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Business confidence in South Africa declined in July after improving marginally in June, according to the latest South African Chamber of Commerce and Industry Business Confidence Index released on Wednesday.

In July the BCI measured 92.0, which is 1.3 index points lower than its June 2019 level and 2.7 index points lower than in July 2018. According to Sacci, this is the index’s second lowest level since January 2019. The lowest 91.8 in March, and the highest 95.1 recorded in January.

Recently released unemployment figures for the second quarter of 2019 were the most telling indicator of the subdued performance of the SA economy, said Sacci.

On the other hand, the business grouping said the decision by the SA Reserve Bank to reduce the benchmark repo rate by 25 basis points, should have a positive impact on aggregate demand that could positively impact on real gross domestic product.

“The lower BCI comes at a time when there is already very high expectations of a shift by government to full implementation of policies geared for economic growth, job creation, alleviation of poverty, crime and social injustices among other priorities, after the election of a new government in the May 2019 elections,” Sacci said in a statement.

“The high level of optimism that existed immediately after the election of President Cyril Ramaphosa, is being affected by indications that the ruling party is divided on policy, political and factional lines, on the basis that these divisions have a direct impact in government’s efficiency and effectiveness in implementing its policies and managing the fiscus.”

Sacci said the poor financial position of state-owned enterprises and municipalities continues to be a huge cause for concern. The business lobby group said the primary cause of their problems are the manner in which they are led, managed and operated.

“Government’s own current practice of how leadership and management is appointed to run its businesses and municipalities is where all problems start,” says Sacci.

“As mentioned in Sacci’s previous comments, it is no longer negotiable that government urgently restructures its policies and procedures on how SOEs are managed, particularly through the independent appointment of competent boards and management.”

The group added it intends to engage with government to present its members’ concerns about low GDP growth rate and the worsening unemployment figures.- Fin24