(Bloomberg) — Sentiment among South Africa’s agricultural businesses advanced sharply as political uncertainty receded after the post-election formation of a broad governing alliance.
Most Read from Bloomberg
A confidence index compiled by the Agricultural Business Chamber, known as Agbiz, and the Industrial Development Corp. rose to 48 points in the third quarter through September, compared with 38 in the prior three months. It’s the highest level since the third quarter of 2023, the data shows.
“The extreme pessimism in the previous survey was partly due to election-related uncertainty. The formation of the government of national unity appears to have eased that concern,” Wandile Sihlobo, Agbiz chief economist, said in a statement Monday. “The focus is back on fundamental agricultural matters.’
Business and investor confidence has improved since the African National Congress formed a unity government with centrist rivals including the Democratic Alliance, after losing its parliamentary majority in May 29 elections. The formation has helped the rand and South Africa’s bonds rally, with investors anticipating faster economic growth and reforms.
However, the agricultural sector has remained somewhat concerned about business conditions, which is reflected in the index being still below the “neutral” level of 50, Agbiz said.
The outlook is clouded by factors including a severe drought that affected the 2023-24 summer crop, as well as weak municipal service delivery and logistics challenges, Sihlobo said.
“While organized agriculture continues to build a productive relationship with Transnet, there remains room for improved port efficiency,” he said, referring to state-owned freight rail and port operations Transnet SOC Ltd., whose under-performance is blamed for holding back South Africa’s economic growth.
Most Read from Bloomberg Businessweek
©2024 Bloomberg L.P.
