Two Months in, Ramaphosa Effect Is Lifting South Africa Economy

(Bloomberg) -- Cyril Ramaphosa has been at the helm in South Africa for just on two months.

While it’s early days, he has implemented changes to liberate an economy hamstrung by policy uncertainty plaguing the crucial mining industry, fix cash-strapped and mismanaged state-owned companies and address government graft concerns. Those were among the main drivers that saw Fitch Ratings Ltd. and S&P Global Ratings lower their assessments of the country’s debt to junk in 2017.

Below are charts showing how the economy is reacting to his tenure.

1. Business Confidence

Business confidence climbed to the highest since the start of 2015 in the first quarter as the appointment of Ramaphosa as president boosted prospects for industry-friendly policies.

The RMB/BER business confidence index rose 11 points, the most since the first quarter of 2012, to 45, FirstRand Ltd.’s Rand Merchant Bank unit and the Stellenbosch, South Africa-based Bureau for Economic Research said in March.

“The widespread rise in the BCI had one common cause: the recent turn for the better in domestic politics,” they said. “In the absence of the appointment of Cyril Ramaphosa as the country’s new president and his subsequent cabinet reshuffle, among other factors, developments around business activity -- and profitability -- would not have justified the large 11-point jump in the BCI.”

2. Debt Ratings

South Africa was able to maintain its only non-junk debt rating in March. Moody’s Investors Service said that was because there were more predictable and transparent policies under Ramaphosa. Moody’s also raised its outlook on the country’s debt to stable from negative.

3. Assets Rally

South Africa’s currency has outperformed emerging-market peers since Ramaphosa was elected as leader of the ruling African National Congress in December. The cost of insuring the country’s debt fell to the lowest level in more than five years in March.

To contact the reporter on this story: Ana Monteiro in Johannesburg at amonteiro4@bloomberg.net.

To contact the editors responsible for this story: Rene Vollgraaff at rvollgraaff@bloomberg.net, Robert Brand, John Viljoen

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