S Africa's business confidence hits apartheid-era low amid COVID-19 lockdown

Fakir Hassen

Johannesburg, May 7 (PTI) The level of business confidence in South Africa has plummeted to a 35-year low due to the coronavirus, a level last seen in 1985 when the country was struggling with international sanctions and the apartheid movement.

The South African Chamber of Commerce and Industry (SACCI), in a statement on Thursday, said its monthly business confidence index sank to 77.8 in April 2020 from 89.9 in March.

'This was the lowest reading since January of 1985, reflecting the economic impact of the first month of a strict lockdown which started on March 27 to limit the spread of the coronavirus disease,' the SACCI said.

The lockdown in South Africa entered its 43rd day on Friday. It is described as a five-level, risk-based approach that differentiates on a national, provincial and local-level.

Currently, the country is at level 4 lockdown with highly limited opening of some sectors. So far, the coronavirus has claimed 161 lives with 8,232 infections in the country, according to the Johns Hopkins University.

Limited economic activity has put pressure on the government to ease restrictions.

In its statement, the SACCI said, 'Striking negative monthly impacts on the index were caused by the lower volume of merchandise exports, the weaker exchange rate of the rand, and less new vehicles sold – all mainly due to the lockdown.' The SACCI Business Confidence Index reflects the neutral sentiment in the market place, as it captures the prevailing business climate and what businesses are experiencing.

The index is composed of thirteen sub-indices -- energy supply, manufacturing, exports, imports, vehicle and retail sales, construction, inflation, share prices, private sector borrowing, financing cost, precious metal prices and exchange rate.

The latest report showed new vehicle sales plummeted by 98.4 per cent or 36,213 units in April.

International trade flows have also been severely impacted by the lockdown.

The government expects the virus to peak in September as it prepares a worst-case scenario, but appeals have been pouring in requesting that the opening of the economy be hastened.

Business for South Africa (B4SA), one of the country's largest business lobby groups, has called for the acceleration of the phased reopening of the economy.

The B4SA, a group formed to deal with the government's efforts to deal with the health, labour and economic effects of COVID-19, has warned that as many as 4 million jobs could be lost in the country because of the pandemic.

The B4SA has called on the government to open all sectors of the economy immediately to avoid a predicted plunge of 17 per cent and job losses exceeding.

This was despite the government having introduced a 500 billion rand stimulus package.

Although the package includes supplementary grants to those receiving old age and disability pensions as well as additional child care grants, there are still millions of destitute people who have been queuing for kilometres daily to receive food handouts from charities. PTI FH IND