Cost of load shedding in October’s economic transactions

The load shedding in most of October 2021, which hit level 4 in the final week of the month, has come at a cost for South Africa’s economic transactions.

“The BankservAfrica Economic Transactions Index (BETI), which captures the current economic trends over a range of sectors using economic transactional data from BankservAfrica, stood at 127.1 in October 2021, which was almost on par with the 127.2 recorded in September 2021,” says Shergeran Naidoo, BankservAfrica’s Head of Stakeholder Engagements.

At 4.6%, the headline BETI recorded its slowest increase since February 2020, despite the pandemic-induced low base in 2020. This figure, however, was not unexpected as most of the economy bounced back from the worst of the Covid-19 pandemic by October 2020.

“Also contributing to the BETI’s October figures were the delay in transactions between July 2021 – September 2021 as a result of the supply chain crisis that saw the late arrival of some shipping routes’ goods for local distribution and sales,” says Mike Schüssler, Chief Economist at Economists.co.za.

Meanwhile, the increased spending during the 2021 municipal elections gave a slight boost to transactions. Both the 2011 and 2016 local government elections showed positive changes in the BETI, while the months that followed recorded monthly declines.

As the 2021 elections had the most candidates and voting stations ever, the spending would have had a positive impact in the run-up to the elections. The average monthly spending increase over the election months was 0.6% in the last two elections. The two months after the elections recorded an average decrease of 1%, indicating election spending can add 1% to the month’s transaction values.

Moreover, it seems a few South Africans made use of the long weekend ending Monday, 1 November 2021, which may have improved local tourism spending. It is also likely that consumers who were due to receive their salaries on 1 November, were paid ahead of the final weekend in October. This may have also contributed to the stronger-than-expected transaction spending for the month of October.

According to Naidoo, the number of transactions that made up the BETI was 126.1 million, which was 11.1% up from October 2020. At R8 171, the average value per transaction was 4.4% down on a year-on-year basis.

“So, the very fact that there was no change between a weak September and October indicates that the load shedding in October hurt transactions,” says Schüssler.

The quarter-on-quarter BETI change was a positive 0.6%, which, other than September 2021, was the slowest increase since July 2020.

“Under these circumstances, the BETI shows resilience in the economy – however, the load shedding and supply chain problems have brought additional pressures,” says Schüssler. “Although the BETI did not decline to the extent that one would expect during load shedding, the overall trend is still for much slower growth. The BETI will slide further if the current load shedding persists.”

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