Business watching for signs of state’s progress

WHEN Finance Minister Nhlanhla Nene delivers his mini-budget on Wednesday, all business wants to hear is that the state has made progress in infrastructure spending, newly appointed South African Chamber of Commerce and Industry (Sacci) CEO Alan Mukoki told Business Day.

In addition, a further pause on interest rate hikes when the Reserve Bank’s monetary policy committee meets next month, would take the cake for business.

“The government needs to work harder to get things done and implement all the infrastructure programmes — such as water-reticulation at municipalities,” said Mr Mukoki, who also called for clear delivery timelines and consequences if these were not met.

In his maiden Budget speech in February, Mr Nene highlighted infrastructure development as a crucial driver of economic growth and job creation.

Treasury spokeswoman Phumza Macanda said infrastructure development was a big aspect of the government’s programme.

Sacci chief operations officer Peggy Drodskie said the government rolling out its infrastructure programme would give the private sector, which “has the expertise”, a chance to create jobs.

The private sector’s other immediate concern is a possible interest rate hike. The Reserve Bank’s monetary policy committee is scheduled to hold its last meeting of the year next month. The consensus view is that the repo rate will remain 6%, but some economists have not ruled out a 25 basis points increase. The Bank raised rates by 50 basis points last January, another 25 basis points last July and by a 25 basis points in July.

“If rates go up again now, businesses may be forced to either take fewer loans, which negatively affects growth and job creation, or pass on rising costs to consumers. The cost of funding is high,” said Mr Mukoki.

Meanwhile, Bank of America Merrill Lynch SA economist Matthew Sharratt said in a research note that there was “ongoing inertia in growthenhancing policy implementation” in the country.

Sacci has released its trade conditions survey, which show that operating conditions remained dim last month amid slow growth in consumer spending, high debt levels and rising input costs.

“There has been no easing for households as debt remains at about 78% of disposable income and real credit to consumers has dropped 0.5% year on year. The possibility of higher interest rates is an inhibiting factor,” Sacci said.