Directors most worried about the economy: IoDSA survey

JUNE 16, 2016

Directors feel more negative than positive about the local economy, this according to the first edition of the Directors’ Sentiment Index™ Report, just released by the Institute of Directors in Southern Africa (IoDSA).

South African economic uncertainty was listed as their top challenge affecting business by the overwhelming majority of the respondents, with exchange-rate fluctuations the next biggest concern.

The impact of broad-based black economic empowerment on business and the declining credit rating of the Republic just came in ahead of social and political unrest. By contrast, the economic health of its major trading partners in the developed world are less of a concern, although sentiment remains negative.

Other key results from the survey include:

• In the main, directors are negative about business conditions, with the impact of red tape and the government on business attracting the most negative ratings.

• On a positive note, directors are largely optimistic about the ability of good governance practices to add value to the organisation.

• Unethical behaviour (bribery and corruption) are the primary governance challenges facing industry, closely followed by a lack of sustainable thinking and a lack of understanding of the overall benefits of governance.

• As regards directorship in South Africa, directors are more positive than negative, particularly with regard to the expected impact of continuous professional development on the board.

The latter was particularly evident in the public and non-profit sectors, where positive expectations relating to this factor were significantly higher as compared to the total sample.

“The Directors’ Sentiment Index™ research will be conducted annually —over time, we believe it will become a useful barometer of how a broad section of corporate leaders across the private, public and non-profit sectors view the general business climate,” says Parmi Natesan, Executive: Centre for Corporate Governance, IoDSA. “What our corporate leaders think impacts society as a whole, and needs to be understood.”

The survey was completed online by 338 members of the IoDSA’s database as well as a specified sample of 103 non-members drawn from a research company’s national panel. The respondent base was 75 percent male and 25 percent female, across all ages—35 percent fell into the 55-plus age group. Seventy-eight percent were executive directors, and 22 percent non-executives.