STANDARD Bank has warned that South Africa could risk having its position as the gateway to the continent usurped by East African countries if it does not fix its energy crisis and logistics challenges.
The bank’s chief executive, Sim Tshabalala, said yesterday that structural reform implementation remained key to sustainable growth and job creation.
He said the ports and airports, as well as the rail and road system, were South Africa’s crown jewels, and were at the centre of the national competitive advantage.
“There needs to be an acceleration in refurbishing these so that South Africa can take its place as the entry point into the African continent,” Tshabalala said.
“We need acceleration in the resolutions of the challenges at Eskom.
“The resolution of power and logistics is crucial for the acceleration of business activity, and business and consumer confidence.”
Tshabalala also said that the implementation of the Africa free-trade area agreement should be accelerated so that “the government can knit itself closer together” and accelerate intra-Africa trade and investment.
“South Africa needs to position itself in the global value-chains that are reconfiguring themselves,” he said.
“Put differently, South Africa stands the risk of losing its position, particularly to East Africa, as all these global value-chains change.”
The largest bank in Africa yesterday reported a strong rebound in earnings for the six months ending June 30, declaring an interim dividend of 360 cents from a withheld dividend in the same period last year.
Headline earnings rose by 52 percent to R11.5 billion, with headline earnings per share rising by the same margin to 721.4c per share.
The group’s South African business recorded a strong recovery, particularly in the consumer and high net worth client segments, recording earnings of almost three times that of the corresponding period in 2020. Its Sub-Saharan Africa operations benefited from the global tailwinds, particularly in those countries with links to commodities.
Vestact Asset Management’s analyst and portfolio manager, Bright Khumalo, said that it was not yet time to pop the champagne – not until the economy rebounds post-vaccination roll-out.
“You have to consider the base when you look at financial stocks since most of them raised a lot of cash provisions for Covid-19 and all of that goes straight to the bottom line,” Khumalo said.
“It’s good news altogether for shareholders, but locally I would not be too excited about financial companies, because our own economic recovery has not come off the ground.”
The group said its performance trends in the second six months of the year and for the 12 months to December 31 this year would continue to be impacted by the base effects of 2020.
Tshabalala said the global backdrop was expected to remain favourable, supported by sustained low interest rates, continued fiscal stimulus and consumer demand, but unforeseen spending pressures were a risk to the fiscal outlook.
“Recovery paths across our markets of operation are expected to be uneven,” he said.
The group forecast its full year 2021 headline earnings per ordinary share and basic earnings per ordinary share to increase by more than 20 percent compared with those in the 12 months ended December 31, 2020.
Standard Bank shares closed 1.25 percent lower at R136.24 on the JSE yesterday.
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