Sacci Business Confidence Shows Steady Improvement

Let's bring you a story that broke earlier. Now, this is South Africa's business sentiment remaining steady, led mainly by overseas tourist arrivals and export growth as well as improving manufacturing output plus lower inflation. A lot of positives. Now, according to the South African Chamber of Commerce and Industry. Okay. Now, that's according to the South African Chamber of Commerce and Industry. I'm joined by the President, Mtho Xulu. Thank you, Mtho, for coming through and talking to us about, I think, affirmation of what everyone has been talking about since the elections, though we are seeing a slight dip in this one. Why the case when we all thought things were going, as they say, swimmingly well? Yes, good afternoon. Thank you very much for having us. Look, it is a slight dip because the business confidence is also measured in terms of real experiences. The dip itself, for instance, is just on month on month, as it happens a lot of times, but you'll see that actually over the past year, it's been going up steadily. We are not too concerned about the dip. Obviously, it's also a sign that reality will set in, in terms of how quickly certain of these seven administration commitments become a reality. All in all, if you look at the year, it's been a steady growth, especially for March and before the hotly contested elections. Talking just about that dip, where did you see sentiment slightly off? The areas that pulled down business confidence this time around was around vehicle sales, and obviously household and retail consumption, as well as the pace of approval of building plans. What we are seeing from this dip is that actually, even though industry may seem to be on the uptick on manufacturing and exports, the consumer is still under pressure, because obviously, new vehicle sales are a measurement of people's affordability and risk appetite to consume, as well as general retail has also been down, and obviously, the turnaround in terms of building plans and improvements. We are seeing and we are measuring this to mean that the consumers themselves are still under pressure, even though the industry may be a bit more positive. Absolutely, and I want to talk a little bit about the motor industry in particular, because there's a story that's been running throughout the morning on the major international news agencies. This is around Europe's car makers, the story being that the competition that they are seeing from China is absolutely clobbering them, there's no question about that, and we're seeing valuations coming down. From a South African perspective, the complaint I've heard from players within the industry is that the government is late in coming up with a policy around EVs. Are you concerned about the outlook for the car industry in South Africa? Well, look, we are looking at it very carefully, because remember, in South Africa, motor manufacturing is also a very big employer, so we are also seeing the trend in terms of the influx of new brands, which are obviously a market share from the traditional brands that are ordinarily manufactured in South Africa, but also cheaper in terms of when they become secondhand vehicles, and they tend to have a cheaper reselling option. So we are concerned that it has a risk on the ability for us to sustain our local manufacturing competitiveness, which is good for the economy, but also whether the shift from the traditional brands to the new brands is going to also affect the confidence of those brands to manufacture in South Africa. From a policy point of view, we are obviously supportive of the industry, to say we need to keep up with global trends, make sure that we position South Africa in a way that it will benefit from its traditional market. So all in all, we are saying policy must be agile, as well as how do we make sure that we protect our manufacturing base, whether to protect the current brands or to convince new brands to manufacture domestically. Absolutely, absolutely. A hint from one industry player, actually, that the government is planning to only come up with policy in 2026. This could be a huge on-goal. Anyway, let's pack that one. Another time we can return to it. Let's talk about the positives. So we're talking lower inflation, we're talking potentially lower interest rates, and we're also talking, of course, the story of this government saying a new higher growth target. Can you perhaps align those with sentiments that you are picking up from your surveys? So there is an element of alignment. So we at the Chamber of Commerce were part, for instance, about a few weeks ago at the phase two of the government and business partnership launch. And some of the targets that have been set there are going to be supported by some of the policies that came from this survey. For instance, we are calling for a greater industrialization and domestic manufacturing, which was an up in the survey. We're saying reliable and cost-effective energy availability. That's also one of the outcomes that we are seeing positive in this report, as well as the tourism and the ability of logistics to import and export goods and services. So I think based on the positives that came from this sentiment and the outlook that the Seventh Administration has placed for itself, we think it's doable if we continue to do the correct things or making sure that institutions work, policies are agile, and obviously the overall business conditions are favorable to the real economy of manufacturing and driving new innovation and new opportunities in value chains, as well as tourism. So what we are seeing as positive now is somewhat also influenced by some of the statements that the new administration has made. But obviously, sustainability of this depends on how we implement and how quickly we do. So if we just keep on the basics and do the work, we think that these confident sentiments can be sustained into the near future. Are there any potential clouds here? And I'm not meaning in any way to rain on your parade, but are there any potential clouds when you look a little further out? I mean, it's great we've got all these other positives, but what are the risks to those views turning out into proper policy implementation that changes the business conditions on the ground? Look, we as business have learned the hard way that the government for a very long time has been totally incoherent in terms of piecing together policies that make sense for the business community. So even though we are happy that there's some level of stability from the elected cabinet, we still do deem that there may be a possibility of policy clashes or management-style clashing, because obviously these two new partners coming out of 10 political parties naturally will have their own strong positions. So we look at policy inconsistency as something that we must continue to look at, making sure that these ministries don't clash in a way that can negatively affect the economy. And secondly, we also want to caution the fact that when we rebuild institutions and actually protect areas such as local government, we don't have these politicians also vying for some sort of popularity contest to win the upcoming local government elections, because those are about 18 months away. And if the political parties of the national government are also using this as a platform to also position themselves to win local municipalities, that can cause an unnecessary competition and stifle the performance of national government, because people are looking at their interest for the upcoming local government elections. So we are looking at it carefully to say, people who come from different areas have the potential to work because it's a myriad of different experiences, but the danger is that they may start competing amongst themselves and actually affecting policy implementation and coordination to the detriment of business. 100% potentially mindful there, no question about it. Talking about government, on the 30th, the Minister of Finance, we're going to be stepping out to the podium. I've got two questions for you. Number one, what do you expect? Number two, what do you want to see? I'm going to add a third one. Have you been asked to suggest some ideas around improving things? Look, the easier answer is the last question. We fortunately maintain an open door policy with the national treasury and the economic cluster. So continuously, we are always trying to express our views with regards to what we want to see. So we do expect that some of the views that will come either from the ministry that we engage with, and ultimately, the national treasury will find expression in the policy statement. So that open door policy is already institutionalized. We don't have a problem with the relationship. I think what we would like to see, obviously, is how much resources are we putting towards the real economy domestically. We have found a lot of times that we don't actually invest sufficiently in entrepreneurship. So very little is mentioned of how do we actually materially support local SMEs, because that's the growth engine that is well documented. So we would really like to see more resources, even from a policy shift point of view, that will allow us to really unlock and support entrepreneurship and SMEs. And secondly, what we would like to see, obviously, are the national reforms that we are talking about. Local government itself, for instance, we know it's underfunded. The public-private partnership framework itself, we were promised that it was under review. That review has not been communicated publicly. So we will hope that materially we will get a sense that the public-private partnership framework has been overhauled to allow the greater participation of the private sector, and ultimately make sure that it's backed up by material support for SMEs and entrepreneurship. Absolutely. And we shall all be looking forward to the delivery of that statement by Minister Godongwa. For today, Mtho, thank you for your time. Mtho Kulu is the President of the South African Chamber of Commerce and Industry.

South Africa's business sentiment remains steady, mainly led 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. CNBC Africa is joined by Mtho Xulu, President,  South African Chamber of Commerce and Industry. 

Sacci business confidence shows steady improvement

South Africa's business sentiment remains steady, mainly led by an increase in overseas tourist arrivals and export growth as well as improving manufacturing output and lower inflation. 

Sacci business confidence shows steady improvement

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Sacci business confidence shows steady improvement

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