Satisfaction by European investors in SA has deteriorated significantly since 2012. The volatility of the rand, government corruption and the cost of compliance with black economic empowerment (BEE) legislation were high on their list of concern.

This was the finding of the 2016 business climate survey conducted among 211 Europe-owned firms by the EU Chamber of Commerce and Industry of Southern Africa.

Policy changes, uncertainty and red tape around work permits were also cited as concerns, while perceptions about SA’s transformation agenda were mostly negative.

"Investor confidence in SA is further undermined by inadequately functioning government institutions," the chamber’s regional director, Stefan Sakoschek, said at a media briefing on the survey’s results on Monday.

A total of 33% of the respondents said they were dissatisfied with the overall business climate with a further 21% saying they were "very dissatisfied".

More than a third indicated a worsening of the business climate over the past 12 months while 30% were rather pessimistic about the prospects in the next year.

On the other hand, close to 50% of the companies interviewed did not expect any significant changes in the next year and 22% were optimistic or highly optimistic.

"The availability and quality of infrastructure — regarded as one of the most important factors for investment in SA — has the most favourable outlook," according to the survey results.

Two-thirds of the respondents anticipated a further deterioration in corruption by the government and regulatory authorities.

"Transformation emerged as the most negatively perceived factor affecting SA’s business climate.

"The cost and administration of compliance with the B-BBEE codes is still expected to have a negative impact on foreign investment. The respondents also included the B-BBEE legislation among the top three challenges for foreign investors in SA."

Expectations on migration services were "very pessimistic".

The processing time for work and residency permits was expected to worsen and 45% of respondents expected a decline in the transparency and consistency of the adjudication process.