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Johannesburg – About 67% of CEOs anticipate that the extent of unsecured lending will negatively affect the South African economy this year, according to a survey conducted by Merchantec Capital.
While it was noted by some CEOs that a tightening of overall credit extension would have a negative effect on the South African economy‚ there was a fair amount of uncertainty in relation to the timing thereof.
Some CEOs indicated that the banking sector would implement measures to ensure that lending practices were more sustainable‚ and that the exposure of the big banks to unsecured lending was not significant to the extent that it would affect operations.
Smaller microlenders by nature have a greater exposure to the negative effects of unsecured lending.
Overall the CEO confidence index weakened in the second quarter of this year.
The index decreased by 9.5% from 57.9 to an overall score of 52.4 points‚ the data showed on Wednesday.
The basic materials sector experienced the greatest decrease in confidence‚ falling by 28.3% from 59.4 to 42.6 points. The technology sector experienced the second-largest decline‚ falling by 24.5% from 64.4 to 48.6 points.
Overall confidence decreased across all sectors with the exception of the consumer goods sector‚ which showed an increase of 9.1% from 50.8 to 55.4 points and the industrials sector‚ which showed a marginal increase of 0.4%.
CEOs also indicated that the current political climate was not favourable for economic growth and that the negative current account balance and the depreciation of the rand were of concern.
Labour unrest and double-digit wage increase demands were also expected to have a negative effect on economic confidence‚ growth and investor sentiment.
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