South Africa’s Business Mood Gets a Lift, But the Middle East Still Worries

A recent survey conducted by Rand Merchant Bank in partnership with the Bureau of Economic Research shows that business confidence in South Africa rose by 3 points during the first quarter of this year, reaching its highest level since 2015—excluding the COVID recovery period.

What’s Driving Confidence?

• Steady government: A stable political environment has reassured firms.
• Friendly interest rates: Low borrowing costs have encouraged investment.
• Stronger rand: A stronger South African rand against the dollar has improved purchasing power.

Persistent Concerns

Despite the optimism, many companies remain uneasy:

• Middle East conflict: Ongoing hostilities threaten supply chains and could elevate energy costs across Africa.
• Logistics strain: President Cyril Ramaphosa has warned that the war is already impacting continental logistics and raising prices.

Political Context

President Ramaphosa’s February address tackled key issues—water shortages, crime, and unemployment—further bolstering business support for the government.

Economic Outlook

Economists argue that sustained confidence will require:

• Stronger demand
• Credible policies
• Real progress on structural reforms

While the strengthening rand and stable interest rates have cushioned the economy over the quarter, translating this positive sentiment into lasting growth will be a challenge in 2026.