Business confidence in South Africa fell to a 9-month low in July after civil unrest plunged the country into a week-long disruption of supply chains and violence. Picture: Itumeleng English/African News Agency(ANA)
Business confidence in South Africa fell to a 9-month low in July after civil unrest plunged the country into a week-long disruption of supply chains and violence. Picture: Itumeleng English/African News Agency(ANA)

July business confidence drops to a 9-month low over civil unrest

By Siphelele Dludla Time of article published Aug 12, 2021

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BUSINESS confidence in South Africa fell to a 9-month low in July after civil unrest plunged the country into a week-long disruption of supply chains and violence.

The SA Chamber of Industry and Commerce (Sacci) said yesterday that the business confidence index (BCI) declined to 93.2 points in July, from 96.2 points in June.

This BCI print was the lowest reading since last October, and pulled away from a more than three-year high of 97 points recorded in May, reflecting the negative impact of the unrest.

Since the Sacci BCI bottomed in May 2020 at the height of Covid-19 pandemic, it improved up to May 2021, pulled back slightly in June and was marginally down in July.

Sacci, however, said the recent month-on-month dip of 3 index points suggested a more muted and limited effect than the disruptions had on the overall business climate.

Sacci chief executive Alan Mukoki said the collective actions of businesses and communities resulted in a containment of the disruptions caused by the rioting and looting mobs.

“The spate of looting and destruction during July in certain areas, whatever the intention, was a setback to inclusivity, growth and job creation,” Mukoki said.

“Its opportunity cost will extend the timeline to attend to critical structural programme implementation in the economy.”

Despite this, Sacci said the BCI pointed towards an improving business climate that is still well above the levels for business confidence experienced a year ago.

The positive month-on-month contributions to the BCI in July mainly came from merchandise export volumes and retail sales volumes.

The continuing and exceptional trade surplus continued to be driven by the extraordinary value of merchandise exports caused by higher global prices and increased demand volumes.

Manufacturing output and building plans passed also made valued year-on-year contributions to the improved business climate.

Sacci said the continuing effect of the Covid-19 pandemic and the lockdown that accompanied the third wave again affected the business climate negatively, but the impact was less severe as more attention was paid to the economic effect of lockdowns.

Sacci economist Richard Downing said the focused attention on the vaccination process in the weeks ahead should bring a further sense of normality to a fractured economy and society.

“The vaccination process should be accelerated with urgency to attain a degree of herd immunity,” Downing said.

“The bigger challenge remains investor confidence.”

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