South Africa’s new multi-party government has an opportunity to boost economic growth and investment, the country’s Chamber of Commerce said, as it announced a slight recovery in business confidence over the last two months.

A measure of sentiment compiled by the South African Chamber of Commerce and Industry (Sacci) rose to 109.1 in July from 107.8 in May. The gauge, which is published every other month, averaged 111.2 during the first half of 2024, higher than the 109.8 recorded over the same period last year.

“There is now an opportunity to put the economy on an upward trajectory that fosters greater business and investor confidence,” the business group said in a statement Wednesday. “The broader representation and accountability in government have created an opportunity for efficient economic expansion, more employment opportunities, and increased inclusiveness.”

Sentiment has turned positive since May 29 elections cost the African National Congress (ANC) its outright majority for the first time in 30 years, pushing it to form a broad coalition with centrist parties including the Democratic Alliance and other smaller rivals.

Businesses were initially hesitant after the vote, worried that the ANC might form a pact with left leaning parties including the Economic Freedom Fighters or the uMkhonto weSizwe Party of former President Jacob Zuma, but they reacted positively after the formation of the more centrist alliance.

“The change in the political environment was reflected in the business climate that initially wavered in May but started to recover in June and July 2024,” Sacci said.

Under the new government of national unity, as the political formation is called locally, investors are anticipating an acceleration in key reforms and a pick up in economic growth after years of under performance.

Handicapped by chronic energy and logistical constraints and the impact of crime and corruption, Africa’s most industrialised economy has only managed average growth of 1% over the last decade.

Between June and July, business sentiment was boosted by an increase in ehicle sales and a stronger rand, Sacci said, while noting that lower merchandise import volumes and fewer foreign tourists had been a headwind.

On a year-on-year basis, the main index increased a meagre 1.8 points, reflecting the reality that economic growth in South Africa still remains inadequate and needs to accelerate, Sacci said.

“Such improvement should enhance more local and foreign fixed investment and thus a higher level of economic activity that can accommodate additional inclusiveness,” it said.