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Inclusive business growth SA's biggest challenge - chamber

May 08 2017 18:23

Cape Town - South Africa’s biggest challenge is to enhance a business environment where a larger part of the economic active population could add value - more inclusive economic growth - in support of more employment.

This is the view of the SA Chamber of Commerce and Industry (Sacci).

"The challenge for growth starts with fixed investment and foreign direct investment (FDI) to augment SA’s dismal savings rate and thus business and investor confidence are essential," Sacci said at the launch of its latest Business Confidence Index (BCI).
 
Sacci believes the management of investor and business sensitivities is of the utmost importance for it could adversely influence SA’s risk profile in local and international financial markets and as a fixed investment destination.

The April 2017 Sacci BCI contains sub-indices which instantly reacted to events at the end of March and into April, pertaining to political developments, policy uncertainty and lower credit ratings.  

However, nine of the thirteen sub-indices making up the BCI were still affected by the business climate prior to the referred events.

"Positive developments in the economy, therefore, still informed the business climate in April 2017 and were vibrant enough to carry the positive business climate forward into April 2017," said Sacci.

Improvement

The Sacci BCI consequently improved by 1.1 index points to 94.9 in April 2017 from 93.8 in March 2017. The April 2017 BCI is 0.6 index points lower than in April 2016.
 
The positive month-on-month change in five of the thirteen sub-indices of the BCI lifted the index in April 2017 although four of the five sub-indices reflected positive business conditions prior to April.

Three of the seven real activity sub-indices - all but new vehicle sales being prior April conditions - were positive. Four of the six financial sub-indices - three sub-indices prior April conditions - either improved or remained unchanged in April.

"The year-on-year movements of the sub-indices show that the business climate deteriorated from April 2016 to April 2017. Six of the seven sub-indices on real activity weakened over this period while three of the six financial sub-indices worsened over the year to April 2017," said Sacci.

The stronger rand exchange rate and lower inflation made positive year-on-year contributions to the BCI in April 2017 compared to April 2016.

Less merchandise import volumes, higher energy costs and lower share prices than a year ago, particularly contributed to the less favourable business climate in April 2017 than in April 2016.

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