Sacci business confidence shows steady improvement

South Africa's business sentiment remains steady, led mainly by an increase in overseas tourist arrivals and export growth, as well as improving manufacturing output and lower inflation, according to the South African Chamber of Commerce and Industry (Sacci). The chamber's President, Mtho Xulu, recently discussed the latest developments in a CNBC Africa interview. While there was a slight dip in business confidence, Xulu remains optimistic about the overall positive trend. The dip, he explains, is a reflection of real experiences and the time it takes for the new administration's commitments to materialize. Looking back over the past year, there has been a steady increase in business confidence, especially leading up to the hotly contested elections. However, certain sectors like vehicle sales, household consumption, retail, and building plans approvals have weighed down the overall sentiment. This indicates that while the industry shows positive signs, consumers are still facing pressures such as affordability and risk appetite for spending. The conversation also delved into the challenges facing the motor industry in South Africa, particularly in light of increased competition from China and delays in government policy around electric vehicles. Xulu expressed concern about the impact on local manufacturing competitiveness and the need for agile policies to support the industry. Despite these challenges, there are several positives on the horizon, including lower inflation, potentially lower interest rates, and a new higher growth target set by the government. These align with the outcomes of Sacci's survey, which highlighted the importance of industrialization, energy availability, and logistics for import and export. Xulu emphasized the need for institutions to function effectively, policies to remain agile, and business conditions to support innovation and value chains for sustained positive sentiment. However, he also warned of potential risks, such as policy clashes within the government and political competition ahead of local government elections. Looking ahead to the upcoming budget speech by the Minister of Finance, Xulu expects to see a focus on supporting the real economy, particularly local SMEs and entrepreneurship. He also hopes for clarity on national reforms, including public-private partnerships, to drive economic growth and support businesses in the country. Overall, while there are challenges and uncertainties, South Africa's business confidence trajectory remains positive, contingent on effective policy implementation and coordination.