Getting Back To A Story Of Growth

President Cyril Ramaphosa aims to attract over R1tr in investment into the economy over the next five years. Consumer confidence has surged since he was elected, but will strong economic growth follow?

- Mariam Isa

There’s a good chance the economy’s pace of growth will surpass expectations if President Cyril Ramaphosa’s ambitious investment drive clocks up meaningful results – an outcome that’s seen as possible given the speed with which his administration has moved to clean out corruption and mismanagement at failing state-owned enterprises.

There's been consensus that his goal of persuading both foreign and domestic business to plough $100bn (about R1.2tr) into the economy over the next five years is wishful thinking, given that key structural policy reforms are being hampered by sparring factions within the ANC ahead of next year’s general election.

But the negative investment narrative appears to have turned positive, comments Kevin Cron, head of corporate, mergers & acquisitions and securities at Norton Rose Fulbright SA. Yet he does add: “A lot of people are sitting on the sidelines waiting to see how things play out. The government is making the right noises but has to put its money where its mouth is.”

However, some analysts believe that the judgment of many South Africans is clouded by the decade of corruption, mismanagement and pessimism that permeated both business and consumer confidence while former President Jacob Zuma was in charge.

Higher growth

Most think that the Treasury’s February Budget forecast for growth of 1.5% this year will be exceeded. Finance minister Nhlanhla Nene said in a recent interview on radio station 702 it was likely to be closer to 2%, and some economists predict the rate of expansion will be higher than the Reserve Bank’s latest estimate of 1.7% for both 2018 and 2019.