/ 14 March 2018

​Businesses confidence high on Ramaphoria

Cyril Ramaphosa addresses a rally to commemorate Nelson Mandela’s centenary year in Cape Town
Cyril Ramaphosa addresses a rally to commemorate Nelson Mandela’s centenary year in Cape Town

It’s no secret that business loves new President Cyril Ramaphosa and it shows in the latest business confidence index which has risen sharply to 45 in the first quarter of 2018, up 11 points from 34 in the fourth quarter of 2017.

This is according to the latest Rand Merchant Bank business confidence index (BCI) compiled by the Bureau of Economic Research.

The survey, taken between January 29 and March 5, 2018 indicates “the sharp subsidence in perceived political and policy uncertainty”.

During this time Ramaphosa who had just come out of being elected ANC president in December became President of the country delivering the much anticipated State of the Nation Address (SONA). This was followed by the Budget speech which improved sentiment about the country’s future “as the Budget was seen to do just enough to stave off the immediate threat of a Moody’s downgrade”.

According to the BCI this kind of leap is a rare occurrence, it nonetheless remains below the “key neutral level” of 50 which shows that more than half (55%) of businesses surveyed were still not convinced by the so-called “new dawn” .

The survey covered a total of 1 700 senior executives spanning five sectors.

Business confidence in the new vehicle dealers sector was the biggest mover jumping by 20 points from 52. Manufacturing improved 13 points to 37 while retail also moved up 13 points to 42.

Confidence in the wholesale sector stands at 53, up two points. Building sector confidence improved by seven points to 45.

Despite the rise in business confidence the survey showed actual business conditions remain depressed.

The Bureau of Economic Research noted that the large gap between actual business conditions and expected future activity levels is normal in the early stages of an upswing.

“Faster economic growth is likely for SA this year compared to 2017. However, confidence is still fragile and the uncertainty surrounding proposed expropriation without compensation will likely have had an impact on the reading, as it remains unclear exactly what will be expropriated” said the Bureau.