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SA business confidence dips in October as blackouts unnerve investors

The South African Chamber of Commerce and Industry’s (SACCI) monthly business confidence index (BCI) fell to 91.7 in October from 92.4 in September.

FILE: A clothing store in Claremont, Cape Town in darkness as load shedding kicks in. Picture: Kaylynn Palm/EWN

JOHANNESBURG - South African business confidence slipped in October, reversing the previous month’s minor recovery as lower exports and imports and another bout of electricity blackouts cooled activity, a survey showed on Thursday.

The South African Chamber of Commerce and Industry’s (SACCI) monthly business confidence index (BCI) fell to 91.7 in October from 92.4 in September.

Six sub-indices weakened, five improved, six weakened, while two remained even.

Notable negative impacts came from decreased merchandise export and import volumes, and to a lesser degree from the rand exchange rate depreciation, and disrupted energy supply, the business body said.

“Unexpected load shedding caught the economy off guard during October,” SACCI said. “For two days (this) seriously disrupted business and demonstrated just how fragile the power situation currently is in South Africa.”

Cash-strapped state utility Eskom and its failure to deliver a steady electricity supply has been the main thorn in investor and business confidence, the government purse, and economic growth over the last decade.

Breakdowns last month at some of Eskom’s ageing coal-fired plants saw it unleash another wave of nationwide blackouts, or “load shedding”, after power cuts earlier in the year dragged the economy into a large contraction, forcing government to activate a R59 billion ($4 billon) bailout for the firm.

“Business confidence remains at a plateau while policymakers have little manoeuvring space to set the economy on course. Credit rating agencies, lenders and investors are reluctant to make decisions in an uncertain environment chamber said.

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