South Africans are apparently so elated at the exit of Jacob Zuma as president that their confidence as consumers has made an unprecedented jump to an all-time high.
The 34-point move in First National Bank’s index of consumers’ sentiment, to 26 in the first quarter, has outdone previous moments of satisfaction in recent history — such as the end of apartheid and the country’s 1995 win at the Rugby World Cup. Confidence specifically among black consumers is near the record reached after the first multiracial elections in 1994.
Cyril Ramaphosa’s ascent to power since December boosted business and investor sentiment and the rand after Zuma’s nine years in office eroded trust and dented the economy. The new president has pledged to clamp down on corruption and appointed a new cabinet, removing some ministers who were seen as compromised.
While the improvement in consumer sentiment is largely due to the change in the country’s leadership, the announcement of free education for poor students late last year and the pushing back of the day when Cape Town is projected to run out of water also boosted confidence, Mamello Matikinca, chief economist at FNB, told reporters in Johannesburg on Wednesday.
The euphoria of the political change has in some cases started to make way for demands of tangible improvements in the economy. Business confidence and the purchasing managers’ index dipped last month after it surged at the start of the year.
Ramaphosa’s “new dawn has clearly created optimism among consumers and the business community”, Matikinca said. “There is a risk that the consumer confidence index overshot in the first quarter on the back of positive sentiment, so this implies that there could be a negative correction in the second quarter.” — Reported by Odwa Mjo, (c) 2018 Bloomberg LP