South African CEO Confidence Plummets Amid Economic Concerns

95% of CEOs believe inefficient and wasteful government spending is the primary cause of South Africa’s budget deficit.

Merchantec Capital’s latest CEO Confidence Index recorded a sharp decline from 53.9 points in Q4 2024 to 45.2 points this quarter, marking a substantial dip in sentiment among business leaders, reflecting growing concern over economic growth, industry stability, and access to capital.

A key finding from Merchantec Capital’s latest survey reveals that 95% of CEOs attribute South Africa’s budget deficit to inefficient and wasteful government spending. Many urge cost-cutting measures, including reducing the bloated cabinet and improving government efficiency. CEO’s also noted the need to reduce excessive regulatory barriers and policymakers to focus on strategies that benefit legal residents and foster a business-friendly environment to stimulate economic growth. Business leaders insist that long-term fiscal stability hinges on holistic structural reforms to improve economic resilience, enhance tax collection, and decrease reliance on debt.

This quarter’s survey revealed an extraordinary volume of commentary from CEOs, demonstrating heightened concern about the state of the economy and the recent national budget. The volume and intensity of CEO feedback indicate a growing frustration with the status quo, reinforcing the need for decisive action.

Business leaders are calling for immediate reforms to stabilise fiscal conditions, encourage investment, and drive sustainable growth.

In Q1 2025, confidence declined across all sectors, with some experiencing sharper drops than others. The most significant declines, ranging between 16% and 23%, were driven by concerns over economic conditions, reduced expectations for industry growth, and challenges in securing debt or equity capital. Sentiment around investment levels also weakened, contributing to the overall downturn. While some sectors saw more modest declines, the trend reflects a broader sense of caution and uncertainty in the market.

Financials faced the most significant decline, with a 23% drop in confidence. This overall decrease was influenced by economic conditions, expectations for industry growth, and the ability to secure debt or equity capital. Issues such as inefficient and wasteful expenditure, corruption, and fraud have exacerbated the economic climate, leading to a lack of confidence in the industry’s ability to grow and thrive.

Consumer Staples experienced a decline of 16%, resulting in a score of 57.11. This drop was mainly caused by a 27% reduction in confidence regarding economic conditions and a 19% decrease in their capacity to obtain debt or equity capital.

Information Technology saw a decline in confidence, resulting in a score of 51.90 points, which reflects a 16% decrease.

Health Care experienced a modest decline to 50 points, marking a 6% drop.

Materials also noted a decrease in confidence, falling by 16%. This decline was largely attributed to a 35% drop in confidence concerning economic conditions and a 17% decrease related to their intended investment levels.

Consumer Discretionary recorded the third-largest decline in confidence, dropping by 20%, to a score of 49.17. The decrease in sentiment was primarily driven by a 37% reduction concerning economic conditions.

Real Estate saw an 18% drop in confidence, bringing the score down to 55 points. This decline was mainly influenced by a 36% reduction in confidence regarding their ability to secure debt or equity capital.

Industrials recorded the second-largest decrease in confidence, dropping 16%, resulting in a score of 50.78 points.

More about the Merchantec CEO Confidence Index

The Merchantec CEO Confidence Index, which consists of five components, collates views from CEOs of top South African companies and therefore provides a leading indicator into how business leaders perceive local market conditions and the economy going forward.

The Merchantec CEO Confidence Index is a copyright report prepared quarterly by Merchantec Capital. The survey collates responses from over 1 000 top CEOs, from the listed and non-listed environment.