SA business confidence edges lower

BUSINESS confidence index (BCI) in April backtracked to the pre-Ramaphoria era with the South African Chamber of Commerce and Industry (Sacci) saying the index shed 1.6 points between March and April.

Sacci said the BCI had eased from 97.6 points in March to 96 points last month. This was on the back of a weaker rand and a decline in exports in the month.

The BCI, however, improved by 1.1 index points year-on-year last month compared to April 2017.

Sacci said the largest positive annual contributions to the business climate in April had come from lower inflation, higher new vehicle sales, and the increased real value of building plans approved.

Lower real merchandise exports and imports and ongoing high real financing costs had the largest negative effects on the business climate compared to a year earlier.

Sacci chief executive Alan Mukoki said the BCI showed that South African savings were not enough.

Mukoki said the country should aim for a fixed investment-to-gross domestic product (GDP) ratio to rise to 30 percent from the current 19 percent in order to support a sustainable growth rate of 5 percent or more per annum.

“Domestic savings are not enough (about 16 percent of GDP) to finance such a daunting investment effort.

“It is therefore an imperative that capital from abroad should complement the domestic savings effort,” Mukoki said.

April’s business confidence reading marked a third consecutive month of decline from January’s multi-year high of 99.7 points, which was the BCI moving closer to levels last seen before Finance Minister Nhlanhla Nene was unceremoniously sacked in December 2015.

It then slid to 98.9 points in February, before falling further to 97.6 points in March.