The Forecast: South Africa 2018 is another in our series of forward-looking analysis and key-country assessments, that our lead or in-country consultants have produced. Below you will find a short summary of the full publication written by our lead South Africa expert Sarah Lockwood.
To receive your free copy of the full publication then please email Roger.Cabrera@menas.co.uk. If you would like to discuss the below contents or any further questions you might have in regards to business in South Africa with our consultants – then please contact us here.
We also held a South Africa briefing recently entitled The ANC’s December 2017 Elective Conference and the Future of South Africa – if you’d like to download the podcast then just click the title above.
DOMESTIC POLITICS AND POLICY
For South Africa, 2018 is likely to be a trying year with significant policy uncertainty.
Factional disputes will continue to dominate the ruling Africa National Congress (ANC). Its new president, Cyril Ramaphosa, will be hamstrung in his attempts to bring about change by the need to ensure unity among ANC ranks.
The result will be:
> confused policy-making;
> limited reform;
> paralysis around important or controversial decisions because of multifaceted ANC ambitions
> a disjointed and ineffective political environment.
Political violence is likely to continue, and even increase, across the country in the run-up to the 2019 elections. Both the eastern coastal province of KwaZulu-Natal and Mpumalanga will remain hotspots.
It is also likely that protests around service delivery will increase over the next twelve months, as is common in the run-up to elections.
Foreign policy is not expected to change substantially under Ramaphosa.
South Africa’s ability to contribute to African peacekeeping missions will continue to decline, and foreign policy will likely continue to emphasise south-south solidarity.
The economy will recover modestly in 2018, but policy uncertainty will continue to threaten growth in the long run. Investors will be very wary of individual events, leading to market instability and low business confidence.
Moody’s review of the local currency debt rating in February 2018 will be key.
A stagnating economy and Eskom’s two new coal-fired plants at Medupi and Kusile have led to an energy surplus, the first in many years. This surplus is likely to increase further over the next five year period as the remaining eight units at Medupi and Kusile are commissioned and brought online, and may require Eskom to start closing some of its highest cost power stations to save money.
Mining: We expect continued policy uncertainty in the mining sector this year, primarily due to ongoing factional battles within the ANC, and investigations into state capture in which Mineral Resources Minister Mosebenzi Zwane is heavily implicated.