SA businesses lead global charge for overseas expansion

SA business leaders have emerged as some of the most bullish globally on international expansion, according to a recent report by Kreston Global.

Kreston is an international accounting network providing advisory and accountancy services to businesses worldwide.

The report, released on Monday, revealed that 66% of SA entrepreneurs anticipate a weighty increase in overseas expansion over the next year, a stark contrast to the global average of just 42%.

This is as SA continues to face economic headwinds. In the final quarter of 2023, the economy saw meagre growth of 0.1%, bringing the annual growth rate to a modest 0.6%. Real GDP has surpassed pre-Covid levels but is still trailing behind the peak in the third quarter of 2022.

Stats SA said the transport, storage and communication sectors were the bright spots, with a 2.9% increase contributing positively to GDP growth. However, sectors such as trade, agriculture and construction have struggled, with agriculture contracting 9.7%.

In the thick of these economic challenges, consumers have felt the pinch. High inflation and unemployment rates have squeezed household budgets, leading to increased financial pressure. In this context of domestic strain, SA businesses are not retreating but looking outward for growth opportunities.

The Kreston Global report, based on a survey of 1,400 business leaders from 14 countries, underscores this trend.

SA respondents are notably more confident about future economic prospects abroad, with 98% expecting a moderate to significant increase in businesses expanding overseas in the next 12 months. This figure is notably higher than the global average of 87%, the report found.

Heinrich Möller, managing partner at Kreston SA, emphasised the strategic vision and resilience of SA business leaders, stating that companies are primarily focused on expanding into Africa, Western Europe and North America, driven by a pursuit of market growth.

“As a business leader and entrepreneur myself, I am inspired by the strategic vision and optimism of my fellow SA business leaders,” said Möller.

According to the report, Africa remains the top choice for SA businesses considering international expansion, with 50% of respondents indicating a preference for neighbouring markets. This is followed by Western Europe (47%), North America (43%) and North Asia (37%).

Despite their optimism, the report indicates that SA business leaders are keenly aware of the challenges that come with international expansion. Managing economic volatility, such as currency fluctuations and inflation, adapting logistics and supply chains and finding reliable local partners are some of the hurdles. The report states that 51% of respondents cite economic slowdowns or recessions as disruptive risks to their global ambitions.

Liza Robbins, CEO of Kreston Global, noted small and medium-sized enterprises (SMEs) are uniquely positioned to navigate these uncertainties. “Although the global challenges faced by entrepreneurs are acute, SMEs are uniquely positioned to deal with navigating uncertainty.”

She said SMEs can harness their agility to turn challenges into opportunities, leveraging new strategies to succeed both locally and abroad.

SA businesses are also proactive in embracing future growth drivers. The report found that 88% of respondents feel prepared to harness the benefits of artificial intelligence (AI) in their global operations within the next two years.

The report highlights that SA business leaders are notably confident in their understanding of international tax rules and are keen on integrating environmental, social and governance practices into their expansion strategies.

GobaN@businesslive.co.za