May 2022 | Data Insights |

The Experian Data Insights Check-In brings you key insights based on the Q1 2022 Business Debt Index.

 

Experian’s BDI

The Experian Business Debt Index or BDI report is an indicator of the overall health of South African businesses as it measures the relative ability of businesses to pay their outstanding creditors on time.

This index incorporates bureau-sourced debtors payment profiles as well as a range of macroeconomic variables.

Our analytics experts have extracted key highlights to give you a good understanding of the current trends we’re seeing in the market.

Short and to the point, these key trends help you better understand the overall health of South African businesses.

Get the Q1 2022 BDI Report for a more detailed view of the overall health of South African businesses.

Get the Q1 2022 BDI Report for a more detailed view of the overall health of South African businesses.

Download the BDI Report

 

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Experian Data Insights Check-In – Q1 2022 BDI Key Insights

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The Experian Data Insights Check-In brings you key insights based on the Q1 2022 Business Debt Index.

Experian’s 2022 Q1 BDI key insights

The Experian Business Debt Index (BDI) combines macro-economic metrics which includes GDP, interest rates and inflation and considers both local and US measures, with bureau metrics from the debt age ratios, to provide a view on prevalent business conditions in South Africa.

The metric is demeaned and standardized, so that the BDI value is distributed around zero. A positive BDI signifies ‘improving business conditions’, whilst a negative BDI indicates that business conditions are deteriorating. The bureau metrics provide a view on the degree to which debtors are overdue on agreed payment terms for invoiced amounts and are referred to as ‘debt age ratios’.

It is important to note that the BDI makes use of Y-o-Y changes in key metrics, e.g. GDP, so that the base for the calculation is the preceding year’s observation. This calculation mechanism gives rise to the drastic recovery we saw in Q2 2021 given the low base observed in the second quarter of the preceding year. This low base -3.23 in Q2 2020 was even lower than the BDI observed during the global market crash of 2008.

Prior to the Q2 2020 drastic acceleration of deteriorating business conditions, we already saw a long-term steady worsening of business conditions over a period of 10 years.

COVID pandemic

Since the COVID pandemic, we have seen spectacular ‘quasi recovery’, because of the statistical effect of the historically low base, but the BDI quickly coming down again from that Q2 2021 high of 3.49 to levels below 1.

Q1 2022 BDI

The latest Q1 2022 BDI came in at 1.44, which was a significant increase from the 0.97 observed in Q4 2021. This improvement was mainly driven by the increase in GDP.

From a sectoral perspective, we saw improvement in BDI for most sectors – most notably for Construction, Manufacturing, and the Electricity sector. Only Agriculture and Financial services saw a deterioration in BDI, but both sectors still find themselves in positive territory, so one can interpret their deterioration causing them to be in a weak situation.

Considering the time-series view of the BDI for Manufacturing, we see the context of the increase in Q1 2022. Indeed, bar the all-time-high observed in Q2 2021, as a result of the statistical effect, the latest observation is the highest we have seen for the Manufacturing sector in the last 15 years.

This positive result was on the back of GDP recovery in the sector – indicative of a normalization of output following the disruptions caused by

  • COVID pandemic
  • July 2021 riots
  • Global supply-chain disruptions

Manufacturing growth

Manufacturing production growth recovered Q1 2022. However, this sector remains challenged by factors such as

  • Load shedding,
  • Flooding in KwaZulu-Natal, specifically for motor vehicles,
  • Disrupted port facilities and inefficient harbour operations to export manufactured goods,
  • Cost pressures and supply shortages resulting from the Ukrainian conflict.

Conclusion

We are expecting the BDI to return to the long-term trend observed prior to COVID, as the statistical low-base-effect diminishes and as there has been no structural reforms to the South African economy over the last 2 years. Thus, all the structural impediments that were in play prior to the pandemic, are still prevailing and are expected to continue to have a deteriorating effect on business conditions in the country.

 

Get the Q1 2022 BDI Report for a more detailed view of the overall health of South African businesses.

Get the Q1 2022 BDI Report for a more detailed view of the overall health of South African businesses.

Download the BDI Report

 

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Watch our video in which Ans takes you through the various graphs that bring these data insights to life.

Ans Gerber
Head of Data Insights and Marketing Services  |  Decision Analytics
South Africa
See Bio
A data scientist in the Innovation team of Experian, Ans has experience in Analytics across various disciplines. In her current role, she is part of a dynamic team that continues to push the boundaries of what is deemed ‘typical’ bureau activities, by finding and creating new data sets, building new products and creating value propositions that address industry needs and also help to build an inclusive credit economy for Africa, by empowering consumers.