JOHANNESBURG - THE SOUTH African Chamber of Commerce and Industry (Sacci) has warned that economic recovery depended on the successful application of a viable Covid-19 vaccine as business confidence rose at a slower pace last month compared to last year.
Sacci said yesterday that the business confidence index (BCI) rose a weak 0.9 index points in November to reach 94.3 points in December, and 1.2 points higher than the same period a year ago. A further 0.2 point month-on-month increase in January maintained the slow upward pace of the BCI, reaching 94.5 points due to positive month-on-month impact of real economic activity and the financial environment.
Sacci said that business confidence levels in 2020 were at their worst annual average level since the economic sanctions during apartheid.
It said the main positive contributions came from increased merchandise import volumes and retail trade while lower inflation and interest rates largely helped the business mood to improve on a year ago.
Sacci president Alan Mukoki said the rand exchange rate against the major investment and trading currencies and retail trade volumes also impacted on business confidence.
Mukoki said the sentiment fell compared to January 2020.
He said the upcoming Budget 2021/22 would be a watershed event to pay urgent attention to medium term corrections and adjustments of public sector finances.
“South Africa finds itself in a fiscal logjam and therefore it has become essential to prioritise economic restoration in an unbiased way and simultaneously attend to the health hazard of Covid-19,” Mukoki said. “The successful application of a viable vaccine appears to have become critical in addressing the Covid-19 risks and ensure the survival of the economy."
Health Minister Dr Zweli Mkhize said yesterday that he was confident that the roll-out of the Johnson & Johnson Covid-19 vaccine to health workers can start next week as an agreement was likely to be concluded in the next few days.
“Given the outcomes of the efficacy studies, the Department of Health will continue with the planned phase 1 vaccination using the Johnson & Johnson vaccine instead of the AstraZeneca vaccine,” Mkhize said.
The government is looking at ways to deploy AstraZeneca's Covid-19 vaccine after temporarily putting on hold plans to inoculate healthcare workers following concerns about its efficacy.
There are concerns whether the fiscus will afford funding of the Covid-19 vaccine programme estimated to cost around R20.6 billion amid worrying growth in the government debt.
Anchor Capital's investment analyst Casey Delport said issues of debt sustainability continue to linger as the primary balance is projected to remain in a deficit. As a result, increasing debt service costs are adding further pressure to an already strained fiscus,” Delport said. “Therefore, a degree of caution is still warranted although the positives stemming from the better-than-expected revenue collection will assist in mitigating the many downward risks still present.”
BUSINESS REPORT