Sentiment in the business sector in South Africa has surged to its highest in 9 years, buoyed by economic prospects since the formation of the Government of National Unity (GNU).
The South African Chamber of Commerce and Industry (Sacci) said yesterday that the Business Confidence Index (BCI) climbed to 118.1 in November 2024, the highest since October 2015, up from 114.2 in the prior month.
The BCI has, since the formation of the new administration in June, improved gradually from a low level of 107.8 in May to 118.1 in November – a 10.3 index-point improvement.
Over the year to November, the BCI improved by 6.6 index points.
Sacci said the broader political representation in the administration of national government has facilitated a positive assessment of economic prospects by business, improving sentiment and stability.
“Although some political shenanigans continued after the national and provincial elections, the resolve to address the stalled economic performance is bearing fruit as the business climate has turned for the better,” said Sacci CEO, Alan Mukoki.
“However, economic growth requires fixed investment, which calls for a longer-term assessment of economic policy and its implementation. In this regard, an efficient and proficient public sector (especially public enterprises and local governments) plays a pivotal role in supporting economic activity. It becomes apparent that the neglect of several years will not be fixed in the short term.”
In the short term (month-to-month), between September 2024, October 2024, and November 2024, the BCI improved by 3.6 and 3.4 index points, respectively, after the dip of 1.2 index points in September.
Only two of the 14 sub-indices had a negative bearing on the BCI in October 2024, and despite the five sub-indices that turned slightly negative in November, the BCI still improved by 3.4 points in November.
There was no sub-index that had a significant negative effect on the BCI in November.
Sacci’s BCI increased by 6.6 index points year-on-year in November – the largest year-on-year improvement for a month since the Covid-19 restrictions were lifted in December 2022.
More inward tourist numbers, higher precious metal prices, and increased new vehicle sales made the most notable positive impact on the BCI in November.
However, lower merchandise import volumes had the only noteworthy negative impact on the BCI.
Sacci noted with concern and disappointment the slow economic growth of 0.4% year-on-year for the first nine months of 2024, saying it reflected the perplexing situation the South African economy finds itself in.
This comes after data showed that economic growth for the third quarter of 2024 stalled at around 0.3%, with the primary sector (agriculture and mining) real output contracting by 4.6% in the first nine months of 2024.
Mukoki said the realisation that a comprehensive effort by responsible role players to collaborate has become inevitable.
“Although the economic growth of 0.4% for the first nine months of 2024 disappointed, the strong upward momentum of business confidence confirms the resolve and understanding of the private business sector to contribute and play its respective role, and to complement an efficient and proficient public sector in its particular role,” he said.
“The translation of business confidence into investor confidence, economic growth, and job creation will, over time, mark the ultimate success.”
BUSINESS REPORT