In September 2021 the BCI declined to 91.0 after registering a highest level so far this year of 97.0 in May. The lowest level for the BCI since its inception was recorded in May 2020 – measuring 70.1. Nevertheless, the level of 91.0 in September 2021 reflects a better business confidence level than the pre-Covid level of 89.9 in March 2020. Although the BCI declined over the last four months from 97.0 in May to 91.0 in September, the average for the SACCI BCI of 94.1 for the first nine months of 2021 is a 9.8 index point improvement on the corresponding period for 2020.

Five sub-indices of the BCI had a positive month-on-month impact on the business climate between August and September 2021. Notable positive month-on-month contributions came from increased merchandise export and import volumes, and an increased number of new vehicle sold. Less retail sales volumes, lower manufacturing output and a decline in the real value of building plans passed were detrimental to the business mood in September 2021.  

Comparing to last year, the exceptional improved year-on-year merchandise export volumes, a stronger rand exchange rate, and an increased number of new vehicles sold, made valuable contributions to the business mood when compared to a year ago. Energy and water supply concerns (with increased utility tariffs) and higher fuel prices were also major contributors to a wary business outlook. Secure energy supply generally remains a crucial concern to the business community. 

The dire need for capital to finance fixed investment remains a key element influenced by short-term business confidence developments, but more importantly by longer-term investor confidence of foreign as well as local investors. It is evident that investment from both the public and the private sectors has for quite some time (since 2016) not been adequate to sustain economic development. Clear, consistent and investment friendly economic policy, as well as the application thereof, is critical to convince both local and foreign investors of a reasonable return on investment.

Although the Covid pandemic had a worsening effect in some parts of the globe since early 2021, improved vaccine application has supported economic recovery as a rule. 

The impressive foreign trade performance of South African provides a welcome windfall. The Medium-Term Budget Policy Statement (MTBPS) in November should serve to give direction on positive economic and business developments going forward.

 

Issued by SACCI