The Experian Data Insights Check-In brings you key insights based on the Q3 2022 Business Debt Index. The BDI 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.
Dec 2022 |
Data Insights | BDI
The Experian Data Insights Check-In brings you key insights based on the Q3 2022 Business Debt Index.
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 Q3 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 – Q3 2022 BDI Key Insights
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The Experian Data Insights Check-In brings you key insights based on the Q3 2022 Business Debt Index.
The Experian 2022 Q3 Business Debt Index (BDI) report brings you key trends and new developments in South Africa’s credit environment.
The report also comments on the economic environment within which these developments take place and includes key insights from indices and market views maintained in the bureau.
The Experian BDI combines macro-economic metric, including GDP, interest rates, and inflation). The report considers both local and USA measures, with bureau metrics in the form of debt age ratios to provide a view on the prevalent business conditions in South Africa.
The metric is demeaned and standardised, 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 agreed payment terms for invoiced amounts and are referred to as ‘Debt Age Ratios’. This data is provided by subscribers to the ‘Portfolio’ product at Experian.
When looking at the BDI from a sectoral perspective, the most meaningful improvement in for the agriculture sector, which moved up from 0.17 in Q2 to 2.19 in Q3.
All sectors found themselves in highly positive territory, even the Services and Electricity sectors that only saw the slightest of deteriorations.
Not only did the agriculture sector show the most meaningful improvement, but it is also the sector with the highest BDI, followed by Transport and Communication, which also showed an impressive improvement from 1.34 to 1.98.
Looking at the time-series view of the Agricultural BDI, we see that the latest figure is close to the all-time high of the Agricultural BDI observed in 2021 Q2. This improved BDI was not only the result of improved GDP but was also due to the improvement in the debt age metrics for this sector from the data we host on the bureau.
Furthermore, we see agricultural food commodity prices continuing to drive the domestic food inflation upwards – despite the recovery of global food prices that have followed the skyrocketing trends observed earlier on in the Ukrainian war. Since Russia has re-joined the so-called ‘grain deal’, they have allowed the safe passage of Ukrainian grain through the Black Sea – thus alleviating some of the supply constraints that were prevalent earlier in the war. Despite the high commodity prices, farmers continue to battle high input costs (considering fuel and fertilizer) as well as rising debt servicing costs such as interest rate increases.
The key macro indicator we report on in our Business Debt Overview for the Agricultural sector, is the sales growth for tractors and combine harvesters (as per the South African Agricultural Machinery Association). We have seen tractor sales growth slowing down from 26.3% Y-o-Y in Q2 to 17.6% in Q3 – still positive territory and indicative of growth occurring at a robust pace. Considering combine harvesters, we saw the Y-o-Y sales growth increasing drastically by 79.1%, compared to last quarter’s Y-o-Y growth of 36.1%.
Looking ahead in terms of the BDI as a whole, we still believe that the BDI is likely to deteriorate – especially considering the increased intensity of loadshedding.
Also, statistically, we don’t expect the same kind of recovery in economic activity that was reflected in the 2022 Q3 figures. Furthermore, considering the slowing of global economic growth in an environment where interest rates have been increasing sharply, and supply chain interruptions have been prevalent, particularly due to lockdowns imposed in China, exports from South Africa are likely to feel the pinch.
In fact, a deteriorating trend is expected to prevail well into 2023, especially in the context of the recessionary trends widely observed.
Get the Q3 2022 BDI Report for a more detailed view of the overall health of South African businesses.
Download the BDI Report
Watch the Video
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
Experian South Africa
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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.