The Bright Side of Business in SA Today
The media may paint a pretty bleak picture of the state of business in South Africa, but, SME owners actually have quite a bit to smile about. Hailed as the backbone of our economy, small- and medium-sized enterprises are certainly living up to their name.
Read about the lesser-reported positives, and give yourself a pat on the back for contributing towards a better, brighter SA.
Manufacturing helped to lift the country out of recession in the third quarter of 2018
The manufacturing sector is our fourth largest industry, contributing 14% to our Gross Domestic Product (GDP). 25% of which is attributed to the food and beverages division. However, the motor vehicles, parts and accessories division was the star performer of 2018.
Overall, 2018 saw manufacturing record its highest annual growth rate in five years when production increased by 1.2%. Of all ten divisions that fall under the manufacturing banner; motor vehicles, parts and accessories outshone them all with an impressive 4.9% growth. Vehicle accessories, specifically, enjoyed a whopping 9.2% rise in activity.
Manufacturing and trade were the largest contributors to the 5.5% increase in formal business turnover in the fourth quarter of 2018, according to Stats SA.
Positive economic growth spurs business confidence
Yes, right now the indices are reporting low sentiment —but it is always gloomy just before elections. Should President Cyril Ramaphosa retain his office, we suspect that there will be a second bout of Ramaphoria. Investment confidence will surge and, with that, the market’s propensity to purchase. These factors will further stimulate economic growth and restore business confidence.
Our economy has been depressed for some time, but we are finally starting to see positive signs that things will turn around. Moody’s said this month (April) that they, too, expect to see an uptick in business confidence following the election. They have forecasted accelerated growth of 1.3% this year and 1.5% in 2020. The figures correlate with the Reserve Bank’s 2019 forecast.
The Purchasing Manager’s Index (PMI) is pointing towards stabilisation
Results from the IHS Markit Purchasing Manager’s Index released on the 5th of February this year reported that headline PMI rose to 49.6 in January. Though not yet at the neutral 50-point mark, the figure is 0.6 higher than December 2018 –signalling that we are reaching stability.
The report further forecasted 1.4% annual GDP growth, a significant improvement from the real growth of 0.8% (sum of all four quarters, compared to 2017).
Rocketing Foreign Direct Investment
We’ve just seen Foreign Direct Investment (FDI) reach its highest point in five years. As reported by the South African Reserve Bank in March, direct investment inflows increased to R70.7billion. That’s R26.8billion more than last year.
South Africa has received investment commitment from China, the United Kingdom, the United Arab Emirates, and Saudi Arabia in the wake of Ramaphosa’s investment summit held in 2018. This is in line with the president’s bid to attract $100 billion in FDI by 2023.
South African’s are shaping and influencing the world
A final thought to lift your spirits, South Africa finally has a head of state that’s making the news for the right reasons. Two South Africans made TIME Magazine’s 100 most influential People list for 2019. Namely, President Cyril Ramaphosa and Caster Semenya.
TIME’s annual list showcases the “people who are shaping and influencing the world around them.” Our president was chosen in acknowledgement of his overcoming infighting within the ANC and direct approach towards rooting out corruption in the party. Vivienne Walt, TIME correspondent, says, “For all that, Ramaphosa has kept his characteristic chuckle and his knack for focusing on the bigger picture.”
Caster Semenya made the list as both a record breaking-and-making sports star as well as her rising above the politics that surround her hormone levels. Semenya has sparked global dialogue on the topic of biological sex, and her influence has contributed towards positive progression for women in the sports arena.
Behind South African business all the way
In our 60 year history of assisting businesses with cash flow solutions, we’ve been through the best and worst of times. What we have learnt is that our country is formidably resilient, and businesses with the right partner can achieve anything. It’s why we continue to support business owners with not only cash when they need it most, but solutions that facilitate future growth. It brings us great joy to see our clients succeed.