South Africa on the right path – Standard Bank

South Africa is on the right path in terms of its reform agenda, with private sector participation increasing in key areas of the economy, such as electricity and logistics. 

This is feedback from Standard Bank Group CEO Sim Tshabalala and the company’s South Africa CEO, Lungisa Fuzile. 

Despite South Africa’s progress, both executives have previously expressed the need for greater urgency in implementing reforms.

Tshabalala and Fuzile offered their views on South Africa’s macroeconomic environment and the government’s policy in Standard Bank’s annual report for 2023. 

The bank reported strong earnings for the 2023 financial year last month, with earnings up nearly 30%. 

Tshabalala said the country’s economic performance was disappointing in 2023 despite South Africa avoiding a recession. 

“Growth and human development continued to be held back by a severe shortage of electricity and by worsening problems with the rail network and ports,” he said in his CEO’s report. 

The country’s economic performance will continue to be plagued by an inconsistent electricity supply in 2024 and logistics challenges, while uncertainty around elections will limit investment. 

Thus, the bank expects the local economy to grow by a meagre 1.2% in 2024. 

However, Tshabalala said he is encouraged by the reforms underway, particularly the concession of the Durban Container Terminal to a private company to operate. 

“Our base case is that policy continuity will be largely maintained after the election, including the current administration’s programme of structural reform, a path that will gradually improve South Africa’s economic performance,” he said. 

Standard Bank South Africa CEO Lungisa Fuzile echoed Tshabalala’s comments, saying that the country’s operating environment is fraught with headwinds. 

“There are growing indications of increasing financial pressure on consumers, and consumer confidence declined further in 2023,” he said. 

Despite this, Fuzile remains cautiously optimistic about South Africa’s macroeconomic outlook. 

“While it remains challenging in the short term, ongoing structural reforms, institutional strength, and policy reforms combined with government-private sector partnership provide a foundation for growth over the medium to long term,” he explained. 

Despite this, he said the energy crisis and logistical constraints remain somewhat intractable. 

Moreover, deep socioeconomic inequalities continue to be a risk to the country’s ability to implement the reforms needed to unlock the economy’s potential. 

“We are, however, optimistic about the prospects for government-private sector partnerships to make headway in achieving the needed reform and supporting future growth.”