Page 9 - KZN Business Sense - Vol4 No1 - eBook

Why measure business confidence?

The measurement of business
confidence is considered significant
since it indicates the current and
expected state of a region’s economy.
It is widely recognised that business
leader’s subjective, individual
expectations play a key role in
economic developments. It also
considered as a very good leading
indicator of the overall business cycle
in South Africa and its regions.

Blythedale Estuary Photo credits Alessandro Imbriaco
ILEMBE BUSINESS CONFIDENCE INDEX (IBCI)

– 2017 YEAR-END

nterprise iLembe, in the manufacturing, assembly Isithebe Industrial Estate, were ■ Individual retailers’ feedback out of 137 countries - overall
partnership with the sector featured for the first time the most confident, despite a was however a mixed bag (61/137), basic requirements
EiLembe Chamber of as the most confident economic 12.3 negative movement to 41.7 and reflective of a significantly (92/137), efficiency enhancers
Commerce, Industry & Tourism, sector, despite a drop in index points. disrupted market – restaurant (52/137) and innovation and
collaborate to produce the iLembe the sector’s overall business ■ The business outlook for the and take-away establishments sophistication (39/147). An
Business Confidence Index (iBCI) confidence. This sector six-month period January to reported above expected executive opinion survey by the
aimed at providing a biannual replaced tourism, catering, June 2018 was also recorded trading, whilst some established WEF identified the following
picture of business confidence in accommodation, property at its lowest level since restaurants, located outside six weakest elements for doing
the iLembe District, as well as an management, which moved to commencement at 48 index high foot traffic retail areas, business in South Africa amongst
overall business outlook. The iBCI the third most confident points, a disappointing 7.4 reported drops in sales, some 16 problematic factors (in
is a hybrid index derived from, economic sector after index points down from even significant drops. Other declining order):
firstly, a biannual business survey construction, property outlooks for the second half of smaller traders indicated that 1. Corruption
conducted in the iLembe district development, property sales. 2017. These six-month business trading was marginally better 2. Crime and theft
and secondly, with a weighted ■ The negative sentiment expectations outlook but did not meet the
index of financial and economic around the tourism, catering, expectations. 3. Political instability
variables. accommodation, property incorporates two golden trading ■ Enterprise iLembe’s District 4. Tax rates
periods for the iLembe District,
It is likely that a region’s management sector is especially namely the Easter and mid-year Accommodation Survey for 5. Inefficient government
business mood will be influenced alarming, with businesses in holiday periods. December 2017 indicated bureaucracy
this sector reflecting negative
occupancy levels of 72% in
both positively and negatively by ■ The following business sectors, KwaDukuza based 6. Poor work ethics
various developments in markets business confidence at 40.6 however, recorded positive
and the economy as a whole and index points; 15.2 index points business expectations accommodation establishments, In summary
with 64% of overnight visitors
down from the level measured
the iBCI seeks to reflect the net for the next six months: hailing from South Africa The credit rating downgrades,
results of these influences. mid-year 2017. manufacturing, assembly (58.9), an underperforming national
■ The negative performance transport, warehousing, storage (excluding KwaZulu-Natal), economy, concerns about public
Highlights and key findings of another significant sector (57.5), construction, property and 12% from international finances and increasing levels of
destinations. Most international
■ Business confidence in the for the iLembe regional development, property sales tourists were German. unemployment, nationally, and
concerns around the iLembe
economy; wholesale, retail,
iLembe District, as measured vehicle trade, is similarly (51.3) and financial & business District’s economy and the cost
through the iBCI, has dropped concerning – businesses in this services, including IT and South African Chamber of of doing business locally, are
to its lowest levels since the sector recorded negative communications (50.3). Commerce and Industry reflected in the most negative
introduction of the index in 2015. sentiment at 34.6 index points, ■ In addition to business The SACCI Business Confidence iBCI recorded thus far.
■ The iBCI 2017 year-end was a downwards movement of 14.7 sentiment, the iBCI’s activity Index (BCI) averaged 93.7 (base
recorded at 42.7 index points, index points (-30%). component lost 0.4 index points 2015 = 100) in the second half of The private sector and all
entrenching itself firmly in ■ A 3.5 index point reduction and measured 46.2 in the 2017, a decline of 1.3 index points levels of government within the
negative territory, i.e. below the in the confidence of the second half of 2017 compared on the average 95.0 of the first half iLembe District are committed to
neutral level of 50 index points. manufacturing, assembly sector to 46.6 in the second half. Since of 2017. partnering on specific initiatives
■ The survey component of was ascribed to the ongoing the third quarter of 2015, when that will aid the viability and
the iBCI, which was conducted spates of industrial unrest, the highest activity index level World Economic Forum growth of small and medium
between mid and end January community protests and was recorded, the activity index The World Economic Forum enterprises and secure investment
2018, and which records disruption to business in the has shed 3.3 index points. (WEF) has also recently published in key economic sectors and
subjective business sentiment, region’s main industrial zones, ■ With regards to the 2017/18 its 2017/18 Competitiveness geographies in our district. 
was recorded at the all-time low especially the Isithebe Industrial Christmas holiday trading Report. It is worth noting South
of 39.2 index points, 13.2 index Park in Mandeni. period, it appears that the Africa’s position according to Enquiries:
points down from the 2017 ■ With regards to business variety and choice on offer various matters that is important Nathi Nkomzwayo, CEO, Enterprise
mid-year level, a substantial confidence per region within impressed consumers and to business in the global iLembe, nathi@enterpriseilembe.co.za
drop of 25%. the iLembe District, businesses visitors alike, with significant environment. The numbers give Cobus Oelofse, CEO, iLembe Chamber of
■ With regards to business in the Mandeni Local growth being reported in total an indication of individual areas Commerce, ceo@ilembechamber.co.za
Richard Downing, Economist, Econdow,
confidence per economic sector; Municipality, home to the retail spend. of performance in South Africa econdow@axxess.co.za

WHY MEASURE BUSINESS CONFIDENCE?
The measurement of business confidence is considered significant since it indicates the current and expected
state of a region’s economy. It is widely recognised that business leader’s subjective, individual expectations
play a key role in economic developments. It also considered as a very good leading indicator of the overall

business cycle in South Africa and its regions.

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