On March 17, 2023, a customer was observed comparing prices while shopping at a Pick and Pay store in East London, South Africa. The image of the customer was captured by REUTERS/Siphiwe Sibeko/File Photo. According to a report by Reuters on November 21, 2023, South Africa’s business confidence dropped in the fourth quarter due to weak demand for vehicles and high borrowing costs that put pressure on consumer incomes. The business confidence index fell from 33 points in the previous three months to 31 points in the fourth quarter. The survey by Rand Merchant Bank (RMB) and compiled by the Bureau for Economic Research also showed a decline in confidence among new vehicle dealers.

The rising borrowing costs have affected consumer spending, while businesses struggle to pass on higher input costs to buyers. Respondents on the survey highlighted logistical challenges such as delays at harbors and difficulty dealing with potholes, as well as issues with timely payments for delivered goods. Despite these challenges, there was a positive note with a 15-point increase in confidence among retailers who have been struggling with high operating costs due to power cuts. While cost pressures have slightly eased, non-durable retailers reported a decline in volumes due to price increases late according to the survey.

“Structural supply constraints around infrastructure and electricity remain a key challenge to operating in the South African business environment,” said Isaah Mhlanga, chief economist and head of research at RMB regarding this issue.