According to one of the country’s top investment bankers, fractures within the South African government\u2014along with global macroeconomic uncertainty\u2014are weighing on dealmaking activity in the continent\u2019s largest economy. \u00a0<\/p>\n\n\n\n
Uncertainty about a key vote on South Africa\u2019s budget and what it portends for the coalition government has dampened business confidence, according to Yasmin Masithela, chief executive officer of Absa Group\u2019s corporate and investment banking unit. <\/p>\n\n\n\n
“That\u2019s weighed on M&A activity despite the fact that corporate cash piles remain near records,” she said.\u00a0<\/p>\n\n\n\n
\u201cThere are hardly any infrastructure deals in the market,\u201d Masithela said in an interview in Johannesburg. \u201cWe are not seeing it in our pipelines.”<\/p>\n\n\n\n
“We are actually not seeing big M&A deals, big infrastructure deals coming out in our pipelines in South Africa, in particular.\u201d\u00a0<\/p>\n\n\n\n
The African National Congress formed a coalition government with nine rivals, including the market-friendly Democratic Alliance, after it lost its outright majority in elections last year. <\/p>\n\n\n\n
Ties between the ANC and DA have frayed since February over budget proposals to increase the value-added tax rate. The DA argues it does not do enough to fire up the economy.\u00a0<\/p>\n\n\n\n
\u201cWe always knew that the first budget would be the biggest test of the GNU,\u201d Masithela said, adding that the protracted process and lack of clarity have made corporates more reluctant to do deals. <\/p>\n\n\n\n
\u201cWe expected we would see consolidations in different businesses’ markets, but no one\u2019s going to be doing an M&A deal now because you need relative clarity.\u201d\u00a0<\/p>\n\n\n\n
Investor sentiment has also taken a knock because of concerns over US President Donald Trump\u2019s trade wars.<\/p>\n\n\n\n
Masithela said clients are also not asking for short- or long-term financing because they want more certainty about the trajectory of their business before making such a move.<\/p>\n\n\n\n
Absa CIB anticipates earnings growth will be in the \u201cmiddle single-digit level,\u201d this year, compared with 6% in 2024. <\/p>\n\n\n\n
It largely foresees that improved growth coming from other African markets it operates in including Ghana, Kenya and Nigeria, said Masithela.\u00a0<\/p>\n\n\n\n
\u201cI\u2019m actually quite optimistic and that\u2019s why I think we will still see growth because the markets that we are in are pivoted to actually getting the benefit of growth,\u201d she said.<\/p>\n\n\n\n
Her division plans to leverage its expertise in renewables across the continent, especially in countries such as Zambia, Masithela said.<\/p>\n\n\n\n
\u201cRemember, we started the renewables business and got really good at it in South Africa, and we are seeing that journey in other parts of Africa,\u201d Masithela said. <\/p>\n\n\n\n
\u201cOur business has understood sovereign risk and the risk management protocols of sovereign risk. That\u2019s why we remain optimistic about hitting our targets and hitting our budgets.\u201d<\/p>\n","protected":false},"excerpt":{"rendered":"
According to one of the country’s top investment bankers, fractures within the South African government are weighing on dealmaking activity.<\/p>\n","protected":false},"author":59,"featured_media":813796,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[9872],"tags":[29,1850,853],"class_list":["post-819450","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-business","tag-absa","tag-bloomberg","tag-south-africa"],"_links":{"self":[{"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/posts\/819450","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/users\/59"}],"replies":[{"embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/comments?post=819450"}],"version-history":[{"count":1,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/posts\/819450\/revisions"}],"predecessor-version":[{"id":819454,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/posts\/819450\/revisions\/819454"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/media\/813796"}],"wp:attachment":[{"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/media?parent=819450"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/categories?post=819450"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/tags?post=819450"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}