South African business confidence climbed to the highest since the start of 2015 in the first quarter as the appointment of Cyril Ramaphosa as the nation’s president boosts 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’s Rand Merchant Bank unit and the Stellenbosch, South Africa-based Bureau for Economic Research said in an emailed statement Wednesday.
“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.”
While keeping a handful of Jacob Zuma loyalists in largely minor positions, Ramaphosa brought back as finance minister Nhlanhla Nene, who Zuma replaced in late 2015 in a decision that caused chaos in the markets. Pravin Gordhan, who won over investors during two stints in the same job before running afoul of Zuma, will oversee six of the biggest state companies that are mostly financially strapped and mired in graft allegations.
The index has hovered below the neutral 50 level since December 2014.
“The improvement in the business mood thus seems quite fragile, and by implication susceptible to change in the event of an adverse negative international economic or domestic political shock,” RMB and the BER said.
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