Oct 2023 | Data Insights |

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.

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.

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.

The Experian Data Insights Check-In brings you key insights based on the Q2 2023 Business Debt Index.


Get the Q2 2023 BDI Report for a more detailed view of the overall health of South African businesses.

Get the Q2 2023 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 – Q2 2023 BDI Key Insights

8-minute read

In the Business Debt Index (BDI), we share key trends and new developments in South Africa’s credit environment. We also comment on the economic context within which these developments take place and share key insights from indices and market views maintained in the bureau.

The Experian Business Debt Index (BDI) combines macro-economic metrics (like GDP) with Bureau metrics (in the form of Debt Age ratio’s) to provide a view on the 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 agreed payment terms for invoiced amounts and are referred to as ‘Debt Age Ratios’. This data is provided by subscribers to the ‘Portfolio’ product here at Experian.

As expected, the 2023 Q2 BDI showed a Q-o-Q decline, moving down from the revised 0.74 to 0.45. This means that business conditions are still improving, but at a slower rate. This drop in BDI was, at least in part, due to a sharp reduction in the differential between domestic PPI and CPI, down from 4.8% to 0.8% Q-o-Q, which contributed to the downward movement of the BDI. This differential is reflective of the marked diminution in the profit margins of companies and a concomitant increase in their financial stress.

The latest drop in BDI was however less severe than what one might have expected. The Q2 GDP saw growth of 0.6% Q-o-Q, which was markedly more positive than the -0.1% that was expected.

This improvement in Agri GDP came to 3.3% (Y-o-Y) in the second quarter, compared to the -2.6% contraction we saw in Q1.

In spite of the relaxation in electricity load shedding towards the end of Q2, the overall level of loadshedding implemented by the national electricity provider, have been significantly more intense in 2023 than in the preceding 9 years. Of late, we have seen a return to higher levels of load shedding – not boding well for the growth of the SA economy or the improvement of business conditions in the country, if we were to rely on Eskom to keep the lights on.

In fact, by 10 August 2023 South Africa had already had a total of 197 days with loadshedding – exceeding the number for entire preceding year. Furthermore, the number of days thus far this year, that South Africa has been exposed to level 6 loadshedding, was 36 – compared to the 8 Stage-6-days we saw in 2022. This has put significant strain on the South African business environment and, particularly so, on small businesses.

To unpack what we observe regarding Small and Medium Enterprises, we need to consider the Debt Age Ratio’s.

These ratios are the component of the BDI that is based on the payment profile data we hold and maintain on the bureau.

There are two such ratios calculated and incorporated into the BDI:

  • 30–60-day debt age ratio and
  • 60–90-day debt age ratio

These ratios are in fact metrics of the degree to which businesses are overdue owed amounts relative to the ‘within terms’ amount and can be indicative of the distress that businesses are facing in general, when it comes to honoring the payment terms that were committed to.

A slight deterioration on both ratio’s, with the 30-60 debt age ratio increasing from 22.1% to 23.7% and the 60–90-day ratio increasing from 8.3% to 8.6% this quarter. This was probably driven by the cost pressures businesses are experiencing due to high interest rates as well as the income-pressures brought on by the load-shedding.

Another cause for concern for businesses in debt, is the prevailing high interest rate.

The prime lending rate in South Africa has continued along the same rapidly increasing trajectory since December 2021 and saw yet another increase in Q2 of 2023. The main driver behind the prime lending rate upcycle has been the CPI. At the current 11.75%, this is the highest that the Prime lending rate has been since 2009. Interest rate increases have been used quite aggressively by the SARB to curb the Consumer Price Inflation. This seems to have been successful – considering that CPI is now back below the 6% mark.

The rate at which interest rates have been increasing over the last 20 months, has been staggering – increasing by 475 bp’s over these 20 months vs. the previous upcycle of 200 bp’s over the span of 24 months.

When comparing the Debt Age Ratios of SME’s with that of the total market, SME’s for the first time in over a year shown a more favourable debt age ratio that of total business (this was the case for both ratio’s).

This is probably indicative of SME’s being particularly prudent when it comes to incurring new debt – especially considering the prevailing high interest rate currently at play – thinking twice before signing up for further financial commitments. It could also be indicative of the fact that the ease of load shedding levels seen in May and June had an almost immediate positive effect on SME’s ability to honour existing debt commitments.

Looking forward to the third quarter of 2023, we expect to see a continuation of the decline in the BDI. Although South Africans are showing resilience in their adaptation to the load-shedding, and although GDP for Q2 might see a slight boost on account of the low Q2 growth in 2022 due to the KwaZulu-Natal floods, the combination of load-shedding and high interest rates will likely erode the level of economic growth over the remainder of the year.

A further reduction in the differential between PPI and CPI inflation is also expected – reflecting a growing squeeze on business’ profit margins.

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