While global trends, especially in the US, will influence South Africa’s economy, the nation must focus on overcoming internal limitations to position itself for stronger growth over the next few years, Nedbank chief economist Nicky Weimar said on Tuesday.
She said this a week before South Africa’s Finance Minister Enoch Godongwana delivers Budget 2025 and as banking group Nedbank opened a “bold new chapter” as it launched its mid-corporate banking offering.
Weimar said for South Africa, the challenge was navigating structural constraints that limit growth potential. While progress has been made with more stable electricity supply, largely due to private sector investment in alternative energy, Eskom’s struggles remain a significant bottleneck.
South Africa’s growth prospects are tied to resolving these issues, which will require efficient management and investment in key sectors.
“Our challenge is to deal with these constraints. If we can make work of that over the next four years, regardless of who’s in charge of the US, we will be in a better position. We’ve already seen some progress,” Weimar added.
Weimar touched on the disruption US President Donald Trump has brought in his second term of office, saying his power to pass policy was much more significant than in his first term.
Trump’s growth plan rests on tax relief, deregulation, tariffs and immigration controls and mass deportations.
While tax relief and deregulation were growth enhancing, Weimar said the other two policies was a bit more of a worry. Tariffs could lead to a trade war that leads to higher costs and higher inflation.
Weimar said if the US interest rates were higher, countries like South Africa carried a higher risk premium, which then limits “our space to cut interest rates and stimulate the economy”.
“When it comes to tariffs the biggest implication for us is Agoa, the preferential access that South Africa have to US markets. Although it has recently been reviewed, Trump can cancel it,” she said.
Weimar said the economists were pricing in a rate cut in July of 25 basis points by the Federal Reserve due to sticky inflation.
Nedbank mid-corporate banking proposition
Nedbank’s new offering is aimed at clients with a revenue turnover level per annum of R1 billion and above, targeting around 3 000 to 4 000 entities that are the “key middle” players in the economy.
Herman de Kock, Nedbank Commercial Banking’s executive head for planning and management, said at the launch of its new mid- corporate client offering on Tuesday that Nedbank aimed to be a partner that would help realise clients’ aspirations for growth.
De Kock said their mid-corporate offering aimed to provide a coverage model that presents a suite of business solutions with a complement of key advisory services and expert knowledge to support the client’s “growth thesis”.
He said this mid-corporate offering had to navigate a complex domestic and global economy.
“It is within this context we are bringing a mid-corporate value proposition to the market, clients with a proven track record, established balance sheet, with a very strong growth thesis and highly entrepreneurial,” he explained.
“This group of business that find themselves between a conventional business banking model and the corporate investment banking model, mostly consisting of JSE-listed entities. And within that middle that is where the mid-corporate banking client plays.”
Ciko Thomas, Nedbank Group managing executive of retail and business banking, said, “The mid-corporate sector is the beating heart of economic growth. It drives employment, and it’s the source of innovation and industry development.”
BUSINESS REPORT