The monthly Business Confidence Index (BCI) for September increased by 0.2 index points reaching 89.2. However according to Neren Rau, CEO: SA Chamber of Commerce & Industry (SACCI) business confidence overall remains low.

Rau says, “There are a range of factors as to why we have this low business confidence including poor global economic performance, local economy which cannot find momentum, business environment plagued by service delivery failures, rising costs and economic and policy uncertainty. Added to this, the strikes of earlier this year also continue to dampen performance.”

The BCI averaged 90.3 in the first three quarters of 2014 compared to 91.4 in the first nine months of 2013. In August this year the BCI in August improved by 1.1 index points.

“It is a concern that the poor business confidence performance was extended over such a long period – an average of 91 for the SACCI BCI since December 2012.”

“Although it appears that waning business confidence has been checked, business confidence remains at an undesirably low level. Such a low confidence level was last observed in early 2000, in the aftermath of the Asian financial crisis.”

Although four of the seven physical activity sub-indices were positive month-on-month compared to three in August 2014, none of the six financial sub-indices of the BCI was positive.
“The lower year-on-year level of business confidence in September 2014 came largely from a more constrained financial environment than a year ago.”
“All six financial sub-indices weighed negatively on the BCI. It appears that the disruptions of the real economy in the first half of 2014 lead to broader consequences as it impacted various financial indicators.”

“Needs, expectations and demands are not commensurate with output, supply and value added. A series of negative economic and socio-political developments are also putting the economic outlook under severe pressure.”

Finance Minister Nhlanhla Nene will present the Medium Term Budget Policy Statement (MTBPS) to Parliament on 22 October 2014.
According to Rau, Sacci sees the MTBPS as a critical policy event.

“Apart from responding to a weakening financial environment and addressing public finance issues, the MTBPS is also looked upon for directional change in terms of spending priorities, debt management, and efficiency in the application of taxpayers’ money, accountability and delivery.”

Concluding, “Performance, accountability and fiscal discipline have to underpin the budget and we are hoping this is made evident during this year’s MTBPS.”