On March 17, a customer was seen comparing prices while shopping at a Pick and Pay shop in East London, South Africa. This image was captured by REUTERS/Siphiwe Sibeko/File Photo. Meanwhile, according to a Reuters report on November 21, South Africa’s business confidence fell in the fourth quarter due to weak local demand for vehicles and high borrowing costs. The data showed that the business confidence index dropped from 33 points in the previous three months to 31 points in the fourth quarter. 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 by 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 such as delays at harbours and potholes that have affected their operations. However, there was a bright spot in terms of confidence among retailers who reported a 15-point jump compared to their previous survey results. Despite this progress, non-durable retailers experienced a steep decline in volumes due to price increases, according to the survey.

Commenting on this trend, 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 the South African business environment. However, the decline in the RMB/BER Business Confidence Index also reflects underlying demand weakness.”