), and Croatia (31). South Africa also outranked the only two other African countries recorded, Kenya (32) and Nigeria (33).

“The two-year improvement reflects positively on South Africa’s Economic Reconstruction and Recovery Plan (ERRP) which, as part of structural reforms aimed at helping the economy recover from Covid-19, pledged in 2020 to make it easier for private businesses to operate in the country, [including] the regulatory reforms and incentives implemented that allow businesses to invest in renewable energy installation,” said Adriaans.

PwC said that it compiles the report on an annual basis, assessing and ranking 33 countries across EMEA as whether they are conducive locations for private businesses, “based on an objective analysis of a range of attributes.”

The top ranked country for private business attractiveness is Switzerland, with a score of 73.1. This is followed by Sweden, Germany, Netherlands, and Denmark respectively.

To determine the overall rankings, PwC look at 64 metrics across nine categories. These categories are listed in the table below:

South Africa’s 2023 private business environment sub-index rankings (out of 33 countries):

PwC outlined that while South Africa does face challenges in several governance-related areas, the relatively well-performing social responsibility and governance pillars do reflect a level of trust within society that many would often assume is much better in comparative countries.

“In fact, South Africa’s performance in this pillar provides a beacon of hope for the country in an uncertain 2024,” said Adriaans.

“When countries have the key attributes in place to support entrepreneurial and private businesses activity, they remain attractive irrespective of short-term economic or social challenges.”

Despite South Africa’s improving rankings in the Index, PwC said that “the country’s 23rd overall position out of 33 shows that it still faces many challenges that make it difficult to operate a business in the country.”

Data from Stats SA shows that over 1,500 companies that had shut their doors in 2023, excluding data from December.

A press release by PwC outlines that these challenges include electricity issues, “skills shortages and high levels of unemployment, a scourge of crime and corruption, deteriorating transport and logistics services, and challenges to access capital and finance for entrepreneurs and private business.”

Read: Businesses in South Africa pinning hopes to some growth in 2024