With Eskom’s more stable electricity supply, the outcome of last year’s election continues to drive optimism in the private sector with business owners optimistic the government of national unity (GNU) can create the stability needed to reignite long-term investment in the country.
Business confidence has improved since general elections in May 2024 that resulted in the formation of the GNU as reflected in the SA Chamber of Commerce and Industry’s (Sacci’s) latest business confidence index (BCI).
The BCI kicked off this year with a reading of 120 index points in January, 12.2 index points higher than it was in May, pointing to a “positive assessment of economic prospects by business [which] still supports an improved business climate”, said Sacci.
Disagreements between GNU members over the implementation of the National Health Insurance Act, the Basic Education Laws Amendment (Bela) Act and the Expropriation Act have heightened concerns about the stability of the GNU in recent months. Still, Sacci’s BCI in January recorded its largest year-on-year improvement since December 2022 when the government started lifting Covid-19 restrictions.
“The broader representation in policy formulation and public sector administration is noted in the broader global and investor context,” the chamber said. “Though many challenges persist, the goodwill towards SA in rectifying and addressing pressing problems is acknowledged.
Companies want predictability and stability. If SA can build long-term confidence that this is a place where investments are safe and returns go back to shareholders, you will see continued investment into SA. If you don’t, it’s a real concern for investors.
— Terry Heymann, World Gold Council CFO
“The final convincing moment of achievement should be when the success finds its way towards investor confidence — locally and abroad. All SA should be able to benefit from such a bigger and performing economy.”
Many business owners in the mining industry, whose growth and competitiveness continue to be constrained by high costs and a lack of investment, have expressed optimism about the progress made since the elections.
At this year’s Investing in African Mining Indaba, Richards Bay Minerals CEO Werner Duvenhage told Business Day the external environment from a government perspective had improved over the past 12 months, as had the group’s relationship with the government.
World Gold Council CFO Terry Heymann said SA’s recent transition of power could provide some assurance that the government will look to create the business environment and build the confidence needed for long-term investment.
“Companies want predictability and stability. If SA can build long-term confidence that this is a place where investments are safe and returns go back to shareholders, you will see continued investment into SA. If you don’t, it’s a real concern for investors,” said Heymann.
Anglo American Platinum CEO Craig Miller said he was “really encouraged by what we’re seeing coming out of the GNU”.
“I don’t expect everybody to agree on everything all the time, but what I see coming out of the GNU is SA working together and trying to find amicable solutions to key issues.
“There has been a great deal of proactivity and a recognition that everybody is aligned around the government’s objectives of creating inclusive economic development and job creation. If we remain focused around that, we’ll continue to succeed,” Miller told Business Day.
“Recognising that gives us a lot of assurance to continue to invest in our assets here in SA,” he said.
January’s BCI was up 7.7 index points from the previous comparable period, driven primarily by increases in inward tourist numbers, new vehicle sales and retail sales volumes.
Lower inflation during the period under review also contributed to the improved sentiment, though the impact was offset somewhat by a decline in merchandise export volumes.
The data also points to an improved picture last year compared to 2023, with the average BCI for the full year increasing by 3 index points.
The election of US President Donald Trump and fears about his foreign policy stance have added some pressure to sentiment in recent months as business owners face more uncertainty about how Trump’s tariffs may affect trade.
Additionally, Trump’s potentially inflationary policies could put pressure on the US Federal Reserve to slow or even halt its rate cutting cycle, keeping borrowing costs for consumers and business owners high.
“With a changed administration in Washington, the world could face some challenges to adhere to a different approach towards international political and economic affairs that could cause some uncertainty and transformed economic and trade relationships between countries,” said Sacci.
“Under such circumstances economic policy options and decisions should be carefully considered,” it added.
Update: February 12 2024
This story includes additional information throughout.
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