CEOs optimistic about SA’s 1% growth amid challenges: Report

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The organised business community has called for a balanced budget that will champion South Africa’s efforts to reduce the country’s debt burden.

KPMG and Business Leadership South Africa (BLSA) have released the annual CEOs’ 2023 Report looking into 50 companies in Southern Africa.

The report looked at the economic outlook for the next three years, including environmental, social and governance issues, and found that 85% of CEOs are more confident about South Africa’s 1% growth prospects in the face of tough economic times.

The report comes ahead of the Mid-Term Budget Policy Statement by Finance Minister Enoch Godongwana on Wednesday.

The business community has called for fiscal prudence and a decision by the government and the finance minister that doesn’t leave the country compromised.

Business Leadership South Africa (BLSA) says the country’s sovereign fundamentals have deteriorated alarmingly over the past decade due to higher borrowing which they say can be attributed to Government’s poor economic management.

BLSA CEO, Busi Mavuso says, “You have so many businesses who have released their annual results this year who’ve said 2023 is the worst trading environment that we’ve experienced, I think it was Remgro who said in their 85 years of existence they have never experienced such a tough difficult environment.”

The organisation teamed up with KPMG on the launch of the 3rd CEOs outlook report where 30 CEOs from South Africa and 20 from across 6 countries in the Southern African region, shared experiences around navigating the tough economic climate.

The report examined barriers to doing business, geopolitics, the economic outlook and the domestic headwinds facing business.

Southern Africa CEO and Africa chairperson at KPMG, Ignatius Sehoole says, “The confidence has gone down worse than last year but continues to be there globally at 72% on the global economic outlook on the prospects but when you look at the Southern African CEOs on their local environment, it’s even higher at 85% because at least in your environment quite a number of things you can do something about but on the global front there’s a lot of uncertainty there.”

Economists say the minister finds himself trying to manoeuvre in a tough economic period in the country, coupled with politics that will make it difficult to deliver a mid-term budget that satisfies all.

KPMG’s Lead Economist, Frank Blackmore says, “The main issue is going to be how we are going to close the deficit, what are we going to do there, are we going to increase taxes, are we going to borrow more, are we going to go to our contingency fund, are we going to cut costs. The minister’s hands are tight with respect to increasing taxes given that next year is an election year and the fact that we are quite highly taxed, borrowing is becoming more difficult which leaves cutting costs and perhaps the contingency fund to bridge the gap between spending and the revenues.”

There have been calls for greater coordination between business and government, as organised business cautions that South Africa risks losing its fiscal sovereignty as it can’t afford more debt.

They have called on the Finance Minister to avoid the populist approach to the budget and political pressure in his balancing act — a move they believe will increase business confidence.