The South African economy could be growing at a rate of 3% if it did not have the impacts of rolling power cuts and logistical constraints throttling growth, Standard Bank Group CEO Sim Tshabalala said on Thursday.
He noted that the lender’s operations are growing significantly faster in its rest of Africa regions than in its domestic market.
The bank, which is South Africa’s largest by assets and has the largest African footprint among its peers in the country, saw profits soar by more than a third during the first half of 2023, and said its Africa regions franchise performed well and contributed 44% to the larger group’s earnings.
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“South Africa can grow at roughly 3% if the electricity and logistics problems were to be resolved. In that case, the African operations would not grow significantly faster than South Africa,” said Tshabalala, who was speaking during a media briefing post the release of the bank’s interim results for the period to 30 June 2023.
He said the African continent is likely to see economic growth of 3.5% this year and 4% in the near to medium term, arguing that the ‘rest of Africa’ markets will grow significantly faster than South Africa.
“We know that Nigeria and South Africa are the laggards in sub-Saharan Africa in terms of GDP growth, so it’s natural that in a country that’s growing 1%, which is your headquarters [South Africa] – if other countries are growing 3% to 5%, those businesses will grow faster than the South African operations, [and] all of that is key,” he said.
The bank’s own projections are that South Africa’s GDP will grow 0.8% this year, which is double the South African Reserve Bank forecasts and chirpier than the International Monetary Fund’s near-zero growth expectations.
Standard Bank’s headline earnings jumped 35% to R21.2 billion, with its Africa regions franchise banking earnings seeing growth of 65%, relative to 17% (R8.4 billion) in South Africa.
The bank said its top six contributors to profit growth in its Africa regions were Ghana, Kenya, Mozambique, Nigeria, Uganda and Zimbabwe.
The company has a strong Africa focus, led by a Corporate and Investment Banking (CIB) strategy. But in recent years, the company’s retail banking business has been making significant progress, Arno Daehnke, Standard Bank’s group financial director, said.
“The growth [in African operations] has been stronger than expected … What I am particularly pleased about is the progress we’re making in our retail business as well as our business and commercial opportunities in that network of countries,” Daehnke said.
He said going forward, growth is going to stem from these businesses while CIB continues to deliver its strong franchise growth.
Tshabalala said he hopes structural reforms such as the unbundling of power utility Eskom and the privatisation of Durban Container Terminal Pier 2 will continue apace.
Read: Navigating new waters: The privatisation of Transnet’s Durban Container Terminal Pier 2
He said while logistical constraints and South Africa’s energy woes have continued to weigh on sentiment, progress has been made in diversifying the electricity supply and logistics.
“Based on what is known about investment in new generation, it is reasonable to hope that power shortages will ease considerably over the next year.”
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