Investment to Follow South African Vote, Standard Bank Says
(Bloomberg) -- South Africa’s investment cycle will “enliven” later this year as President Cyril Ramaphosa gets a renewed mandate after the May 8 general election to continue his reformist agenda, Standard Bank Group Ltd. Chief Economist Goolam Ballim said.
Ramaphosa will probably “embark on more orthodox micro and macro reforms” should his ruling African National Congress win a strong majority in the election, Ballim said in an interview on Bloomberg Television. A solid win, with at least 55 percent of the vote, would galvanize his position within the party, which is struggling with factionalism.
Ramaphosa took over from Jacob Zuma as national president last year and has described his predecessor’s rule as “nine wasted years.” Since then, the country has been holding judicial inquiries into state graft, malfeasance at the government-worker pension-fund manager, poor governance at the state revenue service and the fitness to hold office of the leadership of the National Prosecuting Authority.
The new leader’s efforts are bearing some fruit: foreign direct investment into South Africa jumped to a five-year high in 2018 as Ramaphosa’s strategy to attract $100 billion over five years gathered pace. However, local companies remain reticent to invest amid lingering policy uncertainty, with gross fixed-capital formation dropping for four straight quarters through the end of 2018, according to the statistics agency.
The South African economy probably contracted in the first quarter, but the risk of a recession is “fairly low,” said Ballim of Standard Bank, the continent’s largest lender.
Ramaphosa has indicated he will trim the size of the cabinet after the elections. Finance Minister Tito Mboweni will probably not return to the position, but has been an excellent caretaker, Ballim said.
Regardless of who the new finance minister is, “I’m confident that the National Treasury has been stabilized,” he said.
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