S. African Business Confidence Drops to Pre-Ramaphosa Levels

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(Bloomberg) -- South African business confidence has declined to levels last seen when Jacob Zuma was still the president.

The index dropped to 96 in April from 97.6 the previous month, the South African Chamber of Commerce and Industry said in an emailed statement Wednesday. That’s the lowest since November. Five of the 13 sub-indexes that make up the gauge declined from month earlier.

Business confidence reached a more than two-year high in January as Cyril Ramaphosa’s ascent to power initially boosted sentiment and the rand following Zuma’s scandal-ridden tenure of almost nine years. The currency has now lost 4 percent against the dollar since reaching a three-year high in February after Ramaphosa changed the cabinet and removed some ministers seen as loyal to Zuma and who are implicated in graft allegations.

South Africa’s credit ratings were cut to junk last year and the economy hasn’t expanded at more than 2 percent since 2013.

“To some extent ‘Ramaphoria’ has maybe been overdone,” said Jeffrey Schultz, an economist at BNP Paribas in Johannesburg, “The bottom line is that the growth outlook this year is certainly going to be a fair bit better than what we’ve seen over the last three to four years in South Africa.”

Ramaphosa has pledged to revive the economy and fight corruption. He has overhauled the board of the state-owned utility Eskom Holdings SOC Ltd. and removed the head of the nation’s revenue service, Tom Moyane.

The nation’s leadership “has a mammoth task to restore the South African economy to its full potential that was rudely interrupted over the last number of years,” the chamber said. While steps to address maladministration and corruption has been incisive “a simultaneous phase of the restoration process has to address the revival of economic growth and employment opportunities,” it said.

©2018 Bloomberg L.P.

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