The South African Chamber of Commerce and Industry's (Sacci's) business confidence index (BCI) declined to 91 in September after having registered its highest level this year to date of 97 in May.

The level of 91 in September, nevertheless, reflects a better business confidence level than the pre-Covid level of 89.9 in March 2020, Sacci notes.

Although the BCI declined over the last four months from May to September, the average of 94.1 for the first nine months of this year is a 9.8 index point improvement on the corresponding period for 2020. The lowest level for the BCI since its inception was recorded in May 2020 at 70.1.

"Five subindices of the BCI had a positive month-on-month impact on the business climate between August and September. Notable positive month-on-month contributions came from increased merchandise export and import volumes, and an increased number of new vehicles sold.

"However, lower retail sales volumes, lower manufacturing output and a decline in the real value of building plans passed were detrimental to the business mood in September."

Compared with 2020, the exceptional improved year-on-year merchandise export volumes, a stronger rand exchange rate and an increased number of new vehicles sold made valuable contributions to the business mood.

"Energy and water supply concerns, with increased utility tariffs, and higher fuel prices were also major contributors to a wary business outlook. Secure energy supply generally remains a crucial concern to the business community, Sacci said.

"The dire need for capital to finance fixed investment remains a key element influenced by short-term business confidence developments, but, more importantly, by longer-term investor confidence of foreign, as well as local investors.

"It is evident that investment from the public and the private sectors has, for quite some time, not been adequate to sustain economic development. Clear, consistent and investment-friendly economic policy, as well as the application thereof, is critical to convince both local and foreign investors of a reasonable return on investment," Sacci emphasises.

Although the Covid-19 pandemic had a worsening effect in some parts of the globe since early this year, improved vaccine application has supported economic recovery as a rule.

"The impressive foreign trade performance of South Africa provides a welcome windfall. The Medium-Term Budget Policy Statement, in November, should serve to give direction on positive economic and business developments going forward," Sacci notes.