Diversified Industries continue to drive economic growth
Just over three weeks ago, we watched a meeting between President Ramaphosa and President Trump in the fabled Oval Office with mixed feelings. Some viewed the meeting as a bad omen for bilateral relations, while others viewed the calm demeanour and responses of President Ramaphosa as reflective of the seasoned statesman he is.
There is ongoing debate about what that meeting means in practical terms, but there is no question that the global order is under scrutiny and old norms are subject to question. This Is not necessarily a bad thing.
Our domestic growth is not immune to global winds of change and we have seen sectoral performance outperform expectations. For instance, the manufacturing sector has recently seen a year-on-year turnover increase bolstered by a more favourable business climate under the nascent Government of National Unity (GNU). South Africa has a relatively diversified industrial base, with manufacturing playing an important role in job creation and economic growth.
Industrialisation continues apace with key sectors such as automotive, manufacturing and healthcare benefiting from foreign investments as SA becomes an attractive investment destination that offsets some of the negative impacts of changes to international trade.
With structural headwinds turning to tailwinds, we see a lift in business and consumer confidence. Despite relatively subdued global growth, SA’s leading economic indicator appears to have turned up and we believe a reversal in headwinds (energy, higher short interest rates and inflation) to tailwinds (lower short interest rates, falling inflation in particular food and fuel prices) should drive a rebound in SA’s real GDP growth.
The SA Rand (ZAR) has outperformed peers in emerging markets and we expect the trend to continue. Further underpinning our optimism, Standard Bank’s Macroeconomics team forecasts a growth lift to 1.3% in 2025 and 1.7% in 2026 and 2.2% in 2027 with sectoral gains particularly in manufacturing leading the growth wave.
Meeting client needs where they are
The manufacturing industry is an energy-intensive industry with ongoing efforts to reduce the energy consumption and the costs of manufacturing processes. In response to mounting demands on our manufacturing client base, particularly those with greater working capital requirements, we are expanding our range of financial solutions aimed at enhancing working capital effectiveness.
We are utilising a broad range of solutions, such as cash flow management tools and supply chain financing, to assist corporate clients in optimising working capital. By extending payment cycles, lowering borrowing costs, and managing liquidity, these initiatives assist companies in increasing cash flow efficiency. As economic challenges like inflation, supply chain interruptions, and changes to tariffs continue to impact businesses, we anticipate more emphasis on assisting customers with their operational agility and financial well-being. These initiatives not only help businesses manage their liquidity more effectively but also support them in achieving greater operational efficiencies and sustainable growth.
Healthcare interventions and partnerships
Across Africa the lack of healthcare infrastructure contributes towards the high mortality rate across Africa. Early diagnosis is critical in decreasing the mortality rate however, first world solutions are often inappropriate for the conditions in Africa. At the spearhead of diagnosis is diagnostic imaging.
Standard Bank has strategically partnered with GE Healthcare, a global leader in diagnostic imaging equipment, to accelerate the distribution of cutting-edge technology by making USD 80 million available for funding these installations across the continent. Linking specialists, digital platforms and the correct diagnostic imaging equipment has helped achieve this in Kenya, case in point Bergman Ross and Partners.
Further investment into cutting-edge technology, along with support for specialists to start and grow practices in rural and urban communities across Africa, will make an important contribution to improving access to higher quality healthcare.
Supply chain risks are becoming more pronounced in today’s global economy, particularly as businesses face complex challenges related to operational disruptions, the availability of raw materials, technological adaptation, localised supply chain weaknesses, and workforce retention.
The manufacturing, automotive, and pharmaceutical, are among the sectors most vulnerable to supply chain risks due to their dependence on global supply networks, raw materials, and specialized components. In order to reduce risk exposure and boost agility, several sectors are responding by moving toward more robust, diversified, and localized supply chains and investing in digitalization, automation, and sustainable practices.
Banks and financial institutions, along with business partners, can play a critical role in supporting businesses by offering tailored financing options, such as working capital lines, supply chain financing, and trade finance solutions. The solutions offer corporates a mechanism whereby they reduce the client’s accounts payable without affecting working capital significantly. It can also strengthen supplier relationships by improving supplier cash flow, negotiate better payment terms, increase credit limits and early settlement discounts.
In 2021 Standard Bank, in conjunction with Addendum Financial Technologies (fintech partner), structured and implemented a platform-based supply chain finance solution to assist Omnia with unlocking working capital tied up in its supply chain, a first of its kind.
Digital transformation/automation a priority, with manufacturers adopting a more cost-conscious mindset, with upside opportunities for investment in plant and machinery and new product development to support ecosystems and platform initiatives.
In the healthcare sector, digital transformation and automation are becoming critical priorities as the industry adapts to changing demands, increases in cost pressures, and the need for more personalised, efficient, and scalable services. Healthcare manufacturers, in particular, are exploring automation and digital tools not only to improve operational efficiencies but also to create opportunities for innovation and growth in new product development and ecosystem partnerships.
Banks strategic positioning and partnership
Sustainable financing represents a transformative shift in how financial services operate, aiming to create a more resilient and equitable economy by integrating Environmental, Social and Governance (ESG) factors into investment strategies. Banks play a pivotal role in sustainable financing, acting as facilitators of capital flow towards environmentally and socially responsible projects.
To this end, Standard Bank was awarded the Africa`s first sustainability linked bond with Netcare in 2021, followed by several financing projects across the auto sector. Earlier this year, Motus and Standard Bank announced SA’s first ZAR ESG syndicated sustainability-linked facility, a testament to the bank’s leading capability in international lending syndications to raise FCY loan funding within and beyond the African continent on a bespoke and tailored approach for a South African headquartered corporate and ability to deliver holistic transaction solutions and in-depth and up-to-date market sustainable finance insight and execution expertise.
Prepared by
Junaid Jadwat, Head of Diversified Industries, Client Coverage, Standard Bank Group