The South African Chamber of Commerce and Industry’s (SACCI’s) Business Confidence Index (BCI) rose by just over two points in January to 94.1. But it was down 0.4 points from January of last year, an indication that confidence remains fragile. 

Noting the change from January last year, SACCI said that “this is a reasonable start to 2022”. 

“Increased merchandise export volumes, more new vehicle sales and higher JSE share prices were the sub-indices that primarily supported this level of confidence. Higher inflation, lower real value of approved building plans, and lower international precious metal prices than in January of last year weighed on the BCI.” 

Confidence has actually returned to and exceeded pre-pandemic levels for some time. In 2019, the last full year before the Covid-19 pandemic struck, the SACCI BCI averaged 92.6. In 2020, when South Africa’s economy contracted by 6.4%, it averaged 86.5. In 2021, the average was 93.9, above the 2019 levels. 

How confidence on this front has rebounded faster than economic output, which remains below pre-pandemic levels, is a bit of a mystery. It may be a reflection of the euphoric relief felt from the relaxation of economically punishing lockdown restrictions. 

Noting events like the July 2021 riots, SACCI said: “Business resilience and tenacity kept the economy from being distracted into uncertainty and dismay. Despite the fact that the business climate is not ideal, particularly for attracting much-needed fixed investment, society is determined to work toward a more stable social environment and a growing economy. 

“The upcoming Budget will be a significant event, and it is critical that a path forward becomes clear. Issues such as public and private debt levels, credit and investment ratings, service delivery, and dealing with maladministration and corruption in the public sector are critical to reviving business and investor confidence,” SACCI said. 

That’s a pretty long list and “service delivery” – or the lack thereof – would encompass many things, including Eskom’s inability to keep the lights on 24/7. Tackling maladministration and graft is critical – South Africa’s low investment levels are a reflection in part of a failing state. And a failing or failed state hardly inspires confidence. DM/BM