A recent Reuters report published on November 21, 2023, revealed that South Africa’s business confidence slipped in the fourth quarter of 2023. This was largely due to weak local demand for vehicles as consumer incomes remained under pressure due to high borrowing costs. The data showed that the business confidence index fell to 31 points in the fourth quarter from 33 points in the previous three months.

The survey by the Rand Merchant Bank (RMB) and compiled by the Bureau for Economic Research also indicated a decline in confidence among new vehicle dealers, which reached its lowest level since the second quarter of 2020 when South Africa imposed its strictest COVID-19 lockdown.

Respondents on the survey highlighted several challenges that had impacted their businesses, including rising borrowing costs, logistical problems such as delays at harbours and dealing with potholes, and difficulties receiving timely payments for delivered goods. Despite these challenges, there was a positive development for retailers who saw a 15-point jump in confidence. However, non-durable retailers reported a steep decline in volumes due to price increases.

According to Isaah Mhlanga, chief economist and head of research at RMB, structural supply constraints around infrastructure and electricity remain a significant challenge to operating in South Africa’s business environment. However, he added that the decline in the RMB/BER Business Confidence Index also reflects underlying demand weakness.