Business confidence picks up after developments in SA, Southern Africa | Fin24
 
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Business confidence picks up after developments in SA, Southern Africa

Jan 10 2018 15:34
Carin Smith

Cape Town - Business confidence in South Africa seems to have improved slightly in December, according to the Business Confidence Index (BCI) released by the SA Chamber of Commerce and Industry (Sacci) on Wednesday.

According to Sacci, the improvement in business confidence is only partially due to recent political developments in SA. These would include the recent election of Deputy President Cyril Ramaphosa as ANC president, and no further downgrades by ratings agencies in December.

Sacci said political developments in the wider Southern African region also contributed to raising business expectations, including political developments in Zimbabwe.

The BCI was up 1.3 index points in December 2017 to 96.4. It had also showed an improvement in November 2017.

At the same time, the BCI was nearly 7 index points higher in December than the lowest level it reached in 2017, 89.6 in August.

The BCI started last year at 97.7. By mid-year it had dipped to below 90, and in September confidence reached its lowest level in more than 30 years, mainly due to political uncertainty, unemployment and trade challenges, a Sacci survey showed.

The BankservAfrica Economic Transaction Index (Beti) for September and October showed how consumer and business confidence continued to decline.

The average for the BCI in 2017 was slightly up to 94.4, compared to an average of 93.5 for 2016.

"Economic dynamics in Southern Africa have set in motion the realisation that economic performance could improve to serve the broader population," Sacci said in a statement.

In its view, the anticipation of more policy certainty in SA and an economic direction aimed at sustainable domestic growth could improve the business mood even more.

According to the BCI report, the current traces of improvement in the business climate call for greater responsibility and accountability of business and the public sector.

"The challenges faced by fiscal consolidation, unemployment, excessive debt, low growth and sovereign credit ratings are difficulties that require visionary leadership and urgent and strong action," the report states.

Factors like global economic growth and a "fresh" approach to business and investor challenges would also have a positive impact on the mood of the business sector, in Sacci's view.

The BCI report emphasises that changing the ownership structure of the SA Reserve Bank (SARB) is a matter that could increase the risk levels and financial and economic uncertainty in what it calls the "present frail economic circumstances".

It points out that the SARB plays an important role in maintaining price stability and containing the inflationary process.

Property rights is another critical issue the report highlights, especially in a country like SA, which depends on supplementary foreign fixed investment.

"The business mood and business climate have been supplemented by traces of improvement in the financial markets and the economy and the latest economic figures confirm suggestions of improving prospects," said Sacci.

"The challenges faced by fiscal consolidation, unemployment, excessive debt, low growth and sovereign credit ratings remain challenges that require visionary leadership and urgent and strong action going forward."

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