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Confidence on Credit: Why South African Businesses Are Growing Cautious
Tariffs, uncertainty, and policy pressure test SA’s economic resilience
Xavier Prospero
September 09, 2025
Confidence on Credit: Why South African Businesses Are Growing Cautious
2 Min Read | 400 Words
South African business confidence has seen a third sequential drop in confidence, falling by one point in Q3 of 2025. This comes following U.S tariffs on the country’s exports.
Here’s what it means for aspiring CA(SA)s and business students alike.
🧠 Fun Fact:
Did you know? The Business Confidence Index (BCI) was first developed in the 1970s as a way to measure private sector sentiment. Today, it’s tracked worldwide because shifts in business confidence often precede actual movements in GDP growth.
The Tariff Squeeze
The main driving factor behind the decline in business confidence stems from higher import tariffs imposed by the U.S.
With the U.S being our second largest export market this poses risk.
This specifically affects players like the automotive and agriculture industry, which account for a large contingent of South Africa’s exports.
The tariffs ultimately feed into compressing margins:
Manufacturers: face reduced demand due to increased cost of South African products in the U.S.
Investors: weigh tariff volatility when deciding on capital allocation.
The Confidence Spiral
Business confidence isn’t necessarily just a fugazi (Wolf Of Wallstreet reference), but it’s an active indicator of sentiment, and often times sentiment is just as important as reality.
It directly affects:
Credit flows: Cautious businesses delay borrowing and investment.
Employment: Cash strapped and stressed business owners pull-back on hiring, which in turn affects household income and consumption, causing a harmful cycle.
In an advisory setting, accountants need to interpret these sentiment signals when forecasting cash flows or structuring finance deals. Confidence, after all, has balance sheet consequences.
Global and Local Headwinds
Tariff issues aren’t happening in isolation. Coupled with:
Global trade volatility: Protectionist moves by major economies with leverage.
Policy uncertainty: Investors need clarity on South Africa’s growth agenda.
Infrastructure strain: Energy and logistics remain persistent weak points.
The conjunction of aspects amplifies risk, and explains why the confidence index saw a slip despite certain sectors showing resilience.
Roundup
South Africa’s confidence dip reminds us that sentiment is as important as statistics. Tariffs, policy uncertainty, and weak demand aren’t just abstract macro trends, they shape the financial models, risk assessments, and strategic advice that CAs(SA) must deliver.
For students and young professionals, the key takeaway is this: confidence is currency. Understanding how it moves can make the difference between numbers that mislead and insights that matter.
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