Press release: For immediate release
Date: 10 February 2021
Transactions down in January after December’s surprise recovery
The South African economy remains in a volatile state, as indicated in the latest BankservAfrica data, which shows economic transactions underwent its steepest decline in January 2021 after a surprising increase in December.
“In January 2021, the BankservAfrica Economic Transaction Index (BETI) recorded a reading of 121.4,” says
Shergeran Naidoo, BankservAfrica’s Head of Stakeholder Engagements. “This follows from the stronger month in December 2020 that saw the value of transactions increasing by 1.8%, but declining by 2.3% just one month later.”
The monthly decline in January was the fourth steepest decline in the last five years. Only April, May and June 2020 – the months of the hard lockdown – posted sharper declines.
“As we can see from the numbers, the transactions were under more pressure in January as the stricter lockdown measures and the COVID-19 second wave took a toll on the economy, businesses and consumers,” says Mike Schüssler, Chief Economist at Economists.co.za. “The good news is that the quarterly data, at 2.7%, is not yet negative. Still, the 1.3% year-on-year headline BETI decline is significant, especially being the biggest decline in the last five months.”
The slowdown in January was also apparent in the volume of transactions, which declined by 2.5% year-on-year while the standardised nominal value showed no change. Meanwhile, the real average value per transaction fell for the 13th consecutive month. “We believe this indicates that electronic payments are being used by smaller role players as the real value per transaction has been slowing down in the last 10 years,” explains Naidoo.
It seems that unlike November’s Black Friday and Cyber Monday’s dismal sales, shopping picked up slightly in December due to the pent-up consumer demand. The demand fell in January as the stricter lockdown ban kicked in.
“While we do not know what the outcome will be in the coming months, we believe the months of big declines then large rebounds in the South African economy are now behind us. We expect the economy’s movements to stabilise and that the post-pandemic trends will become clearer in the coming months,” says Schüssler.
Payments after cheques
On 31 December 2020, cheques as a payment instrument came to an end in South Africa. The BETI data, meanwhile, points to a bigger increase in overall electronic credit transfers as well as continuing, strong growth for Real-Time Clearing (RTC) payments. “This could have to do with cheque payments changing to electronic credit transactions over the past few years. Another factor could be RTC that has grown faster than any other method of electronic payments,” says Naidoo.
In contrast, electronic debits have only shown positive nominal growth of 25% over the last two years. “In the current economic climate, this could be a reflection of consumers and businesses who are reluctant to take on new contract commitments of loans, leases, contracts for mobile phones, satellite television, vehicle tracking and so forth,” says Naidoo.
Contact Leigh-Anne Sa Joe for more information: Leigh-AnneS@Bankservafrica.com or (011) 497 4347.
Notes to the Editor:
The BETI stands for the BankservAfrica Economic Transaction Index. BankservAfrica is a payment enabling organisation operating between the various South African banks with a very secure messaging environment in place. Economists.co.za is an economic consultancy that helped develop the BETI.
The BETI is a very fast and broad overview of current economic trends over a broad range of sectors, making use of economic transactions as captured by BankservAfrica. Like the Swift Index, the BETI is considered a “now-cast” number as a result of its speedy ability to convey the overall economic conditions to the market. Where most economic indicators can take anything between 38 and 76 days to become public knowledge, now-cast indicators take less than a month after the facts were revealed to come to the market.
The BETI is also the broadest of the “now-cast” indicators to come to the market, as it covers economic transactions across the whole economy. Very big distortive economic transactions do not form part of the BETI. This is also on its own a trend-strengthening indicative factor.
BankservAfrica is the trusted payments partner and Financial Markets Infrastructure (FMI) to the financial services industry. As the largest automated payments clearing house in Africa we clear and process billions of low value card, ATM and EFT transactions annually. Our role in the South African National Payments System (NPS) is to facilitate interoperability between the banks and ensure regulatory compliance with our regulators against international banking security best practice and standards and reduces risk and complexity in the industry.
We continue to strive to be a world class and pre-eminent payments operator, innovator and payments partner of choice in Africa, by simplifying our worlds through combining trusted transactions with sensitive information.
BankservAfrica’s national responsibility is to provide safe financial payment services for 56.7 million South Africans, irrespective of their location in partnership with our shareholders and partners.
With a 48-year history in South Africa, BankservAfrica operates 24/7, 365 days a year and delivers on very strong SLAs.
December 2020/January 2021 BETI report to accompany press release
Date: 10 February 2021
BETI indicates the economy remains volatile
Transactional activity in December and January were the complete opposite
South Africa’s economic transactions recorded a substantial decline in January 2021 after a surprisingly strong December 2020. On a monthly basis, the value of December transactions rose by 1.8% and decreased by 2.3% in January.
January reflected the fourth steepest decline in the last five years with only April, May and June 2020 posting sharper falls. So, apart from the hard lockdown months, transactions were under more pressure in January due to the stricter lockdown measures and the second wave of COVID-19 that South Africa experienced from December.
While the quarterly change is not in the red at 2.7%, the BankservAfrica Economic Transaction Index (BETI) declined by 1.3% on a year-on-year basis. This is the biggest fall in the last five months.
December seemed to show pent-up demand as more consumers shopped, unlike November where spending was more cautious. This was also clear in the Google Mobility data, which peaked just before Christmas. But as the stricter lockdown ban kicked in, demand slowed down in January.
The yoyo effect, evident in the BETI’s monthly change in direction, has reappeared but with much more volatility this time. Perhaps it reflects the uncertainty in the economy and the desire of role players to move on from the lockdown and the pandemic.
Actual number of transactions in January 2021 down
The volume of transactions declined by 2.5% year-on-year in January 2021 while the standardised nominal value showed no change from a year ago.
The real average value per transaction declined for the 13th consecutive month. We believe this indicates electronic payments are being used by smaller role players, as the real value per transaction has been declining in the last ten years.
Payments after cheques
On 31 December 2020, cheques as a payment instrument came to an end in South Africa. This suggests cheque payments changed to electronic credit transactions over the past few years. Another factor could be RTC, which has grown faster than any other method of electronic payments.
In contrast, electronic debits have only shown positive nominal growth of 25% over the last two years. This indicates that consumers and businesses are reluctant to take on new contract commitments be it loans, leases, contracts for mobile phones, satellite television, vehicle tracking and so forth.
Clearly, business and consumer confidence remain relatively low as the lockdown crossed 300 days.
We believe the months of big declines and large rebounds are now behind the South African economy. We expect the economy’s movements to stabilise and that the post-pandemic trends will become clearer in the coming months.