Things are looking up for businesses in South Africa
FNB says there has been a strong bounce-back and promising growth prospects for the local tourism industry, while business confidence in South Africa climbs to pre-Covid levels.
Thokozani Dlamini, the CEO of FNB Merchant Services, said that the bank had seen an increase of 55% in turnover on their merchant services platform for the overall tourism industry, coupled with a 17% year-on-year increase in transaction volumes.
The bank also reported an increase in overall travel spending in 2022 – supported by the hospitality and tour operators contributing 35% and 16%, respectively.
“The total increase in travel spend is driven largely by the increase in airline travel with total spending up from R4 billion to R8 billion in 2022 thus far,” added Dlamini.
FNB noted that Statistics South Africa (StatsSA) showed that the hotel sector’s income is progressing in the post-lockdown recovery.
Regarding year-on-year growth rate basis, total hotel sector income was substantial, with a 118.6% increase in September, which was renewed acceleration on the already strong growth of 59.5% in August, said Dlamini.
According to Stephan Claassen, FNB’s national sales head said: “This points to a strong rebound of the sector as we have seen a 72% increase in travel turnover and a 71% increase in transaction volumes which points to optimistic signals ahead of the festive season.”
Claasen added that this also suggests that short stays and breakaways coupled with experiences are popular trends in the local markets, particularly along the coastal regions.
“The impact of the tourism sector during the previous years has negatively impacted businesses and the industry. However, hospitality and travel, together with popular tourism-linked companies, have benefited with increased growth rapidly re-approaching pre-Covid levels in some areas,” added Claasen.
The national sales head said that the country is also likely to see a positive growth trend when local tourism is also booming. Consumers are expected to spend more money across various parts of the country.
Bumper season ahead
According to Investec chief economist Annabel Bishop, data gathered by the Department of Home Affairs shows a big bump in the number of travellers coming to South Africa.
The data indicates that a total of 2.2 million travellers (arrivals, departures and transits) passed through South African ports of entry/exit in October 2022, representing a 2.9% month-on-month increase and a 121.3% year-on-year lift.
Looking at tourist numbers specifically, year-to-date (January-October 2022), there was a 159.4% increase in tourists travelling both from ‘overseas’ and the rest of Africa into the country. Travellers from ‘overseas’ regions climbed by 335.5% y/y while those stemming from Africa rose by 129.0% y/y.
“We anticipate a favourable festive period with travel restrictions eliminated and pent-up demand elevated,” Bishop said.
“International tourism spend remains significant for many operators in the tourism and hospitality sector that relied largely on domestic travellers last year when the Omicron strain prompted a large number of cancellations by foreign tourists.
“Indeed, according to the Minister of Tourism, this is projected to be the biggest and boldest summer period yet after the two-year hiatus occasioned by the Covid-19 pandemic’s lockdowns, restrictions and travel bans. Persistent, heightened load shedding, however, remains a downside risk, impeding optimal activity,” she said.
Business sentiment is up
Adding to the positive waves for South Africa, local business confidence is now also at its highest average in four years, suggesting the economy has largely recovered from Covid-19 disruptions.
A measure of sentiment from the South African Chamber of Commerce and Industry averaged 109 in the year to November and climbed to 110.9 last month, from 109.4 in October, the group said Tuesday in an emailed statement.
South Africa’s economy expanded 1.6% in the third quarter, and when annualised, it shows gross domestic product is bigger than before the coronavirus pandemic struck.
The Covid aftermath has been replaced with global and domestic events, Sacci said.
While the monthly improvement in mood was driven by increased new vehicle sales and manufacturing output risks remain. They include record power cuts, rising interest rates, high inflation and an expected global economic slowdown among South Africa’s main trading partner, Europe.
To counter these challenges, “it remains important to return greater economic stability and more certainty to South Africa,” Sacci said. “South Africa cannot afford instability in a global environment of possible recessionary forces impacting on keener investor choices.”
Overnight implied volatility on the South African rand touched the highest level in more than two and a half years, ahead of a decision by lawmakers on whether to proceed with impeachment proceedings against President Cyril Ramaphosa, three days before the governing party meets to consider re-electing him as its leader.
With Bloomberg
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