Enterprise iLembe in partnership with the iLembe Chamber of Commerce, Industry & Tourism collaborate to produce the iLembe Business Confidence Index (iBCI) aimed at providing a biannual picture of business confidence in the iLembe District, as well as an overall business outlook.

Highlights and key findings

• The composite iBCI recovered   from its lowest level recorded at   the year-end 2016, with the combined hybrid index (i.e. both the survey and activity indices) for the 1st half of 2017   gaining 4 index points compared to the 2nd half of 2016.
• The iBCI 2017 Mid-Year was recorded at 49.5 index points, equalling the highest business   confidence level recorded   during the 2nd quarter of 2015.  The iBCI however continues to   remain in negative territory, i.e. below the neutral level of 50 index points.
• The iBCI 2017 Mid-Year  displayed the most significance  variance recorded, since the   commencement of the iBCI,   between the survey component (expressing subjective business sentiment) and the activity index (reflecting actual economic activity within the   iLembe District).
• The activity index component was recorded at its lowest level ever, at 46.6 index points firmly entrenched in the negative.
• The survey component of the iBCI, which was conducted during July 2017 was recorded   at a high of 52.4 index points.
• The Financial & Business Services, including IT &  Communications sector was the   most confident economic sector (57) followed by Tourism, Catering & Accommodation   (55.8), Agriculture, Forestry, Hunting (54.8) and Construction, Property Development, Property Sales, which also includes Property Management (50.4).
• The negativity of the iBCI   activity index was severely impacted on by the US$ sugar price (-3.5%), tourism (-5.4%) and construction activity (-18.4%) being the biggest contributors.
• The two market related indicators of competition and   market size jointly remained the   most significant business   constraint selected by 51% of  businesses. Sentiments that the   local market is overtraded in   certain sectors highlighted the need for competent and    innovative business innovation   and management, as well as the imperative of developing a   diverse regional economy, with significant job creation potential.
• 31% of survey respondents   listed skills shortages and other labour related issues as primary business constraints. The rapid development of technology and the workforce's inability to keep pace was also singled out in this regard.
• Service delivery & infrastructure  provision was a perceived business constraint of 24% of   respondents. The cost of    development, cumbersome administrative processes and   speed of decision making were highlighted as specific contributors to this business   constraint.

South African Chamber of Commerce and Industry (SACCI) BCI

• The SACCI Business Confidence   Index (BCI) averaged 95.0   (2015=100) in the 1st half of   2017 and increased by 1.4 index   points on the 93.6 average for   the 1st half of 2016. In the 1st   half of 2017 the average of the   SACCI BCI increased by 1.7   index points on average of 93.3   the 2nd half of 2016.
• The major challenge for South   Africa is firstly to escape the   recessionary economic    conditions and to adhere to   matters listed by the credit   rating agencies as hampering   economic growth and    improving employment    opportunities. In this context,   business and investor    confidence are pivotal. The poor   performance of the domestic   economy in 2016 (GDP growth   of 0.3%) and an anticipated   0.5% in 2017 are exposing the   dire straits in which the    economy finds itself.

In summary
The optimistic sentiment and expectations expressed by businesses in the district was a welcome antidote for the negative business climate and economic activity reflected in the Activity Index component of the iBCI. This optimism will be a much-needed brace against the subdued International Monetary Fund (IMF) outlook for South Africa, with political ambiguity and weak investor, consumer and business confidence leading to low growth projections for 2017 at 1% and 1.2% in 2018.

The private sector and all levels of government within the iLembe District are committed to partnering on specific initiatives that will aid the viability and growth of small and medium enterprises and secure investment in key economic sectors and geographies in our district.

Cobus Oelofse 
CEO: iLembe Chamber of Commerce
T: 087 727 8630
ceo@ilembechamber.co.za
Nathi Nkomzwayo
CEO: Enterprise iLembe
T: 032 946 1256
nathi@enterpriseilembe.co.za

Richard Downing
Economist: Econdow
econdow@axxess.co.za