Sentiment about South Africa has improved since the formation of a coalition government but the nation needs to be cautious about complacency, according to chief executive officers at two of the nation’s biggest financial-services companies.

While “the sentiment has changed,” not very much has altered for companies in their domestic operations, Sanlam CEO Paul Hanratty said at Bloomberg’s Future of Finance event in Johannesburg. “There are some tiny green shoots appearing that we need to nurture.”

Since the African National Congress aligned with business-friendly parties after losing its outright majority in May 29 elections, South African markets have been on a tear. The rand has gained 5% to the dollar, local-currency bonds have outpaced all peers in an emerging-market index with returns of 24% in greenback terms, and the Johannesburg Stock Exchange has hit successive record highs, delivering a 15.7% return in dollar terms.

If the country expedites reforms such as operational improvements at state-owned ports and freight-rail company Transnet and power utility Eskom, gross domestic product growth exceeding 3% by next year is doable, Discovery CEO Adrian Gore said.

Still, the country needs to be cautious about becoming complacent and thinking that the problems have been solved, said Hanratty.

While the nation has had no power cuts for more than six months following its worst year on record of outages in 2023, its electricity crisis isn’t yet over. Eskom still needs to build generation capacity to deal with increase in demand.

The constraints contributed to the economy expanding just 0.6% last year, the smallest increase since the 2020 contraction due to the Covid-19 pandemic. Gross domestic product has grown by an average of less than 1% over the past 10 years — insufficient to cut a 33.5% unemployment rate, among the world’s highest.