‘Good news’ for South Africa is just around the corner – if we stay clear of one thing

 ·19 Apr 2024

Experts say that if the vote next month is trouble-free, investor appetite will swing back in South Africa’s favour, and the country will turn towards a ‘good news story’.

These are the opinions of renowned economist Dawie Roodt and investment bank Goldman SA CEO, Simon Denny.

Denny told Bloomberg that South African investors are holding off on big moves before the vote next month.

“Assuming the vote is trouble-free, we could see quite a significant pickup in foreign interest in both equities and debt,” he said.

Goldman has significantly expanded its operations in South Africa, tripling headcount over the past five years in its Johannesburg offices, from where it services the rest of sub-Saharan Africa.

The US bank is betting on growth as energy constraints ease by the end of the year and a smooth outcome in the nation’s most-contested general election since 1994. 

Roodt seemed to agree with this narrative, adding that a positive outcome in the 2024 elections could bolster markets, strengthen the rand, and help grow the economy.

“Should there be a favourable 2024 election outcome, South Africa will become a good news story,” he said.

“A good news story will result in the rand strengthening dramatically, lower interest rates, and confidence returning to the economy,” he added.

However, Roodt warned that there is a risk of a negative outcome, and this includes the ANC forming a coalition with the EFF.

This scenario can lead to ultra-left, ideologically-driven policies, which can cause tremendous damage to the country, he said.

However, these are not the only two outcomes on the cards for the election. 

There are several possible outcomes for the country’s future, and not all of them are negative.

One such possibility is the formation of a government of national unity, where political parties like the DA and Freedom Front Plus can have a significant role to play.

According to Roodt, this presents an opportunity for South Africans to steer the country in the right political direction, which will ultimately strengthen the economy.

Roodt also highlighted the importance of making wise economic decisions, as the financial markets can be unforgiving and quick to punish poor decisions.

Even if a coalition with destructive ideologies comes to power, they won’t be able to escape the consequences of their actions in the market.

As Roodt puts it, “even if Floyd Shivambu becomes the new Finance Minister, he will have to think twice before making any foolish moves.”

With Bloomberg

Read: Unemployment warning for South Africa

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