The South African Chamber of Commerce and Industry (Sacci) says the Business Confidence Index (BCI) figure of 94.1 in January demonstrates business and society's tenacity and resilience.

The BCI increased by 2.1 index points between December and January, despite negative non-economic incidents in January.

Following the destructive non-economic events that occurred at the beginning of this year, the January confidence level is a sign of "inherent resolve for a normal society", says Sacci. 

It adds that the improvement reflects stronger support for the business climate.

Increased merchandise imports, exports and retail trade volumes contributed to the higher BCI, while rising inflation and higher debt servicing costs had a negative impact, Sacci says.

"The relatively stable January 2022 BCI compared to a year ago indicates a positive but delicate balance. Between January 2021 and January 2022, the Sacci BCI dipped marginally by 0.4 of an index point. Given the difficult economic circumstances, this is a positive start to 2022."

The subindices that supported this level of confidence were mainly increased merchandise export volumes, higher new-vehicle sales and higher share prices on the JSE than a year ago.

However, higher inflation, a lower real value of approved building plans and lower international precious metal prices weighed on the BCI, Sacci says.

"Despite non-economic incidents having a negative impact on the economy (particularly in the second half of 2021), business resilience and tenacity kept the economy from being distracted into uncertainty and dismay. Further, despite the fact that the business climate is not ideal, particularly for attracting much-needed fixed investment, society is determined to work toward a more stable social environment and a growing economy.

"The upcoming Budget will be a significant event, and it is critical that a path forward become clear. Issues such as public and private debt levels, credit and investment ratings, service delivery, and dealing with maladministration and corruption in the public sector are critical to reviving business and investor confidence," the organisation says.

In a business-cycle downturn since December 2013, the South African economy experienced recessionary conditions when the Covid-19 pandemic hit. The Command Council's initial strict lockdown process exacerbated the economy's structural deficiencies and the current impasse in which it finds itself.

"The inability of Eskom to provide reliable and reasonably priced power, as well as disrupted provincial and municipal infrastructure, raises the cost of doing business in South Africa and continues to be an impediment to investment.

"These are significant physical impediments to creating more jobs and accelerating economic growth. As a result, the promise of service delivery to improve social order could not be fulfilled," the organisation says.

Further, the current account balance has been positive since the third quarter of 2020, owing primarily to a commodity price effect rather than increased trade volumes. South Africa also benefited from favourable trade terms. The result was an extraordinary nominal current account surplus, primarily due to merchandise trade. Import and export volumes of goods and services are still lower than they were in 2019.

"It is critical that South Africa maintains its international competitiveness in order to regain former levels of foreign trade activity. The nominal price effect also aided tax collection, primarily from the mining sector, with an estimated additional R150-billion in tax revenue," Sacci adds.

The extremism that caused the mayhem and destruction in certain areas of South Africa in July 2021 was one of the non-economic exogenous distractions that harmed the economy. The burning of Parliament buildings, as well as damage to other infrastructure and the failure of various public sector institutions, are further examples of exogenous negative factors that contributed to economic, investor and business uncertainty in South Africa, the organisation highlights.

"The President's release of the first report of the Zondo commission provides ample evidence of state capture, as well as maladministration and corruption in the public sector. The Special Investigating Unit also discovered more than R7.8-billion in Covid-19 corruption in the provision of personal protective equipment.

The State of Disaster, as well as noncompliance with financial and tender regulations as a result of urgent health matters, has created opportunities for widespread corruption within the health fraternity at all levels of government.

Additionally, various instances of crime and corruption continue to pose serious challenges, as the President has highlighted several instances of maladministration in the public sector that necessitate further investigation and prosecution.

The South African Constitution, on the other hand, establishes the norms and standards necessary to ensure a fair economic regime supported by sound, substantiated, and sustainable economic policy, as well as a properly functioning public sector within the confines of law and order, Sacci says.