Foreword: Wait and see

Sonas and Budget are attempts by government to rebuild


In an environment where there are suspicions around the motives of government, indeed the words “trust deficit” have been used widely in the business community, the Sonas and Budget are attempts by government to rebuild some of the lost ground.

Having said this though, the business conditions and trade conditions survey project a deep picture of mistrust and cynicism from the business community.

Essentially the picture we see is one of things moving sideways rather than up. Perhaps sideways is better than down.

But, let’s get back to the messages coming from government.

Corruption and state capture are receiving visible levels of attention, which is something that we need to acknowledge as a positive step.

Moves to introduce good governance in state-owned enterprise are welcome but perhaps a tad overdue.

The real economy sees increasing fuel bills from the fuel levy which, inter alia,mitigates against a positive sentiment towards the year ahead.

Belt tightening seems to be the message from government. The impact of this is that business folks aren’t in a buoyant mood to invest in new capacity, in new infrastructure, in new projects.

Overall, the sentiment centres on a wait-and-see approach. The key period ahead now is the election, and what happens post the election.

In a period where load shedding suddenly hit the country, this did not auger well for already doubtful sentiments towards the period ahead.

And did not help the president and minister of Finance when they attempted to project a brave face for the country. Indeed, these events could have done much to sabotage their efforts.

So, until the end of May, we believe that the business community will be in a holding pattern, much like the aircraft waiting in the air for clearance to land. A kind of no man’s land where it is better not to make any decisions that have longer term consequences.

Generally speaking, our business community tends to favour a more conservative approach, which means that they really have to be of a strong positive conviction before they pull out their cheque books to start a new investment cycle.

This of course will have consequences for the foreign investor community who watch developments from a distance and equally only make decisions where there is a level of confidence that things are moving for the better. To get there, the economy must show signs of growth, of rising and moving into a positive cycle. Usually these decisions lag our economy by one or two quarters after the visible turn around.

So where does this leave us? Flatlining until mid-year following a gradual return to normality.

However, progress will be slow as we start to see a more moral and ethical outlook on how business and government work together for the good of the South African economy.

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