University of the Witwatersrand and Bank of China Collaborate to Create South Africa’s First Chinese Investors’ Confidence Index
The index, called CICISA is a quarterly index that tracks the evolution of the “investment climate” or “investment attractiveness” of South Africa over time.
Wits University and the Bank of China have produced the first Chinese Investors’ Confidence Index for South Africa during the Brics Summit, held in Johannesburg this week.
The index, called CICISA is an index that tracks the evolution of the “investment climate” or “investment attractiveness” of South Africa over time. It monitors a set of quantitative economic indicators, sourced from market data, that are selected to capture key aspects of the economy considered important for Chinese Investors. The indicators covering the period from 2012 to 2022 are converted into common units and aggregated into four sub-indices that focus on different dimensions of investor confidence and ultimately into the composite over all CICISA.
“As the single largest trading partner and major investor in South Africa, gauging the South African economy from the Chinese investors’ perspective is highly relevant,” says Professor Volker Schoer, research director at the Wits School of Economics and Finance.
“The objective of this innovative index is to provide a tailored view of the South African economy that is reflective of uniquely Chinese perspectives of South Africa’s investment climate and business environment.”
In order to develop the index, a team of economists at the School of Economics and Finance under the leadership of Prof Uma Kollamparambil worked in close collaboration with CEO Dr Chen Longjian, Mr Du QiQi and experts from the Bank of China in South Africa.
To complement the objective economic performance indicators, the team surveyed 55 Chinese owned companies that operate in South Africa, to provide some insights into the subjective assessment of Chinese investors’ confidence. The companies were asked, among others, to rate the SA economy, legal system, political system and social cohesion. Results show that the companies were only moderately confident.
They expressed their concerns about South Africa’s political stability, social cohesion, energy crisis, lack of skills and other barriers to doing business. Irrespective, the Chinese-owned companies still expressed a positive outlook with respect to growing their own workforce, investment in fixed assets, and future revenue expectations. When asked to compare South Africa against other countries on the African continent as an investment destination, they on average consider South Africa to be more attractive.
The data was compiled in a comprehensive report that consist of four chapters including country and provincial overviews, the CICISA index itself and a complementary chapter of contribution by experts who provide context and insights into current South African priority areas such as technological innovation, digital commerce, fintech and green economy.
Through the sharing and publication of the CICISA, the team hopes to provide a new and profound perspective for government agencies, enterprises, financial institutions, research institutions, and other relevant professionals to study and understand the South African investment environment.
“We plan to update the Index annually, striving to create a continuous report that is up-to-date and has investment reference value.”