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JOHANNESBURG — Cyril Ramaphosa’s ascendency to the most powerful position in South African politics has buoyed the economy. Psychologically, South African business is in a much better headspace today than what it was during 2017, despite challenges still existing regarding record unemployment and slow growth. And amid last week’s fiscally conservative budget plus an impending Cabinet reshuffle, markets are liking what they’re seeing with local bonds and the rand having rallied. If this positive change is to become a more long-term trend, though, many more changes will need to be made. South Africa needs policy certainty as well as a friendlier approach towards business’ role in society. These will be Ramaphosa’s biggest tests going forward. But, for now at least, there is much to celebrate. – Gareth van Zyl
By Janice Kew, Thembisile Dzonzi and Loni Prinsloo
(Bloomberg) – South African company heads cheered the start of Cyril Ramaphosa’s presidency, saying that business and consumer confidence were sure to improve following the departure of scandal-hit Jacob Zuma.
The result should be economic growth and even job creation, while various stagnating business-friendly policy initiatives could be revived. Further downgrades to the country’s debt may also be avoided.
Below are a selection of quotes taken from interviews with chief executive officers as their companies reported full- or half-year financial results.
Ian Moir, Woolworths Holdings Ltd.
South Africa’s largest clothing and food retailer caters for customers in the higher income bracket in its home market and in Australia.
“We’ve gone from looking down to looking up. It’s incredibly positive. It will make a big difference in terms of consumer sentiment. We’re talking about greater GDP growth, we’re talking about fiscal responsibility, we’re talking about corruption being under control. It’s all the right things. It’s everything we wanted and I think our customer is going to respond well.”
“Yes, VAT has increased and it was a tough budget. But the good thing was that it was a fiscally responsible budget. Our customers are going to feel better about a fiscally responsible budget and the lower threat of credit downgrades coming back than they are about an increase of 1 percent on VAT.”
Mark Lamberti, Imperial Holdings Ltd.
South Africa’s sixth-largest company by sales has a global transportation operation and is planning to spin off its African car rental and retail business later this year.
“If the President delivers on the kinds of things he spoke about in the state of nation address — and I have no reason to believe he won’t over time — I think you will see a level of regulatory certainty that we never had before, which makes it easier to make an investment decision.
“You will definitely see an uptick in consumer and business confidence. You will see people investing more. You will see consumers more upbeat and prepared to buy that new car that they were thinking twice about before.”
“This is like 1994 again for me and I’ve been through both. I was excited about this when he finally became president as I was standing in the queues voting in 1994.”
Ivan Glasenberg, Glencore Plc
The commodity trader and mining company produces cobalt and copper in African countries including Zambia and Democratic Republic of Congo.
“We know him. I think he’s going to be a very good president for the country. You can see it’s already having a favorable affect on the exchange rate and it will create hopefully more investment opportunities in the country.”
“I believe the country will be more stable, will be more acceptable to foreign investment and I hope there will be more foreign investment in the country.”
Jose Dos Santos, Cell C Pty Ltd.
South Africa’s third-largest mobile-phone company completed a recapitalization last year and is now growing by acquisition into a full-service telecommunications provider.
“Business and investor confidence have turned positive since the election of Ramaphosa at the ANC elections in December. We saw the positive reaction in the stronger currency. If the rand continues to improve that holds great possibilities for Cell C in terms of capital expenditure.”
Referring to government plans to sell off more spectrum to increase availability and speed of broadband, which has been gathering dust for some years:
“With the new leadership the industry needs a resolution on the white paper policy and spectrum allocation needs to be fast-tracked. At the very least we need clarity and a resolution on a way forward.”
Rob Wessels, AfriSam South Africa Pty Ltd.
South Africa’s second-biggest cement maker has reduced its debt in the past year, even as it’s been struggling with a depressed construction industry.
“As a cement company we have already seen some improvement with the election of Cyril, and already saw an improvement in our January and February numbers. We are seeing some green shoots in the industry that has been very depressed, with some private and residential building ticking up. We hope to see this come through in the public sector as well, even though we know our state-owned companies are currently tight on money. So yes, we are cautiously optimistic.”
Andy Hall, Adcock Ingram Holdings Ltd.
South Africa’s largest maker of hospital products is building by acquisition after a tough period partly caused by a lengthy takeover battle.
“No doubt there is a renewed sense of optimism regardless of people’s political affiliations or anything else. It benefits us in many ways. The president had committed to making sure government agencies work better, that suppliers get paid quicker, so clearly that benefits our business. Particularly from a regulatory perspective.”“The second issue is around how his appointment has impacted the rand-dollar exchange rate. Most of our cost inputs are on the dollar and with the rand trading where it is, it really has been beneficial to our business.” “The other issue is that it just changes sentiment in the country. People go out and spend more time in shopping centers as opposed to sitting at home thinking about what they should be doing with their money. We are immensely positive about what the new president is saying.”
Bernard Berson, Bid Corp Ltd.
“A lot of the economic cycle is based on sentiment and if you can get the sentiment to turn and you get the positive feeling, a lot of it feeds on itself. Success breeds success.”
“We sincerely hope that the feel-good factor does carry on and that Ramaphosa really does get to grips with some of the issues and can positively contribute to the future of South Africa, which will be good for South Africa, the investors, us and everybody.”
Cyril Ramaphosa: The Audio Biography
Listen to the story of Cyril Ramaphosa's rise to presidential power, narrated by our very own Alec Hogg.