2024 has been harder than expected – but there are signs of life for South Africa

 ·26 May 2024

South Africa may still be facing some challenges, but the mood in the country is substantially more optimistic.

Jeremy Gardiner from Ninety One said the first half of 2024 was expected to remain challenging, with interest rates close to 20-year highs globally.

That said, geopolitical issues, such as a higher oil price and the Israel-Hamas conflict, have seen the descent in US inflation pause close to the finish line. He said that this has probably pushed the US interest rate cuts (and thus South Africa’s) to September at least.

In South Africa, the mood has definitely improved from the depths of depression many of us experienced last year, even with the often-loaded and scary pre-election jitters.

“Let me remind you that this time last year, we’d just been through nearly 3 weeks of Stage 6 load shedding, and going into winter, there were rumours that we may even face a complete grid collapse,” said Gardiner.

“On top of that, we were acting bizarrely ‘unneutral’ in the Russia-Ukraine conflict, and the Americans had just accused us of supplying weapons to Russia. Foreign investors gave up on us – they dumped our bonds, and the currency collapsed, which pushed both inflation and interest rates up.”

“The national mood reached the lowest level I’ve experienced in my professional career, with more talk of emigration than ever before.”

Crucially, load shedding has been at lower levels since last year, and it is currently suspended for several weeks. This has been due to improved maintenance, less sabotage, and major investment in renewables.

For winter, South Africans should expect stage 2 on average and stage 1 by the end of the year.

“Next year, after 16 long, dark years of load-shedding, courtesy of government incompetence, mismanagement and corruption, we should be largely free of load shedding,” said Gardiner.

He said that this is significant, as nothing can destroy the confidence of foreign investors and South African citizens than the lights going out.

“Suddenly, the vicious cycle that we’ve been labouring under—declining growth, job losses, fewer taxpayers, lower tax revenues, and less investment—turns around and becomes virtuous—higher growth, more jobs, more taxpayers, increased taxpayer revenues and investment.”

He added that the gradual improvement in ports and railways should also lead to improved optimism.

Although there are election jitters, most analysts expect a business-friendly coalition between the ANC and smaller parties, with the IFP touted as a strong candidate.

“The much-vaunted ANC-EFF coalition at a national level seems statistically unlikely, but then so was Brexit, so remain vigilant.”

Read: Half of South African households are now on social grants – and government wants more

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