On March 17, 2023, a customer was seen comparing prices while shopping at a Pick and Pay shop in East London, in the Eastern Cape province, South Africa. This image was captured by REUTERS/Siphiwe Sibeko/File Photo. According to a Reuters report on November 21, South Africa’s business confidence slipped in the fourth quarter of 2022, mainly due to weak local demand for vehicles as consumer incomes remained under pressure in the face of 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. This information was part of a survey by the Rand Merchant Bank (RMB) and compiled by the Bureau for Economic Research. Confidence among new vehicle dealers also dropped 24 points, marking the lowest level since the second quarter of 2020 when South Africa imposed its strictest COVID-19 lockdown.
Rising borrowing costs in Africa’s third-largest economy have curtailed consumer spending, while businesses are struggling to pass on higher input costs to buyers. Respondents on the survey also pointed to logistical challenges, ranging from delays at the harbours to dealing with potholes, and a struggle to receive timely payments for delivered goods. However, there was a bright spot as there was a 15-point jump in confidence among respondents in the retail sector which has struggled with high operating costs due to power cuts. While cost pressures have slightly eased non-durable retailers reported a steep decline in volumes due to price increases of late according to survey results.
Isaah Mhlanga chief economist and head of research at RMB said “Structural supply constraints around infrastructure and electricity remain a key challenge to operating in