As winter sets in and power cuts ramp up, a fresh chill has seeped into the bones of South African business. The RMB/BER Business Confidence Index (BCI) fell nine points in the second quarter (Q2) of 2023 to 27, its lowest level since 2020 when the economy was in Covid meltdown mode. A recession has been narrowly dodged, but that may be as good as it gets for a while.

It was the fifth consecutive quarter that the BCI fell, a decline that is pretty much directly linked to the rise in rotational power cuts to prevent a collapse of the national grid. It all boils down to the basic fact that without a reliable supply of power, business in an industrialised economy simply cannot prosper and have confidence in prevailing conditions. And without confidence, it is not going to make significant investments or create new jobs.

"A challenging business environment amid, among other factors, persistent load shedding, rising interest rates and cost pressures weighing on profitability... affected confidence," RMB said in a statement.

The biggest declines were recorded by new vehicle dealers and retailers who are at the coalface of consumer sentiment in these tough times. New vehicle dealer confidence tanked 21 points to 23, strongly suggesting that rising interest rates to contain inflation are making consumers think twice before seeking finance for a new car. Or at least that seems to be the perception in the showroom even if new vehicle sales have been surprisingly resilient in the year to date.

Meanwhile, retail confidence fell 14 points to 20.

"Traders in non-durable goods (food, beverages, etc) struggled the...