THE average value of economic transactions registered another decline last month, marking the second consecutive monthly decrease, according to the BankservAfrica Economic Transactions Index (Beti).
The index represents an overview of economic trends over a range of sectors, making use of economic transactions captured by BankservAfrica.
According to the Beti, the transactions processed by BankservAfrica via the National Payments System (NPS) recorded their biggest monthly decline since January, when higher lockdown restrictions were in effect.
BankservAfrica’s head of stakeholder engagements, Shergeran Naidoo, said the Beti for July was at 127.6 points. “Already being the second month in negative territory, the monthly Beti level declined by -0.2 percent between July 2021 and June 2021,” said Naidoo.
The annual and quarterly figures were mostly up since May and April, when strong rebounds were recorded.
However, at 16.8 percent, the value of real economic transactions in July was up compared to the low base value of -11 percent in July last year, which was driven by the Covid-19 pandemic and harder lockdowns.
The base effect from the hard lockdown in April last year and the massive recovery in the middle of last year have resulted in the annual figures being less reflective of actual growth, because the weak numbers this year show high growth over the last year.
Economists.co.za chief economist Mike Schüssler said this base effect resulted in stronger-than-normal numbers in the following year.
“The impact of a very strong April and a minor increase in May 2021 on the back of April 2021’s high level has resulted in positive quarter-on-quarter figures. The recorded year-on-year change was 16.8 percent, which is true, but only because 2020 was such a terrible year,” said Schüssler.
The average value of nominal transactions was the third lowest this year.
The negative impact of the looting and the extended level 4 lockdown was already visible in the Beti for July. However, as a smoothed index, the full impact was yet to be seen.
Meanwhile, the standardised nominal value of transactions was R996 billion, the lowest number since February, according to Naidoo.
The number of transactions was at an all-time high of 122.5 million, mostly because of electronic fund transfer payments and real-time payments increasing rapidly. The reasons for this could be the longer spending period during July, which included five weeks that ended in near weekends.
The all-time high could also be the result of the damage to the ATM infrastructure during the unrest and the subsequent closure of bank branches, which resulted in more electronic transactions. These transactions are measured in the Beti.
On how the looting could play out in economic transactions, the index said an example was a shop that had been looted and owed a wholesaler R1 million on a 30-day basis. The shop owner had to pay the wholesaler according to the payment terms, which could be the middle of the month, which, in the context of the events in July, would be a week after the looting occurred. The owner would hope that the insurance payout would assist him financially.
When the insurance did pay out via the NPS, it would reflect as an economic transaction, so the true loss in economic activity would not be reflected well in a transaction index.
Additionally, there would probably be less spending for some time, with the likely result that transactional activity, such as for new debit orders on cars, would cease until existing assets were paid off. Also, for the duration of a shop’s closure because of the looting, the owner would not order new stock.
Furthermore, as some payments were made in arrears, the impact would be seen only this month or perhaps next month. For example, when a company purchased stock, the payment was made a month later.
Above all, the Beti reflected the lowest level of economic activity since March and showed that the economy had taken a step back.
“One suspects that the same will be true for August 2021. That being said, the overall July 2021 Beti is stronger than one would have expected – even after the twin impacts of the riots and level 4 lockdown,” said Schüssler.