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There were more electronic banking transactions in May, with positive monthly figures suggesting a better-performing second quarter. This is despite uncertainties in the months ahead due to the current Government of National Unity (GNU) discussions.
The BankservAfrica Economic Transactions Index (BETI), which measures the value of all electronic interbank transactions processed by BankservAfrica, recovered further in May 2024, contributing to a positive outlook for the economy in the second quarter.
“The BETI recovered further to an index level of 136.2 in May, reaching the highest level since June 2023 and improving by 1.4% on a monthly basis,” Shergeran Naidoo, BankservAfrica’s head of stakeholder engagements, says.
The index showed a third consecutive monthly increase and the latest BETI figure is an early signal that the economic performance in the second quarter could surpass the first quarter.
The standardised nominal value of transactions cleared through BankservAfrica in May 2024 increased to R1.301 trillion compared to R1.290 trillion in April, while the number of transactions moderated to 155.3 million compared to 157 million in April.
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“Since the end of March, South Africans were free of load shedding, which has created a more productive economic environment, while the additional activity relating to the national election in May would have also played a positive role, partly due to additional workers temporarily employed in the run-up to election day,” Elize Kruger, an independent economist, says.
The BETI’s historical performance shows that in 6 of the 9 elections under review, economic activity picked up in the month before the election month, while in 8 of the 9 cases (2024 included) the BETI increased in the election month itself.
Kruger says while other developments in the economy are also reflected in the BETI, election-related spending could be seen to make a meaningful impact on the monthly BETI in the period around election dates.
She points out that the BETI performance in the months after each election revealed that in 4 of the 8 cases, the BETI declined on a monthly basis, remained unchanged in one instance and only increased in 3 of the 8 cases (note: the 2024 data is not yet available). Therefore, some slack in the BETI in June 2024, should it be realised, would not be unexpected, Kruger says.
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“Some divergence was evident among other nowcast indicators during May. Both the Absa Purchasing Managers’ Index (PMI) and new vehicle sales numbers plummeted, with ‘uncertainty due to the election’s potential outcome’ cited as one of the underlying reasons.”
Kruger says the PMI made an abrupt U-turn, tumbling to 43.8 index points in May. According to the report of the index, numerous respondents noted that orders were put on hold as clients awaited the election results.
“Similarly, after only one positive figure in April following eight successive months of falling numbers, new vehicle sales, as reported by the industry association Naamsa, were down by 11.6% compared to a year earlier.
“On the other hand, the S&P Global South Africa Purchasing Managers’ Index (PMI®) moved sideways in May, with an index level of 50.4. The accompanying report indicated a stabilisation in demand conditions in the private sector, while supply chains appeared to be on a better footing in the second quarter.”
Among the different payment streams captured in the BETI, PayShap was again the star performer during May. The cumulative number of transactions surged to 30 million in May since its launch in March 2023, as the gradual migration of transactions from legacy payment rails to PayShap by some of the participating banks, has contributed to the rising transaction numbers.
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Overall, Kruger says, the BETI signals a continuation of positive momentum in economic activity in the first two months of the second quarter, a welcomed development following a dismal economic performance in the first quarter, with real gross domestic product (GDP) growth contracting by 0.1% compared to the previous quarter, as signalled by the BETI in March.
“However, with the ANC having lost its majority vote in the national election after 30 years at the helm, South Africa now enters unchartered territory with regard to coalition politics.
“The prevailing uncertainty about the outcome of negotiations and what that would mean for the economy’s prospects and economic policy in general, is keeping investors firmly in a ‘wait-and-see’ mode, especially relating to capital expenditure plans,” Kruger says.
