Global crisis hits local business confidence

Maryanne Maina

Maryanne Maina

Confidence in the business community last month dropped to levels last seen six years ago.

The SA Chamber of Commerce and Industry's (SACCI) Business Confidence Index (BCI) declined to 82,4 last month from December's 83,8 points - which was the lowest in 2008.

The index reflects the effects of the crisis in the global economy and the local business environment which is continuously declining.

SACCI chief executive Neren Rau said: "This assessment is from businesses operating in the country. The BCI is now at levels last seen at the beginning of 2003. There were 13 indices in the report and 7 of them displayed this negativity. Car, retail and export sales have been greatly reduced. This situation will continue until the middle of the year."

Retrenchments and a reduction in consumer spending have affected business confidence, Rau added.

Stanlib Asset Management economist Kevin Lings said: "The export market is stressed and trading conditions are harsh, especially in productive sectors such as manufacturing, mining and construction.

"We need more government initiatives to encourage business."

Michael Kafe, head of African Economic Research at Morgan Stanley, said the only positive was that our banks were not as exposed as other international banks. He said this reduced our risk.

"Also, the government has less than five percent offshore in foreign government bonds. We have less external debt so we are better placed than other heavily indebted developing economies," he said.