In Q3 2025, South African CEOs were asked whether they agreed with Capitec CEO Gerrie Fourie’s assertion that the country’s true unemployment rate may be closer to 10%, thanks to the informal sector, rather than the official 33.2%. The response was overwhelmingly skeptical, with only a quarter of CEOs supporting this view and the vast majority pushing back strongly.
Many CEOs acknowledged that the informal sector plays a vital role in providing livelihoods for millions, especially in a challenging economic climate. However, most leaders argued that equating informal, survivalist activities with formal employment “risks understating the severity of South Africa’s labour market crisis.” As one CEO put it, “The informal sector is significant, but 10% is too low. The crisis is deeper than the numbers suggest.” Another CEO highlighted the growing strain on the economy, noting, “Unemployment is growing at an alarming rate with company closures. The informal sector is large, but not enough to offset the crisis.”
Several CEOs emphasised that informal work rarely provides the stability, upward mobility, or economic contribution associated with formal jobs. One respondent warned, “Counting survivalist activity as employment creates a misleading picture of the economy.” Others pointed out that while the informal sector offers a crucial safety net, it does not address the underlying structural issues such as lack of skills development, limited access to capital, and persistent inequality that keep unemployment stubbornly high.
The consensus is clear: while the informal sector offers a lifeline for many South Africans, it does not fundamentally change the reality of high unemployment and underemployment. CEOs overwhelmingly believe that the country’s jobs crisis is far more complex and entrenched than a simple statistical adjustment can capture.
The Merchantec CEO Confidence Index plummeted to 40.1 in Q3 2025, down from 45.3 in Q2, marking the lowest sentiment since the pandemic recovery. CEOs cited a worsening macro environment, with persistent load shedding, weak consumer demand, and ongoing policy uncertainty. Many described the economy as “stuck,” with little sign of near-term improvement.
Industry growth sentiment remained subdued, as most sectors saw little to no progress and continued to face competitive pressures and shrinking margins. Company growth expectations softened, particularly in Consumer Staples and Real Estate, though Industrials and Health Care stood out for their resilience and sector-specific opportunities.
Access to capital remained challenging, especially for Real Estate and Utilities, where CEOs reported increased difficulty securing funding. Investment plans were largely on hold, with most leaders adopting a cautious stance and delaying major decisions until there is greater policy and economic clarity.
Sector-Specific insights:
Consumer Discretionary experienced a notable decline, with the index dropping from 61.0 in Q2 to 55.3 in Q3. CEOs reported a slowdown in consumer demand and increased caution around discretionary spending, with ongoing concerns about cost-of-living pressures and market volatility.
Consumer Staples also saw a decrease, with the index falling from 55.0 in Q2 to 47.9 in Q3. Leaders cited persistent cost pressures and subdued demand, though some noted early signs of stabilizing input costs. The overall outlook remains cautious.
Financials declined from 57.05 in Q2 to 51.7 in Q3. CEOs pointed to tightening credit conditions, regulatory uncertainty, and a more challenging lending environment as key factors behind the drop in confidence.
Health Care was a bright spot, rebounding from 51.88 in Q2 to 57.3 in Q3. CEOs highlighted renewed investment, sector-specific opportunities, and improved growth expectations, with increased demand for health services and innovation driving sentiment.
Industrials showed significant improvement, rising from 48.23 in Q2 to 57.4 in Q3. Leaders cited resilience, increased project activity, and better-than-expected demand in certain sub-sectors, with investment sentiment also improving as supply chain disruptions eased.
Information Technology saw a decline, with the index dropping from 53.57 in Q2 to 47.6 in Q3. CEOs reported slower deal flow, increased competition, and delays in client decision-making, leading to a more cautious outlook.
Materials posted a slight gain, moving from 47.48 in Q2 to 48.2 in Q3. CEOs attributed the improvement to stabilsation in commodity prices and renewed export opportunities, though global market risks remain a concern.
Real Estate experienced the sharpest decline, with the index plummeting from 61.25 in Q2 to 35.0 in Q3. CEOs cited funding constraints, weak demand, and uncertainty in the property market as major challenges, resulting in a collapse in confidence.
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Tax revenue: Tax Revenue has increased from R100 billion in 1994 to R1,4 trillion in 2016 in South Africa. Not only does this indicate the efficiency of tax collection, but also a broadening tax base in South Africa. Essentially this means that an accessible target market for start-ups has increased and should continue to increase.