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Polity.org.za offers a unique take on news, with a focus on political, legal, economic and social issues in South Africa and Africa, as well as international affairs. Now you can listen to the top three articles on Polity at the end of each day.

  1. 3h ago

    South African inflation rises modestly but bigger fuel-driven jump seen in October

    South African inflation rises modestly but bigger fuel-driven jump seen in October South Africa's inflation rate rose modestly in September, data showed on Wednesday, but economists expect a sharper acceleration in October after fuel prices hit a record high. Headline consumer inflation ticked up to 4.5% year-on-year in September from 4.4% in August, moving further away from the central bank's 3% target. The figure was below a 4.7% forecast from economists polled by Reuters. Transport inflation accelerated to 10.8% from 8.8% in August, making it the largest contributor to the rise and accounting for around a third of headline inflation, South Africa's statistics agency said. South Africa imports most of its fuel, leaving it vulnerable to swings in global energy prices. Its regulated petrol price rose about 5% in September before surging 12% in October. ECONOMISTS DIVIDED ON FINAL 2026 RATE DECISION The central bank has raised its policy rate twice since the start of the Iran war, including at its last meeting in September. Economists are divided on what the bank will do in mid-November at its one remaining scheduled meeting of 2026. Nedbank economist Johannes Khosa expects another 25 basis point rate hike as inflation is projected to remain above the central bank's target until at least the last quarter of 2027. Bureau for Economic Research chief economist Lisette IJssel de Schepper said the bank could keep interest rates unchanged as underlying price pressures, reflected in the level of core inflation, are relatively contained. She said October's fuel price increase could push overall inflation above 5% at the next release. Trade unions and some political parties have called for the government to offer fuel price relief, along the lines of the levy reduction between April and June.

  2. 3h ago

    R10bn in temporary fuel-levy relief announced amid record fuel prices

    R10bn in temporary fuel-levy relief announced amid record fuel prices Finance Minister Enoch Godongwana announced another round of temporary reductions to the fuel levy in response to a surge in fuel prices to record levels, following global disruptions to supply that have arisen after the US and Israel declared war on Iran earlier in the year. The fuel levy for diesel will be reduced by R3 a litre from November 4 to December 1, 2026, while the fuel levy applicable to petrol will be reduced by R1.50 a litre over the same period. The diesel levy will then be reduced by R1.50 a litre and petrol by R1 a litre until January 5, 2027. "These measures will provide R10-billion in support, at a fiscal cost of R10-billion in foregone revenue. "To fund this support, the R10-billion that was transferred to the Central Energy Fund will be returned to the National Revenue Fund to finance this relief," the Minister stated in his Medium-Term Budget Policy Statement speech to lawmakers on Wednesday. Earlier in the year, temporary fuel-levy relief was also introduced between April to June at cost of about R22-billion. The National Treasury has reduced what it expects to collect from the fuel levy in 2026/27 by R30-billion; a figure that takes into account the direct cost of the relief provided, as well as behaviour changes in response to higher fuel prices which is reducing overall consumption. The latest relief measure comes amid record retail prices, with large hikes of above R3 a litre announced for both petrol and diesel in October, after crude oil prices rose to above $100/bl. The decision to extend further relief was based on a cost-benefit analysis that determined that the reduction in the fuel levy would be positive for households, consumption, inflation and growth. Any further relief beyond January 5 would be based on a similar assessment and would take into account the circumstances at the time as well as what space remained to provide relief in a fiscally neutral manner.

  3. 3h ago

    National Treasury lowers 2026 growth outlook to 1.2% warns of elevated risks

    National Treasury lowers 2026 growth outlook to 1.2% warns of elevated risks The National Treasury has lowered its growth outlook for 2026 to 1.2% from its 1.6% forecast outlined in the February Budget. In 2025, South Africa achieved growth of 1.1%, once again falling short of levels required to reduce unemployment and poverty. Growth is expected to reach 1.6% in 2027 and rise to 2% by 2029, which remains below the 3% growth target set under the Government-Business Partnership. Finance Minister Enoch Godongwana acknowledged in his Medium-Term Budget Policy Statement (MTBPS) address on Wednesday that the risks to growth remained elevated. "A prolonged conflict in the Middle East, alongside El Niño and its likely impact on producer costs and output, could further weaken domestic growth," he said. However, he argued that fiscal discipline and a lower inflation target were helping to contain borrowing costs and reduce South Africa's risk premium. While ongoing structural reforms, coupled with the focus on delivering public infrastructure, had the potential to place the economy on a "faster, more sustainable growth trajectory". "If we stay the course, growth could exceed 3% per annum," he asserted. The National Treasury also published three alternative scenarios to its baseline forecast, including: The domestic upside Scenario A, which models a successful implementation of the expanded Operation Vulindlela Phase II reforms, supported by higher public and private investment. This yields real GDP growth of 2.3% by the end of the medium term, compared with 2% in the baseline. Under the scenario, the level of real GDP is 3.1% higher than the baseline by 2034;The domestic upside Scenario B assumes a gradual improvement in the level and quality of public investment spending over the long term, driven by reforms that root out inefficiencies and strengthen collaboration with the private sector. Real GDP growth averages 1.8% over the medium term, compared with 1.6% in the baseline. By 2034, real GDP reaches a level which is 1.6% higher than the baseline; andThe global downside Scenario C, which assumes a re-escalation of geopolitical tensions in the Middle East in the first half of 2027, in line with the downside risk assessment in the IMF's latest World Economic Outlook, with elevated uncertainty persisting throughout the year. Real GDP growth averages 1.5% between 2026 and 2029, compared with 1.6% in the baseline. The National Treasury said in the MTBPS document that the risks to the outlook were tilted to the downside. "A prolonged stalemate or escalation of conflict in the Middle East could keep energy prices high and inflation elevated, while a reassessment of AI investment could tighten global financial conditions. "Domestically, infrastructure bottlenecks, weak confidence and limited fiscal space leave little room to cushion further shocks. "Conversely, a quicker resolution to the war, faster reforms or improved state capability could lift growth above current forecasts," the document states.

  4. 1d ago

    South Africa must prepare for potential loss of US trade benefits, Ramaphosa says

    South Africa must prepare for potential loss of US trade benefits, Ramaphosa says President Cyril Ramaphosa said on Monday that the country must prepare for its potential exclusion from the United States' duty-free trade initiative, the African Growth and Opportunity Act (AGOA), as relations between Washington and Pretoria have soured. AGOA gives eligible African countries duty-free access to the US market for thousands of products. South Africa has benefited from it for years. US President Donald Trump's administration has cracked down on South Africa for what Trump claims is its persecution of white people. South Africa's government says this is a falsehood spread by fringe groups. Ramaphosa said it remained to be seen whether South Africa would remain part of AGOA and his government was in discussions with US counterparts. Some US officials have suggested South Africa should be excluded. "I need, as President, to prepare us if it ever happens," Ramaphosa said. He said the impact on jobs would be "devastating" and he and Deputy President Paul Mashatile have been travelling around the world to explore alternative markets. Ramaphosa cited a recent trade agreement with China as a positive step. China introduced a zero-tariff scheme for qualifying South African goods in May.

  5. 1d ago

    BofA, BNP see South Africa rating upgrade after budget

    BofA, BNP see South Africa rating upgrade after budget South African Finance Minister Enoch Godongwana is expected to signal the country's commitment to fiscal discipline on Wednesday, with its debt-to-GDP ratio set to decline for the first time in more than two decades — potentially paving the way for a credit-rating upgrade as soon as next month. Four of 11 economists surveyed by Bloomberg, including those at Bank of America, Morgan Stanley, BNP Paribas SA and Old Mutual, anticipate an upgrade by year-end, while the rest see it coming in 2027. Moody's Ratings' and S&P Global Ratings' next reviews are scheduled for November 27, and Fitch Ratings' for December 11. "We view Moody's as the most likely agency to act, with a potential upgrade to Ba1, while an S&P upgrade to BB+ remains a closer call," Tatonga Rusike, BofA's sub-Saharan Africa economist, said. Fitch is in no rush after its upgrade in June, he said. Moody's said last week Africa's largest economy is heading for its first upgrade by the company since 2009, provided its fiscal performance continues to improve. Morgan Stanley expects S&P to raise South Africa's rating to BB+ next month and Moody's in early 2027. Both rating companies have South Africa on positive outlook, and an upgrade by either would lift the country to one notch below investment grade, putting it on the path to exit junk status. Investec Wealth & Investment International sees a greater than 50% chance the country regains its investment-grade credit rating within two years and BofA expects it to do so before 2029. Rating companies will need evidence of "a durable improvement in fiscal metrics, including lower deficits, falling government debt and firmer trend growth," Rusike said. When Godongwana delivers his medium-term budget policy statement at 2 pm in Cape Town on Wednesday, he's expected to show the National Treasury beating its consolidated budget-deficit forecast of 4% of GDP for 2026-27, with economists surveyed by Bloomberg estimating a shortfall of 3.8%. They also project the Treasury to have met its goal of stabilising debt in the year through March 2026. The debt-to-GDP ratio is forecast to decline to 77.5% this fiscal year, slightly slower than the Treasury's projected drop to 77.3%. "We are in a position where we have our public finances in order," Keabetswe Mojapelo, head of economic research at Old Mutual, said. South Africa's economy has largely withstood the fallout from the wars in Iran and Ukraine, while the government has kept spending in check despite heightened global uncertainty. That resilience, together with plans to introduce a fiscal anchor, is strengthening the case for a rating upgrade. "We've managed to weather this current shock quite well from a fiscal perspective and this is really unprecedented on the South African side because normally these kinds of shocks put us in a worse off position," Mojapelo said. "We have two rating agencies that have put us on a positive outlook and for the most part I don't see how from a fiscal perspective we get any worse off, even in managing these windfalls."

  6. 1d ago

    Structural, financial deficiencies in metros actively restricting economic growth – City Risk Monitor

    Structural, financial deficiencies in metros actively restricting economic growth – City Risk Monitor South Africa's major municipalities are facing severe financial pressure, driven by an inability to manage debt, crumbling infrastructure, and a crippling lack of long-term administrative planning. This is according to Independent Consultancy, the Paternoster Group's City Risk Monitor, which recently assessed nine of South Africa's ten major municipalities – including the eight metropolitan metros alongside Polokwane and Mbombela. Speaking to Polity.org, Paternoster Group founding partner Lawson Naidoo warned that structural and financial deficiencies are actively restricting economic growth and weakening investor confidence. The model evaluated four critical risk areas: financial sustainability; infrastructure and services; the development environment; and political/institutional risk. The findings show that the core infrastructure that residents and businesses depend on is failing. Naidoo pointed out that the financial health of the country's local government structure has been on a downward trajectory for years, a reality repeatedly mirrored in the Auditor-General's reports. Naidoo highlighted alarming statistics from the 2024/25 fiscal year, which indicated that only 35% of municipalities were classified as being in good financial health and that more than 50% lacked sufficient current assets to cover short-term liabilities. Also 72% suffered from inadequate cash flow to pay creditors on time. He explained that this fiscal collapse is heavily exacerbated by a combination of physical and financial distribution losses. Naidoo highlighted that municipalities are currently losing massive amounts of water and electricity owing to zero maintenance and illegal connections. "Only about half the water that a municipality uses is billed," Naidoo explained. Instead of investing in fundamental infrastructure upgrades to meet National Treasury norms, municipalities are bleeding cash into emergency, short-term stopgaps – such as hiring expensive water tankers – rather than fixing underlying pipe leakages and grid issues. Naidoo said for the private sector, the municipal decay translates directly into an increased cost of doing business. Escalating rates and tariffs are paired with extensive bureaucratic delays in approving building plans and issuing necessary regulatory permits. Furthermore, safety and security deficits continue to erode business confidence. Naidoo emphasised that long-term investment relies heavily on stability. "Businesses want to invest in places where there is certainty about the future direction of a municipal government and a municipal administration," he noted. He explained that a foundational flaw in the current local government framework is the uniform distribution of power. The Constitution allocates the exact same significant powers and responsibilities to all municipalities across the country, entirely disregarding their actual size, local revenue base, or administrative capacity to perform complex duties. Naidoo said this structural mismatch is further aggravated by localised political instability. The rise of volatile coalition governments across key metros has triggered a dangerous shift toward consumption spending – such as bloating staff costs – to satisfy short-term political promises, he explained. "When political leadership is not stable, we tend to see short-term spending prioritised over long-term investments," Naidoo stated. Ultimately, he said it is not a lack of financial resources, but a severe deficit in administrative capacity, planning, and political willpower that keeps South Africa's largest economic hubs anchored in a state of rolling crisis.

  7. 2d ago

    S Africa targets 1.3m unregistered children with early childhood development reforms

    S Africa targets 1.3m unregistered children with early childhood development reforms Government is hosting the second Bana Pele Leadership Summit in Gauteng this week, underscoring its commitment to expanding early childhood learning as a critical development priority and a vital tool to redress historical inequalities. In his weekly letter to the nation, President Cyril Ramaphosa emphasised that Grade R is now officially compulsory in South Africa, meaning children must acquire essential foundational skills by the age of five. Despite this policy, a staggering 1.3-million children aged three to five are currently not enrolled in any early learning programme. Ramaphosa pointed out a sharp divide in educational access based on socioeconomic status. "Most of these children live in poorer communities, where paying even a low fee for a child to attend an ECD [early childhood development] centre is a challenge. In contrast, children in better-resourced communities are far more likely to enter the foundation phase able to read for meaning and handle basic numeracy," he said. The Bana Pele campaign, led by the Department of Basic Education (DBE), aims to dismantle these disparities. Ramaphosa reiterated that every child, regardless of the circumstances of their birth, deserves an equal opportunity to learn and grow. Quality ECD shapes a child's cognitive, social, emotional, and behavioural growth, providing the bedrock for lifelong success. The second Bana Pele Summit brings together a diverse coalition of stakeholders, including government officials, practitioners, communities, business leaders, funders, and civil society. The summit will evaluate the country's progress toward a crucial milestone: ensuring all children between the ages of three and five have access to affordable, equitable, and quality early learning programmes by 2030. HOW IT WILL WORK To achieve this, the government has substantially increased its investment over the past two years by raising subsidies for ECD attendees and allocating resources for expansion. The State aims to reach an additional 300 000 children by 2027 and a further 900 000 by 2030. However, the President noted that funding alone cannot solve the "crisis" and said public resources must be directed to the communities that need them most. Through the Bana Pele Mass Registration Drive, thousands of previously unregistered early learning providers are being brought into the national system. This initiative provides the government with a clearer geographic mapping of early learning centres, allowing authorities to identify service gaps and deploy targeted support. Ultimately, these early learning reforms are part of a broader strategy to renew South Africa's socioeconomic architecture. Because early learning intersects with education, public health, social protection, and employment, its long-term benefits will ripple across the entire economy, Ramaphosa stressed.

  8. 2d ago

    South Africa on path to investment-grade rating, Investec says

    South Africa on path to investment-grade rating, Investec says South Africa stands a good chance of regaining its investment-grade credit rating within two years and next week's mid-term budget could take another step toward that goal, according to Investec Wealth & Investment International. The fund manager sees a more than 50% chance the country will restore its investment grade rating by 2028, propelled by economic reforms and fiscal discipline that have shifted sentiment after years of being shunned by investors. "A sufficiently credible medium-term budget policy statement could support an initial move by Moody's Ratings and S&P Global Ratings to one notch below investment grade" said investment strategist Osagyefo Mazwai. "If that progress is reinforced in the 2027 budget and 2027 MTBPS, an investment-grade rating by 2028 becomes achievable." Both ratings companies already have South Africa's credit assessment on a positive outlook. Finance Minister Enoch Godongwana will deliver the mid-term budget update on October 21 and is expected to show continued growth in the country's primary budget surplus – a gauge of how much revenue exceeds non-interest expenditure – amid stronger corporate tax receipts. He's also expected to lay out more details for a fiscal framework to ensure long-term budget discipline that keeps the ratio of government debt as a percentage of gross domestic product under control. The mid-term budget "needs to show that National Treasury is committed to a credible fiscal anchor, that the debt trajectory is moving decisively toward debt-to-GDP reduction, and that debt-service costs have peaked and can decline," Mazwai said. Credit-default-swap spreads suggest that markets are anticipating imminent upgrades to one notch below investment grade, Mazwai said. Moody's, which now rates South Africa Ba2 — two notches below investment grade — said earlier this week that the country is headed for its first credit-rating upgrade since 2009, provided it's fiscal performance continues to improve. The nation obtained a full house of junk ratings in 2020 when Moody's Ratings downgraded its debt assessment, leaving it without an investment-grade assessment for the first time in 25 years. More recently, sentiment has been warmed by the Treasury's success in keeping the budget on track and by the central bank lowering its inflation target to 3% last year, which was subsequently endorsed by Godongwana in a sign of government support. That's helped turn the page for investors after a decade of overspending under former President Jacob Zuma, who's nearly nine years in office was marred by corruption and mismanagement.

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Polity.org.za offers a unique take on news, with a focus on political, legal, economic and social issues in South Africa and Africa, as well as international affairs. Now you can listen to the top three articles on Polity at the end of each day.

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