SA business confidence retracts in third quarter

South Africa's construction sector showed further improvement in the second quarter, lifted by higher sales, employment, and more building plans passed, according to the Afrimat Construction Index. However, Dr. Roelof Botha, Economic Advisor at Optimum Financial Services Group, highlights the impact of recent events such as riots, COVID-19 lockdowns, and the structural challenges facing the country. The provincial business confidence saw a significant drop in KZN from 77 to 27 index points, while Gauteng gained one and KwaZulu Natal fell by two. The riots in KZN impacted confidence levels, along with the lockdown and force majeure declaration by Transnet. However, Gauteng experienced a smaller, more localized impact due to its resilience and faster return to normalcy. The COVID-19 cases and lockdown restrictions further dampened sentiment across the country. The survey focused on KZN, Gauteng, and Western Cape, with marginal improvements in confidence observed in the retail sector, driven by expectations of increased demand and government relief measures. Despite the challenges, there is a silver lining with stability in Gauteng and marginal deterioration in Western Cape. Respondents expect the fourth quarter and the year ahead to bring improvements in the construction sector, fueled by rebuilding efforts in KZN and potential infrastructure investments. However, the vehicle dealer confidence declined by 16 points, falling below the 50 mark, affected by looting, global supply chain shortages, and container and shipping issues. The government's focus on structural reform, including municipal infrastructure, rail, port efficiency, electricity, and spectrum allocation, is crucial to attracting investment, increasing employment, and bolstering the economy. Addressing corruption is another key focus, with efforts to root it out and change the culture of entitlement. While progress is being made in combatting corruption, more needs to be done to build trust and integrity in the governance system. Overall, South Africa's business confidence is navigating through challenging terrain, with a mix of obstacles and opportunities on the horizon.