The Future of Payments: What's Changing in South Africa in 2024?
In 2023, the South African economy experienced a confluence of contrasting economic indicators. A peak followed by a subsequent downward trend characterised both inflation and interest rates, with experts predicting that these rates would further decrease, offering prospects of a more stabilising economic environment. However, rolling power cuts and logistical bottlenecks at ports emerged as significant impediments, weighing heavily on the nation's economic output. Experts say that these obstacles may persist, setting the tone for a potentially challenging economic terrain in 2024.
The SA economy, like most global economies reliant on import and export dynamics, will face the inevitable influence of geopolitical uncertainties and conflicts in the Middle East and Eastern Europe, along with pressure on the broader global economic climate. However, in addition to these external factors, it is also important to implement some reform to tackle the infrastructural challenges that contribute to the country’s economic narrative. These challenges will play a pivotal role in the 2024 economic outlook for the country, alongside some uncertainty preceding the country's national elections.
In this article, we delve into some of the pivotal developments poised to shape South Africa's economy in 2024.
South African Reserve Bank’s (SARB) launches a low-value real-time digital payment service
The South African Reserve Bank (SARB) has taken a significant stride towards modernising the country's financial landscape by introducing a low-value real-time digital payment service. Despite 80% of South Africans holding bank accounts, a substantial portion of consumer transactions still relies on cash. Recognizing the need to enhance financial inclusion, South Africa is actively working towards this goal with the launch of PayShap. This innovative low-value, real-time rapid payment platform aims to expedite digital transactions, making them faster and more convenient while simultaneously reducing the dependence on cash within the economy.
PayShap was launched as part of a collaboration between BankservAfrica (the automated clearing house owned by South African commercial banks and the South African Reserve Bank, the country’s central bank), the Payments Association of South Africa and the South African banking community.
The scheme aligns the objectives of the South African Reserve Bank's to reform and modernise the country’s national payment system framework known as Vision 2025.
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Get startedInflation continues to ease
Experts forecast a gradual easing of inflation in the country. Starting from an estimated 5.8% in 2023, the inflation rate is projected to decline to 5.0% in the current year, with further anticipation of a decrease to 4.5% by 2025. This downward trend is expected to bring inflation within the comfort zone of the South African Reserve Bank (3%-6%). A contributing factor to this optimistic outlook is the expected reduction in fuel prices, a driver of cost inflation in recent years. Forecasts indicate that fuel prices are anticipated to decrease in the first quarter of 2024, offering relief to businesses and consumers alike.
This combined with modified levels of Eskom blackouts are to be significant contributors to providing the South African economy with a much-needed respite as it embarks on the New Year. Gradual stabilisation in the electricity supply is expected to alleviate the strain on businesses and households. The gradual stabilisation in the electricity supply is anticipated to alleviate the strain on businesses and households, playing a crucial role in sustaining economic activities.
Despite the presence of these positive indicators, challenges persist. While optimism surrounds the country’s economic prospects in 2024, success hinges on South Africa’s ability to navigate and surmount challenges related to electricity and transport infrastructure. Therefore, the strategic focus must shift towards accelerated implementation of reforms, policies and projects, steering South Africa towards a path of prosperity this year.
