BLSA CEO highlights opportunities to bolster foreign sentiment towards SA

Changes to interest rates both locally and across key markets, coupled with positive political sentiment linked to the Government of National Unity, are enhancing foreign investor confidence in South Africa, says Business Leadership South Africa (BLSA) CEO Busi Mavuso.

She highlights that hosting the G20 meeting next year will be another opportunity to bolster international sentiment.

In her weekly newsletter, Mavuso describes the Reserve Bank’s recent rate cut decision as a positive sign for businesses and consumers, indicating that the tight monetary conditions of the past 15 months are beginning to ease and hopefully supporting investment.

However, she notes that the Reserve Bank’s decision was small in comparison to the US Federal Reserve’s more substantial move last week, which slashed rates there by a full half a percentage point.

Mavuso notes that the rand last week hit its strongest levels in 18 months against the US dollar, while long bond yields are still falling, making it cheaper for government to borrow.

“That shows foreign investors are now being attracted by our relatively higher interest rates and improving risk outlook. That is good for the business environment too,” she writes.

Looking ahead, Mavuso asserts that South Africa has another opportunity to bolster international sentiment when it hosts next year’s G20 meetings.

“South Africa chaired the G20 once before, in 2007, with Trevor Manuel leading it, but it did not then host annual summits. That time was, though, a relatively high point for South Africa’s economic performance, with the economy growing over 5% and a fiscal surplus. Our growth rate next year will not be nearly as robust, but it is an opportunity to demonstrate to the world that we are moving in the right direction,” she asserts.

As Brazil prepares to host this year’s G20 summit in November, which will conclude various working groups and task forces ranging from women’s empowerment to energy transition, Mavuso highlights several potential international cooperation agreements likely to be signed.

Alongside the G20, business groupings host the private sector forum which is called the B20.

“Last week, business leaders in South Africa held a meeting with the leaders of Brazil’s B20 initiative to ensure we can pick up the baton following their hosting of the summit. They shared their experience of hosting and the journey they have been on,” Mavuso explains.

B20 will take place a month before the main G20 meeting, linking the business community with the G20 governments.

“It has been discussing urgent and important topics since the beginning of the year ranging from trade and investment to employment and education. I expect our hosting of the B20 will be an opportunity to show how South African business is ready to scale, and to demonstrate how partnership between business and government can solve challenges and unlock growth,” Mavuso says.

She indicates that BLSA and Business Unity South Africa will be aiming to ensure that the country hosts a successful event during South Africa’s chairing of the G20.

“It is an opportunity to cement the narrative of South Africa as an emerging success story where we are resolving our challenges and finally delivering growth,” Mavuso stresses.