JOHANNESBUR, June 13 (Xinhua) -- The Franchise Association of South Africa (FASA) on Thursday expressed grave concern over the negative effects of the decline in gross domestic product of 3.2 percent in the first quarter of 2019.
FASA said the contraction puts South Africa at risk of slipping into a second recession in successive years.
While the franchise industry still delivers growth despite the negative economic environment, many of the association's members feel they are fighting a losing battle as salary and wage costs escalate together with huge increases in electricity and rentals, said Vera Valasis, executive director of FASA.
He said that they are concerned about their future in such an environment. Some of the negative effects which dented the economic growth are the electricity outages at the start of the year and decline in business and investor confidence.
"A weak rand-dollar exchange rate and increases in almost every other input cost for doing business in South Africa today," he said.
The sector observed that if the government does not honor their promise of reducing the costs and the removal of barriers to entry for small businesses, some of the franchise sector might look elsewhere.
FASA called on the government to honor their election promises to support the sector.
Valasis said, "We invite the minister to engage with the Franchise Association to work together to explore ways to open new doors to business expansion through the tried-and-tested franchise format."
According to Statistics South Africa, manufacturing, agriculture and mining sectors all contracted in the first quarter of 2019.
