South African Business Mood Drops to Nine-Month Low After Riots

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South African business confidence fell to a nine-month low in July, after a week of deadly riots, looting and arson cost the economy 50 billion rand ($3.4 billion) in lost output and imperiled at least 150,000 jobs.

A confidence index compiled by the South African Chamber of Commerce and Industry dropped to 93.2 from 96.2 in June, the group known as Sacci said Wednesday in an emailed statement. That’s the lowest since October 2020.

Riots and looting erupted in the eastern KwaZulu-Natal province and the commercial hub of Gauteng last month after the jailing of former President Jacob Zuma on contempt-of-court charges. The violence marked the worst civil unrest in South Africa since the end of White-minority rule in 1994, with at least 354 people dead and thousands of businesses looted or burned down.

The decline in the gauge was less severe than that recorded in an index measuring manufacturing sentiment, which posted its largest monthly drop in July since record keeping began almost 22 years ago.

READ: South Africa’s Manufacturing PMI Falls in July Following Riots

The Sacci reading suggests a more muted effect on the overall business climate in the country, after the collective actions of businesses and communities helped to contain the disruptions caused by the rioting and looting, the group said. Still the spate of looting and destruction was a setback to inclusivity, growth and job creation, and could compound and upset investor confidence in the long-term, it said.

“Its opportunity cost will extend the timeline to attend to critical structural program implementation in the economy,” Sacci said.

Read more: Riots Prove a Reality Check as Nedbank Warns of Challenges Ahead

South African gross domestic product hasn’t expanded by more than 3% since 2011 and output is only expected to reach pre-coronavirus pandemic levels in 2023. Economists see the damage from the riots shaving as much as one percentage point off economic growth this year.

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