Business conference among South African companies edged up just slightly in November, with the momentum seen since September slowing, a survey showed on Thursday.
The South African Chamber of Commerce and Industry’s (Sacci) business confidence index (BCI) for November 2018 measured 96.1, up just 0.3 index points month-on-month.
Sacci said: “The upward momentum of the BCI since September 2018 appears to have flattened and it is the second time this year that the business climate hesitated after encouraging steps to develop and enhanced business confidence.”
It said the economy continued to face various limitations due to inadequate growth, growing public debt, capital outflows, world trade tensions, fiscal constraints and several socio-political challenges that prevented optimal economic performance.
South Africa exited a technical recession in the third quarter, but overall growth is expected to be anaemic at 0.7% in 2018, much lower than the 1.5% of the National Treasury forecast in February.
Sacci noted some state-owned enterprises, in particular, were facing serious financial constraints and experiencing an inability to deliver proper public services, singling out power utility Eskom as a case in point.
On Thursday, the cash-strapped state firm said it would continue with the rolling power cuts it has been forced to implement countrywide for more than a week to avoid a total collapse of the grid under demand pressure.
Sacci said proposals and debates around the government’s plans to amend the Constitution to allow for land expropriation without compensation “need to be considered with the utmost sensitivity for its economic consequences”.
“It should be guided by lessons of international experience and focus on enhancing productivity and strengthening security of tenure,” the chamber said.
“Given the dire need for foreign direct investment in South Africa to enhance economic growth, investment is conditional to upholding the rule of law and the application of contracts to remain unchanged.”