SA's tired economy 'cannot take more Gordhangate knocks'

Cape Town - It is important to understand that South Africa's "tired economy", where things are really tough, really cannot take any more knocks like that seen in the latest events regarding Finance Minister Pravin Gordhan and the National Prosecuting Authority (NPA), Mike Schüssler, chief economist at Economists dotcoza, told Fin24 on Wednesday.

"At this point in time the SA economy is basically a patient in hospital. It may have been on its way out of the high care ward, but the summons issued for the minister of finance may just send the economy into ICU," warned Schüssler.

"We are concerned about the SA economy and the latest Gordhan/NPA issue was really bad timing. I don't think the Hawks have an inkling of economic responsibility on their minds. I think it is a one track minded prosecution in every sense of the word - at the expense of the economic well-being of South Africans."

Referred to the August BankservAfrica Economic Transaction Index (Beti) released on Wednesday, Schüssler said the number of transactions in the South African payment system as recorded by the Beti, indicate that the economy is still volatile at present.

The Beti measures all South African interbank transactions under R5m.

READ: SA economy directionless - economist

The Beti weakened in September, reflecting a slower year-on-year growth of 1.4%.

After a slight recovery in August, the September Beti data showed a month-on-month decline of -0.9%, according to Dr Caroline Belrose, head of fraud and data analytics at BankservAfrica.

“The recent history of the Beti Index shows how the real value of transactions changes direction almost on a monthly basis,” explains Belrose.

The data also shows the domestic economy was far weaker in the third quarter than in the previous quarter.

“Since December 2015, there have been no year-on-year positive changes of over 1.6%. When taking the South African population growth of 1.6% into account, it is apparent that the average person will experience declining income levels in this weaker economic environment,” according to Schüssler.

Nominally the value of transactions continues to increase after taking inflation into account – but still, the growth in transactions declined to levels well below 2% on a year-on-year basis.

READ: Third quarter off to bad start for SA economy

Transaction and product category growth

Growth in the number of transactions for September was 6.8%, while the standardised nominal value of the transactions that make up the Beti was R774bn. This is an increase of 7.6% in nominal terms.

Major declines were evident for cheque transactions as the move to electronic forms of payment continue. The value of cheque transactions declined 8.2% in nominal terms.

Real-time clearing is the fastest growing transaction category with nominal growth of 28.5%. Authenticated early debit orders have also been growing rapidly with a change of 24.7% in nominal terms on a year ago.

The overall value per transaction in the South African banking system grew by 2.4%, far less than the consumer price inflation rate, Schüssler added.

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