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03/11/2026

3 scenarios for this week’s election – including the worst case for investors in South Africa.

Government
Bloomberg
2 Nov 2026

South Africa’s nationwide municipal elections on Wednesday hold few fears for investors, if market indicators are anything to go by.

But shifts in broad support for the major political parties could provide a read on the future of the governing coalition that has steered the country’s fiscal and economic reforms.

One-week implied volatility for the rand versus the dollar has declined since the start of October and is well below the one-year average level, suggesting little extra demand to hedge against price swings.

Government bond yields have fallen, and the cost of insuring the country’s debt against default is close to a 16-year low.

While the African National Congress—the country’s biggest political party—controls most municipalities, its support has declined nationally since 2016, when it attracted more than 50% of the vote.

In 2024, it got just 40% in parliamentary elections.

Polls across the board show the ANC losing even more support this time round, and perhaps ceding control of key metros to the main opposition Democratic Alliance.

For markets, however, what matters is where those votes land.

“The key question for investors is not so much the outcome of individual municipal elections, but what the results signal about the future of the Government of National Unity and the direction of national economic policy,” said Rajeev De Mello, a global macro portfolio manager at Gama Asset Management SA.

Investors should prepare for one of three potential scenarios, according to Metodi Tzanov, chief economist at Emergingmarketwatch:

No fear: ANC loses support, but GNU is intact

In this scenario, the ANC loses support nationally, but gains are dispersed among various smaller parties, without any opposition group achieving a major improvement.

That would leave the balance of power in the coalition government intact and the fiscal and reform agenda in place, according to Tzanov.

Investors have little to fear from this scenario, with the rand and government bonds likely to remain supported by positive sentiment about the economy.

“A further weakening of the ANC without a clear beneficiary would probably have a limited impact on the rand and government bonds,” de Mello said.

“More fragmented municipal governments could undermine local service delivery and investment, but unless the results threaten the stability of the national government, the market reaction should be relatively muted.”

Best case: ANC loses support, DA gains the upper hand

If the DA has a strong showing at the expense of the ANC, that would further cement the coalition government, though the balance of power in policymaking could shift toward the opposition parties.

Control of major metros like Cape Town and Johannesburg would also strengthen DA’s hand.

The government’s economic agenda would remain intact or even accelerate, while improving governance of important cities would be positive for investment and the economy.

That would support financial-market assets and the rand, according to Mark Bohlund, a senior credit research analyst at REDD Intelligence.

“This scenario would offer some upside to the equity and bond market and the rand with investors likely less concerned about developments in KwaZulu-Natal and the Eastern Cape,” provinces where populist parties have made inroads, he said.

With investors increasingly focused on institutional reform, fiscal discipline and governance, the DA gaining ground in major metros would be seen as a validation of the “GNU experiment” and evidence that reform-based politics can gain support, said Thierry Larose, an emerging-market debt portfolio manager at Vontobel Asset Management AG.

“A strong DA performance could reduce perceived political risk premiums,” Larose said. “The rand could appreciate” and government bonds “could outperform other EM local markets,” with the sovereign spread also narrowing as credit-rating upgrades become more likely, he said.

Worst case: ANC loses support, throws in with EFF and MK

The worst-case scenario for investors is if the ANC’s losses come against gains for the Economic Freedom Fighters and uMkhonto weSizwe Party, both of which oppose the coalition government and free markets, while the DA fails to strengthen its position.

The GNU would become vulnerable to factions within the ANC that disagree with its fiscal policies.

That would be negative for the currency as it would raise doubts about the durability of the coalition government, according to Lee Hardman, a senior forex strategist at MUFG Bank Ltd.

It would also likely weigh on bonds as the prudent fiscal policies that have driven gains over the past two years erode.

President Cyril Ramaphosa will stand down as leader of the ANC in late 2027, with behind-the-scenes jockeying to take over his position already in full flow.

If the ANC loses ground with voters in this week’s elections, and especially if it loses control of metros such as Johannesburg and Tshwane, the capital, it may weaken his ability to steer the selection of his successor toward someone who will continue reforms.

That’s a tail risk investors should be prepared for, according to Adriaan du Toit, the London-based head of emerging-market sovereign research at AllianceBernstein Ltd.

“South Africa’s election risk looks underpriced. Pragmatic outcomes are possible, but there are a few scenarios that would weigh on local assets,” he said.

“The election also starts the clock on a more volatile political backdrop before the ANC’s December 2027 conference.”

02/11/2026

Good news about interest rates in South Africa.

Finance
Bloomberg
30 Oct 2026

South Africa’s central bank chief said its models suggest that its current policy approach will bring inflation down to its 3% goal once the initial shocks triggered by the ongoing conflict in the Middle East fade.

“So far, our modelling indicates that prevailing policy settings are sufficient to return inflation to target after the initial shock has passed,” Lesetja Kganyago said in a prepared speech delivered to the Italian-South African Chamber of Trade and Industries on Thursday.

“We remain firmly focused on our mandate, and will act as needed to prevent higher inflation from becoming entrenched.”

South African officials last month unanimously voted to raise borrowing costs by 25 basis points to 7.25% as higher energy and fertiliser prices, spurred on by the wars in Iran and Ukraine, resurfaced.

While monetary policy cannot prevent the initial price increase caused by the fuel shock, “it must ensure that the temporary rise in inflation does not become entrenched in expectations, wage formation and broader price-setting behaviours,” Kganyago said.

Inflation quickened to 4.5% last month and has been above the central bank’s 3% target since March. The central bank will deliver its next interest-rate decision on 19 November.

The governor also said South Africa is turning a corner after years of low growth, engrained by deep and prolonged dysfunction in the political economy as state capacity was hollowed out during the scandal-marred nine-year presidency of Jacob Zuma.

“Several foundations are stronger today than they were only a few years ago,” Kganyago said. They include improved electricity supply and the country’s reforms in areas such as logistics and municipal services.

Fiscal credibility has also improved as the government has made progress in stopping debt growth, he said. “We have moved from credit rating downgrades to upgrades.”

Last week, Finance Minister Enoch Godongwana in his medium-term budget announced that South Africa’s debt as a percentage of gross domestic product has finally peaked and will start declining in the current fiscal year.

He also said revenue collections were expected to outperform previous expectations and the budget deficit would be smaller than previously forecast at 3.9% of GDP.

“These developments should lift confidence, investment and growth,” Kganyago said.

30/10/2026

South Africa’s economy is much bigger than you thought.

Finance
Staff Writer
29 Oct 2026

Stats SA has published its revised benchmarks for the country’s gross domestic product, and rebased the data to 2022, showing that the economy is over 5% larger than previously stated.

Rebasing and revising benchmarks for the economy is an international practice that aligns the metrics used to measure an economy’s scale with new developments across markets.

South Africa’s previous base year was 2015. While it is recommended that benchmark revisions and rebasing happen every 5 years, Stats SA delayed the process due to Covid-19.

With the economy normalising following the Covid-19 pandemic, the process has now been implemented.

The 2026 benchmarking and rebasing exercise changed the base year from 2015 to 2022, updated the source data, and transitioned to the 2018 classification of individual consumption by purpose.

The process also improved the methodology for the non-observed economy and owner-occupied rent.

As a result of the changes, the size of South Africa’s economy in 2022 was raised to R6,990 billion, up by
around 4.9% from the previously published R6,667 billion.

The largest change occurred in the mining industry (up by 12.5%). This was due to the inclusion and better coverage of illegal mining.

The second-largest change occurred in finance, real estate, and business services (up by 9.1%). This was primarily due to improved methodology for compiling owner-occupied housing estimates in real estate activities.

In the context of 2025 (the latest full year), South Africa’s economy is 5.3% larger than previously reported, now captured at R8,044 billion, versus R7,642 billion before.

Notably, the revisions and rebasing also impact South Africa’s GDP growth over the years.

With the new basis, the 2.1% growth recorded in 2022 was actually marginally higher at 2.2%. The 0.8% growth in 2023 was 0.2 percentage points lower, at 0.6%.

2024’s economic growth was unchanged at 0.5%, and 2025’s growth, which was celebrated for pushing past 1% at 1.1%, was actually only 0.9%.

Different but still the same
Importantly, Stats SA noted that the rebasing and benchmarking revisions don’t fundamentally change the makeup of the economy—they just give a clearer and more accurate picture of it.

“Benchmarking and rebasing refined the measurement of the economy without materially changing its
sectoral composition,” it said.

The finance, real estate and business services industry remains the largest contributor to the economy (21.8%).

Four industries strengthened their contribution to the economy, namely:

Finance, real estate and business services (0.9 of a percentage point),
Mining and quarrying (0.5 of a percentage point),
Trade, catering and accommodation (0.3 of a percentage point) and
Transport, storage and communication (0.1 of a percentage point).
Manufacturing, personal services, electricity, gas and water, and general government services came in weaker. The rest were relatively flat.

On the demand side, household final consumption expenditure saw the largest revision, and the non-observed (informal) economy has become a key contributor at 8.7%.

This economy now excludes non-profit institutions, which are now counted as a new formal industry.

North-West University Business School professor Raymond Parsons said the changes to South Africa’s GDP data show that the country’s economy is resilient, but also flags lagging reforms.

“The services sector seems to have done most of the heavy lifting to anchor economic activity, and household consumption is still revealed as a vital engine of growth,” he said.

“Fixed investment, on the other hand, remains a lagging factor.”

Parsons said the changes do not drastically rewrite the fiscal space in South Africa but will provide technical ‘breathing room’ for measures such as stabilising South Africa’s public debt.

Johann Els, Chief Economist at PSG Financial Services, said that, based on the revised GDP estimates, the gross debt ratio for the current fiscal year could fall from 78.2% to an estimated 74.5% of GDP.

The consolidated budget deficit could fall from 3.9% to an estimated 3.7% of GDP, while the primary surplus could ease from 1.7% to an estimated 1.6%.

“These are improvements in the ratios, not in the actual rand amounts of government borrowing or spending,” Els noted.

Importantly, despite the broader positive outlook, the data “still reveals vulnerabilities at various levels,” Parsons said.

“The headwinds and tailwinds that need to be navigated by SA remain the same,” he said.

“The revised GDP picture emphasises why accelerating the pace and implementation of key structural reforms are nonetheless still needed to unlock SA’s true economic potential, if South Africa is to break out of its current narrow 1%-2% growth corridor.”

29/10/2026

Plan to cut petrol prices by 22% in South Africa.

Energy
Staff Writer
28 Oct 2026

The Automobile Association has thrown its weight behind Finance Minister Enoch Godongwana’s plan to phase out fuel taxes in South Africa, saying it is long overdue.

The group was responding to a recent interview on 702, where the minister said the country needs to “find a way of phasing out” the general fuel levy and Road Accident Fund (RAF) levy in petrol prices.

Godongwana said that the fuel levy brings in approximately R80 billion, while the RAF levy is funding the struggling insurance model.

Fuel prices in South Africa comprise the basic price—around 58% of the total at current inflated rates—while taxes make up the remaining 42%.

At R4.16/R4.29 and R2.25, respectively, the general fuel (diesel/petrol) and RAF levies add a combined R6.41/R6.54 to a litre of diesel and petrol, accounting for around 22% of the total price.

The AA noted that a motorist filling a 50-litre tank pays about R329 in levies. A company running 100 petrol vehicles, each refuelled once a week, pays about R1.7 million a year.

The intention to phase out these two levies “is a long overdue and welcome call,” said Bobby Ramagwede, CEO of the AA.

“Fuel taxes land on everyone who moves: the commuter in a taxi, the business running a fleet, and the worker who pays to get to the job that pays for the journey.”

However, he said the government needs to do much more and go much further in reviewing its pricing strategy.

Specifically, he said the basic fuel price needs the same scrutiny as the levies.

“The basic fuel price is the biggest single part of what motorists pay. It reflects what it would cost to buy fuel on international markets and ship it to South Africa,” he said.

“The government should remove the levies the minister has named, and review the basic fuel price formula in public.”

More needs to be done
The National Treasury previously noted that the fuel composition formula was being reviewed as a longer-term strategy to counter rising fuel prices.

However, this would be looking at retailer and wholesaler margins and other smaller levies, not the basic fuel price formula itself.

The Department of Mineral and Petroleum Resources, not Treasury, sets the basic fuel price through a formula.

The AA said there should be a public review of this formula to ensure it is up to date and suited to the country’s needs.

The group also acknowledged the glaring problem with getting rid of the taxes or fiddling with the levy structures.

Godongwana said that phasing out the general fuel levy would leave a gap of about R80 billion, which would have to be closed.

This would imply the need to collect revenue elsewhere.

This has been demonstrated by the Department of Transport’s investigation into applying the RAF levy in more places to counter declines in fuel collections.

However, the AA said that South Africa’s problem isn’t in revenue collection.

“I have long held the view that the problem is. expense management and budget allocation,” said Ramagwede.

“Our fiscus is porous. That needs to be fixed if we want interventions like this one to succeed.”

The AA head said that the RAF itself is an unnecessary burden, and that South Africa does not need a central fund to cater for road injuries.

“We need to deal with the root causes: poor road user behaviour, decaying infrastructure and questionable vehicles,” he said.

“Improve those, and the state carries less of the cost of compensating the people hurt in crashes.”

He said that South Africa should adopt the model of compulsory third-party insurance to resolve the issue, as has been implemented in developed economies.

28/10/2026

International agency raises red flags for South Africa.

Finance
Bloomberg
27 Oct 2026

Fitch Ratings expects South Africa’s debt as a percentage of gross domestic product to start rising again in the year through March 2029, mainly due to weak economic growth, challenging National Treasury and Moody’s Ratings’ projections.

Fitch still expects debt to stabilise at about 78% of GDP over the next two fiscal years, a key factor behind its June decision to upgrade South Africa to BB, two notches below investment grade, with a stable outlook, it said in a statement on Monday.

“Nevertheless, unlike the government, we expect debt to GDP to very modestly rise again” in 2028-29 to 79% of GDP, it said.

South African Finance Minister Enoch Godongwana, in his medium-term budget statement last week, said that debt peaked at 78.4% of GDP in 2025-26 and will decline to 76.6% by 2029-30.

Moody’s also sees debt on a downward path. The company, whose measure includes most government guarantees to state-owned enterprises, said Friday that debt peaked in the last fiscal year and is set for a “clear, albeit gradual” decline.

Moody’s described the budget update as credit-positive, as it shows fiscal consolidation remains on track despite higher oil prices, tighter monetary policy, and weaker nominal GDP growth than assumed in February.

But it cautioned that the nation has limited fiscal space to absorb shocks. Moody’s also rates South Africa two notches below investment grade, with a positive outlook.

Its next review of South Africa is expected on 27 November, and Fitch Ratings’ on 11 December.

27/10/2026

Dawie Roodt’s reality check for anyone paying tax in South Africa.

Finance
Jonathan Hoyle
26 Oct 2026

While higher taxes were not discussed during the recent Medium-Term Budget Policy Statement (MTBPS), the tax burden on South Africa has still increased.

During the recent “mini-budget”, Finance Minister Enoch Godongwana did not mention any new general taxes or changes to the current general tax and VAT regimes.

The only new tax mentioned was the new National Online Gambling Tax, which Godongwana said would be detailed in the 2027 budget.

While the MTBPS is not typically focused on revenue or new tax measures, it is often used as an indicator for future changes.

This year’s speech did not indicate that the Treasury would need to implement new tax measures, but rather suggested that the government had higher-than-anticipated revenue.

This overrun allowed the government to increase its expenditure for the remainder of the financial year by approximately R45.5 billion.

While the MTBPS did not indicate any new taxes for South Africa, Efficient Wealth Chief Economist Dawie Roodt said South Africans are still paying higher taxes.

Speaking to Alec Hogg on Biznews, Roodt said the increased government revenue came from a more aggressive South African Revenue Service (SARS).

This means that, while taxes themselves have not increased, the amount of tax being collected from South Africans has.

“Tax rates are not going up, but the tax take is going up because of a stronger SARS,” Roodt said, also noting that higher commodity prices had given the government a windfall.

He also raised concerns about what a higher tax take could mean for South Africa’s economy, which is already struggling to grow.

“You are reducing the fiscal deficit not by spending less, but by taking more out of the economy,” he said. “In the process, you are increasing the tax burden on the economy.”

In 2025, South Africa’s GDP growth was 1.1%, below that of many other emerging markets, with 2026 economic growth initially forecast at 1.6%.

During the MTBPS, the 2026 forecast was revised downward to 1.2% due to challenging global economic conditions.

Roodt warned that South Africa’s economic growth could be lower than 1.2% for the year and could even fall below 1%.

“The major concern is economic growth of around 1%, and I don’t even think we will see 1%,” he said.

An aggressive SARS.

Roodt highlighted that SARS had become more aggressive with its collections recently, leading to the service having higher-than-expected revenue for the year.

By the end of September 2026, SARS said it had collected R15.5 billion, or 1.6%, more than had been anticipated in South Africa’s February budget.

The revenue service attributed this increase to factors such as strong corporate tax and lower-than-estimated VAT refunds.

Roodt warned that higher collections were not a sustainable method for growing tax income, with economic growth necessary to increase government revenue.

SARS echoed Roodt’s sentiment that economic growth is important for increasing government revenue and said it is necessary for sustainable revenue expansion.

“The year-to-date outcome demonstrates the resilience of South Africa’s revenue system,” the revenue service said.

“However, as reflected in the Minister’s speech, sustainable revenue growth ultimately depends on economic expansion, investment, job creation and broad-based compliance.”

While Roodt warned that the increased tax collection could be seen as a higher burden on South Africans, SARS said its increased revenue protected taxpayers.

“Every rand recovered through compliance interventions protects honest taxpayers and strengthens the fiscal framework,” SARS commissioner Johnstone Makhubu said.

“Compliance is one of the most effective tools available to safeguard the integrity of the tax and customs ecosystem.”

In the MTBPS, Godongwana said tax revenue is expected to increase by 6.1%, which Makhubu said was a challenge SARS would meet.

“The Minister has challenged all 14 500 SARS employees to make every effort to collect the resources needed to make South Africa work,” he said. “I am confident that Team SARS will answer the nation’s call.”

26/10/2026

Godongwana: SA’s Constitution, red tape stall investment.

23/10/2026

New rules for international investments coming.

Finance
Bloomberg
22 Oct 2026

South Africa proposed rules that would allow local asset managers to oversee foreign investments from the country without being subject to their own offshore limits, advancing a plan to strengthen its position as a financial hub for the continent.

Approved institutions would be able to manage qualifying foreign portfolios and conduct related foreign-currency activity from South Africa under the first phase of the so-called Synthetic Financial Centre, the central bank said in a draft framework published on Wednesday.

The proposal, which is open for public comment until 30 November, would also allow qualifying private equity fund managers to take part.

An estimated R10 trillion of South African savings is currently managed offshore, according to Operation Phumelela, a public-private initiative established in 2024 to find ways to boost financial-sector competitiveness through reforms.

It includes National Treasury officials and leaders in the finance industry.

The proposed framework may allow more of the management to take place in South Africa, even when the underlying assets remain offshore.

Investors would remain subject to their applicable prudential foreign-investment limits.

“Such reforms are a logical end point to improving competitiveness and match the capabilities of Mauritius, Dubai and latterly Rwanda, though we anticipate these will take longer to consolidate,” Operation Phumelela — which means succeed in isiZulu — said in February, when the National Treasury first announced the plan in its budget.

“These reforms are a major step forward for the South African financial sector,” Leila Fourie, then chief executive officer of JSE and chair of Operation Phumelela, said at the time.

“They enable us to bring trillions of rands in South African savings – currently managed offshore – back home.”

22/10/2026

Petrol price relief announced for South Africa.

Budget Speech
Staff Writer
21 Oct 2026

Finance Minister Enoch Godongwana has announced another round of fuel price relief, through cutting fuel levies from 4 November.

The minister announced that the fuel levy will be temporarily reduced by R3 per litre for diesel and R1.50 per litre for petrol from 4 November 2026 up until 1 December 2026.

Thereafter, the relief will continue at a lower amount until 5 January 2027.

The diesel levy will be reduced by R1.50 per litre, and the petrol levy by R1 per litre.

“These measures will provide R10 billion in support, at a fiscal cost of R10 billion in foregone revenue,” Godongwana said.

To fund the relief, the R10 billion that was transferred to the Central Energy Fund will be returned to the National Revenue Fund and put into the Contingency Reserve.

“This intervention will help ease cost-of-living pressures without compromising the sustainability of the budget,” the finance minister said.

The relief follows months of significant price hikes in petrol and diesel, with another large increase lined up for November.

Central Energy Fund data through 20 October indicates average under-recoveries of approximately R1.52/litre for petrol 95 and R1.25/litre for diesel.

Petrol and diesel prices hit record highs in October, after a R3.33 hike took petrol to over R30 per litre for the first time.

The coming relief to prices follows a similar move by the Treasury earlier this year, where it cut R3 per litre from the general fuel levy in April.

Record high prices still on the cards
While the relief from Treasury will be welcomed by consumers and various groups that have been calling for it, fuel prices remain extremely elevated.

Notably, at current recovery levels, the November relief is not enough to fully eliminate the under-recovery in petrol, with 2 cents per litre still in the red.

Put another way, if the current recovery levels persist—or get worse—petrol prices are still headed for another record high.

The picture for diesel is much better, with the R3 per litre relief seen swinging what was to be a price hike into a price cut.

Another point worth noting is that petrol prices are still well over R10 per litre higher than before the US-Iran War broke out in February/March.

Diesel prices are more than R13 per litre higher over the same period, with the coming relief factored in.

Post-Iran War price adjustments

21/10/2026

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

Finance Minister Enoch Godongwana will deliver the mid-term budget update on October 21.

By Adelaide Changole, Bloomberg · 19 Oct 2026, 08:43

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.

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