A resurgence in tourism and an uptick in metal prices pushed the SA Chamber of Commerce and Industry (Sacci) business confidence index to a nine-year high in November as sentiment in Africa’s most industrialised economy continues to benefit from the formation of a government of national unity (GNU).
The index reached 118.1 points — the highest since October 2015 — up from 114.2 in the prior month.
Sacci said the surge in sentiment was due to an increase in the number of overseas tourists, improved precious metal prices and a belief the economy will fare better in the new year as the GNU implements further market-friendly policies.
Sacci’s business confidence registered 107.8 points in May, just before the watershed election that saw the ANC lose an outright majority for the first time since 1994.
The peaceful election and formation of the GNU, with the ANC and the DA the dominant players, has largely been seen as market positive, with local markets since then.
The suspension of load-shedding has also been a boon to sentiment, with attention now firmly on fixing the country’s logistics sector and the failing local government.
The surge in business confidence coincides with an uptick in consumer confidence — two indicators that bode well for economic growth that has so far proven elusive.
The FNB/BER fourth-quarter consumer confidence index, released last week, shows sentiment among high-income households improved further — though the confidence levels of middle-income households eased — with the overall index’s reading the best for the festive season since 2019.
While a poor performance by the agriculture sector saw GDP contract in the third quarter, many market pundits were unfazed by the data.
Nedbank on Tuesday said it expected the economy to grow 0.5% overall in 2024, and to improve to 1.5% in 2025.
The lender expects the Reserve Bank to cut interest rates three more times next year, providing further relief to consumers and retailers.
“The Reserve Bank’s monetary policy committee cut the SA repo rate by 25 basis points (bps) in September and November 2024, and we expect a further 75bps of cuts in 2025, with the prime interest rate bottoming out at 10.5%,” Nedbank said in a trading update.
“However, the risk to the interest rate outlook is on the upside given the potential impact of the incoming US administration’s economic policies. Private sector credit growth remained muted at 4.4% year on year in October 2024.
“Within this, household credit growth slowed to 3.2%, which is likely the bottom of the current cycle ... as lower inflation boosts real disposable income, easing interest rates reduce debt service costs and the two-pot system gives households access to a portion of their retirement funds.”
The bank added that it expected a “material improvement in fixed investment activity, which will likely materialise in 2025 as business confidence improves on the back of the outcomes of the government of national unity”.
Home loans originator Ooba said the two interest rate cuts implemented this year had led to increased activity among prospective home buyers.
“Ooba is experiencing a marked increase in home loan applications following the recent interest rate cut, “the company’s owner, African Rainbow Capital (ARC) Investments, said in a trading update.
“This positive trend is reflected in key metrics exceeding budget expectations, including average daily application intake, average bond size, and conversion rates,” it said.
“October bond production increased significantly, rising 18.7% compared to the same period last year and 26.8% compared to the previous month.”
ARC Investments, which is controlled by billionaire Patrice Motsepe, said it expected gradual economic growth.
“SA’s post-election business landscape is marked by cautious optimism, with increased investor interest tempered by uncertainty surrounding policy direction under the newly formed government of national unity,” it said.
“While significant economic challenges persist, recent interest rate cuts and growing political stability signal potential for improved consumer spending and business confidence. However, tangible benefits are likely to emerge gradually rather than immediately.”
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