Exchange-rate fluctuations remain the primary risk factor for businesses operating in the Southern African Development Community (SADC), followed by crime, theft and corruption, and economic and regulatory policy uncertainty, a recent survey conducted among companies in the region shows.

The Association of SADC Chambers of Commerce and Industry (Ascci) yesterday released the results of its 2005 Regional Business Climate Survey (RBCS), as well as announcing the establishment of a Regional Business Climate Index (RBCI) for the region.

Douglas Reisner said that the overall opinion on business outlook for the next 12 months was 'upbeat', although the current business performance indicator remained relatively unchanged from the 2004 survey results.

The survey included results from 541 businesses from all (then) 14 countries in the region, drawn mainly from the manufacturing sector but also including, for the first time, the primary (agriculture, mining and fishing) and service sectors, which made up some 20% of total respondents.

Reisner said that the survey showed significant consistencies with, and, therefore, served as validation of, last year's pilot survey.

Ascci CEO Sipho Mseleku said yesterday that the RBCS was commissioned primarily to assist the respective chambers, in particular, and the private sector, in general, as a lobbying tool in interactions with the governments in the region, as well as to assist potential foreign investors in assessing risks and the broader business climate, in SADC.

Some 20% of respondents were international businesses operating in the region, which means that the results do carry an element of perspective of the risks and outlook as identified by foreign investors.

The survey also reflected a greater propensity towards exporting to other SADC markets, rather than to Northern Hemisphere countries.

Respondents expected employment to remain unchanged or marginally improved over the next 12 months, led by the metals, machinery, vehicles and precision manufacturing sector, which also showed the second-best overall performance, after the primary sector.

This year's survey was used to officially formulate what has been termed a yearly business-climate index for the region, based on four indicators - current performance, expected performance, employment outlook and investment outlook of the businesses polled.

The index is based on a points system, which means that upward or downward movement is gauged in comparison with previous years.

The 2005 RBCI was 100 points, up six points from last year.

Interestingly, expected performance, employment outlook and investment outlook were all up, on average, but current performance remained steady.

However, Brian Mtonya of consultant Alliance Group said that 2005 would be used as a base year for the index, because of the new sectors which were introduced this year.

Two new issues raised were the perceived effects of Madagascar's admission into the bloc and concerns around the HIV/Aids epidemic in Southern Africa.

About 21% of respondents saw Madagascar as an attractive export market, but this figure was undermined by a high level of unfamiliarity with the country and its market opportunities.

Almost half of companies in the survey had an HIV/Aids programme in place and 62% said they recognised the impact of the disease on their organisation.