The absence of load-shedding lifted confidence in April to the highest level since January — and a solid win for Ramaphosa may see it stay up

South Africans headed to the polls to vote in the general election, a report showed that business confidence picked up on promises of economic growth and job creation.

The SA Chamber of Commerce and Industry’s (Sacci’s) business confidence index (BCI) rose to 93.7 in April from a seven-month low of 91.8 in March. This is the highest level since January.

The index, among other things, is generally regarded as a dip-stick of business sentiment in the country.

“The common theme of election manifesto policies among the parties to drive economic growth and job creation seems to resonate well with the markets, [and] belief that there is adequate seriousness by parties and by the government to adopt that help fight corruption and drive an economic growth agenda,” Sacci said in a statement on Tuesday.

The reprieve from power cuts as Eskom suspended load-shedding also bolstered business confidence.

Despite this, the chamber warned: “The once-off nature of political campaign activities that include high expenditure on printing and advertising may lull one into a false sense of comfort about business confidence. Although once-off, the benefit cannot be taken for granted, it is most welcome by business.”

Sentiment lifted at the start of 2018 on expectations of better business prospects following the election of Cyril Ramaphosa as ANC president. The index, however, has fallen significantly in the context of sluggish economic conditions and continued political uncertainty.

The index is a measure of the volume of activity rather than a poll of sentiment, and has a relatively strong relationship with economic growth.

Five of the 13 sub-indices of the BCI improved from March while five remained unchanged, and three declined. The five that improved were the rand exchange rate against the major trading and investment currencies; higher share prices on the JSE; increased real value of building plans passed; real retail sales; and merchandise import volumes. 

“The outcome of elections should bring more clarity to business and enhance better planning and decision-making. Business and investor confidence will become pivotal to the economy and the business climate in the second half of 2019,” Sacci said.

However, policy certainty after the elections will depend on the extent of Ramaphosa’s victory within the ANC rather than the ANC’s own victory, it said.

“The president’s victory would protect and shield his leadership from vicious factional battles within his party that have plagued his presidency since his appointment. Business confidence is likely to be emboldened by this outcome.”