The outlook against this macro backdrop for the rest of the financial year is expected to remain challenging. The ongoing energy crisis, port and infrastructure challenges are expected to further constrain economic activity. Whilst inflation is expected to ease gradually, interest rates are likely to remain elevated, placing continued pressure on consumer disposable income. Additionally, the upcoming elections and ongoing global geopolitical tensions increase uncertainty. Banks are becoming increasingly cautious in offering credit and we urge businesses to follow lead. Approval levels for credit remain low at 31.1% with over two-thirds of all credit applications being rejected, according to Experian.
State-owned enterprises (SOEs) need private sector equity partners to turn their fortunes around. Industry updates on
Seaports: South Africa’s maritime hubs are unable to provide services and capitalize on the 85% surge in ship traffic as vessels use alternative routes to avoid attacks by Houthi rebels through the Red Sea. Several of our aging ports were already congested due to inefficiencies [https://bit.ly/492dF03].
Airways: The strained fiscus can no longer afford to bail out struggling SOEs after the deal to sell 51% of South African Airways (SAA) to the Takatso Consortium fell through.
Successes for the private sector
Railways: Despite the internal disagreements of the SAA sale, there was less pushback against privatizing part of the Durban port, with an agreement that expertise and cash are needed amid Transnet’s woes. Transnet will allow private trains onto its rail network of over 20,000 km.
Electricity: The recently passed Electricity Regulation Amendment Act will create an open market platform for competitive electricity trading, essentially ending Eskom’s monopoly on generation [https://bit.ly/4a2Yo0g].
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Impressive growth!