Mboweni likely to drive up confidence

Business confidence has rebounded from its lowest level in more than a year and could surge after newly appointed finance minister Tito Mboweni delivers the medium-term budget policy statement in October.

Business confidence has rebounded from its lowest level in more than a year and could surge after newly appointed finance minister Tito Mboweni delivers the medium-term budget policy statement in October.

Alongside the investment summit in the same week, the medium-term budget is expected to provide greater certainty, according to the SA Chamber of Commerce and Industry (Sacci).

The business confidence index, which assesses the business climate, rose by 2.8 points to 93.3 in September 2018, from 90.5 in August. This was from a base level of 100. Every five years, the index is set to 100 and it increases or decreases from that point. The index was last reset in 2015.

The index was compiled at the end of September and does not reflect the events of the past few days, including the resignation of Nhlanhla Nene as finance minister. The survey did, however, take into account the economic stimulus plan announced at the end of September to reignite the economy.

Nene was replaced by Tito Mboweni, whose appointment was well received in political and business sectors. The rand firmed 41c from an intraday low of R15.06 to the dollar on the day of the appointment.

Economists say a “credible” minister at the helm of the Treasury bodes well for business and investor confidence.

“Mboweni was an inspired choice to replace Nene and the decisiveness of the move amid market uncertainty was widely welcomed,” said NKC analyst Gary van Staden.

Mboweni’s appointment was a confidence-building and reassuring step for the economy, said North West University economist Raymond Parsons.

SA’s finances are in a perilous state and Mboweni would have to convince the country and markets that the Treasury is on top of the challenge, said Absa head of macroeconomic research Peter Worthington.