South African chief executives are sceptical of the pace of growth-enhancing reforms ahead of the watershed 2019 national election. Picture: Courtney Africa/African News Agency (ANA)
JOHANNESBURG - South African chief executives are sceptical of the pace of growth-enhancing reforms ahead of the watershed 2019 national election - with the Merchantec CEO Confidence Index plunging 11.6percent in the first quarter of this year.

Sentiment among management of consumer goods and technology companies had the most significant drop in confidence in the quarter.

Merchantec said in a statement yesterday that the consensus among chief executives was that while everyone awaited the outcome of the election, consumer spending had halted, which had resulted in a knock-on effect on business confidence.

The areas of concern were needed clarity from the government on economic policies, Eskom, stability of power supply, rising cost of fuel, no significant gains in bringing the perpetrators of fraud to book, mixed messages from the ruling party regarding "the land issue" and the ambiguity surrounding the mining charter, Merchantec said.

“Some CEOs said the election will not bring immediate change and that it will take at least a year for new policy implementation. For now they are just managing risk.”

Merchantec’s survey found that six in 10 chief executives had indicated they were waiting for the outcome of the election before further investing in their businesses.

Business leaders in the technology sector saw confidence tank 41.6percent - Merchantec said the decline in sentiment in the sector was driven predominantly by economic conditions.

However, confidence among leaders in the consumer services and financial sector increased in the quarter. Merchantec said the increase in sentiment in the financial services industry was mainly due to industry growth.

Data from the SA Chamber of Commerce and Industry on Wednesday showed that business sentiment in South Africa fell to a seven-month low in March.

Bernard Drotschie, the deputy chief investment officer at Melville Douglas, said President Cyril Ramaphosa’s growth reforms needed to be implemented if the president hoped to gain any support from the private sector.

“While confidence levels remain depressed, other economic indicators such as consumer lending, retail sales and employment figures signal that the worst may be behind us,” Drotschie said.

BUSINESS REPORT