In early March 2023, a customer was seen comparing prices while shopping at a Pick and Pay store in East London, South Africa. This photo was captured by REUTERS/Siphiwe Sibeko/File Photo.
On November 21, 2023, a Reuters report revealed that South Africa’s business confidence had decreased in the fourth quarter. The decline was primarily due to weak local demand for vehicles and high borrowing costs, which put pressure on consumer incomes. The RMB/BER Business Confidence Index fell from 33 points in the previous three months to 31 points in the fourth quarter. The survey by the Rand Merchant Bank (RMB) and compiled by the Bureau for Economic Research also showed that confidence among new vehicle dealers dropped by 24 points, marking the lowest level since the second quarter of 2020 when South Africa implemented its strictest COVID-19 lockdown.
Despite this decline, there were some positive signs for businesses operating in South Africa. Retail sector respondents reported a 15-point increase in confidence due to slightly easing cost pressures. However, non-durable retailers experienced a steep decline in volumes due to late price increases according to the survey.
The challenges facing South African businesses are significant, with structural supply constraints around infrastructure and electricity being cited as key factors affecting operations. “Structural supply constraints around infrastructure and electricity remain a key challenge to operating in the South African business environment,” said Isaah Mhlanga, chief economist and head of research at RMB.” Despite these difficulties, it is important for businesses to remain optimistic and find ways to adapt and innovate in order to thrive in an ever-changing marketplace.