The Deputy Minister noted that South Africa’s economy has begun to turn the corner. He outlined milestones already achieved as well as the work that remains to unlock sustained growth.
Signs of Stability, But Growth Remains Modest
While acknowledging that the full impact of current global developments on South Africa will unfold in coming months, Sarupen emphasised that long-lagging macroeconomic enhancements have now materialised, laying the foundation to restore confidence and boost growth.
These advances include significant strides in stabilising public debt, maintaining a sustained primary budget surplus, and lowering the inflation target. Notably, South Africa is currently among a small group of countries globally running a primary surplus, a strong indicator of fiscal discipline.
“Simply in the space of the macro economy, every lever that you could pull to maximise confidence and growth has been done. That sets the tone for what kind of reforms need to happen across the state,” he noted.
Although these developments contribute to a more predictable economic environment, growth remains subdued, with GDP projected at 1.4% to 1.6% for 2026.
Panellist Chris Hattingh, Executive Director at the Centre for Risk Analysis (CRA), which co-hosted the event, said that while South Africa has benefited from favourable global commodity cycles over the past decade, we do not address the fundamentals, and the economy remains vulnerable to external shocks.
“If globally the situation turns against us from a commodity price point of view and trade flows point of view, we do not have the kind of shock absorbers that other economies have and that exposes our business quite a bit more.”
To shift the trajectory, South Africa will need to achieve sustained annual growth of 3% to 4%, widely seen as necessary to attract meaningful investment inflows and drive economic expansion.
He added that, despite some improvements in stability, South Africa is not yet doing enough at a policy level to attract the scale of capital required. Economists and international organisations generally regard gross fixed capital formation of around 30% of GDP as necessary for emerging markets to achieve rapid, sustained growth. South Africa’s investment rate currently stands at roughly half that level.
Sequence of Reforms: Fixing the Economy’s Structural “Plumbing”
Deputy Minister Sarupen said reform is now dependent on the strength or weakness of individual ministers. “We know what needs to be done. The question is whether there is the political will by individual government ministers to do so.” Further to this, there is an important sequence in which structural changes must be implemented, referring to the need to fix the economy’s “plumbing”.
This includes addressing long-standing constraints in energy availability and pricing, improving freight rail and logistics networks and enhancing port efficiency and capacity.
Sarupen stated: “The plumbing of the economy is all managed through state-owned enterprises, good or bad, but because ours are vertically and horizontally integrated, we create single points of failure. And then you have red tape in our economy, which holds back another 0.5% of GDP.”
Panellists also pointed to cumbersome licensing requirements across municipal, provincial and national levels, as well as fragmented regulatory processes, which continue to result in significant costs to businesses.
Infrastructure, Investment and the Role of the Private Sector
There was broad support for recent interventions aimed at increasing private sector participation in key infrastructure sectors. South Africa has all but seen the end of loadshedding, several private operators signed agreements to run trains on Transnet lines and port activities has recorded its strongest cargo throughput growth since 2011.
From an investor perspective, South Africa’s geographic position continues to offer strategic advantages. As a strategic node along global trade routes, particularly around the Cape sea route, the country is well positioned to benefit from shifts in global shipping patterns. However, realising this potential will depend on the reliability and efficiency of its infrastructure.
Improving Governance and Service Delivery
Discussions also highlighted the importance of strengthening governance at municipal level, where service delivery challenges directly impact the cost of doing business.
Sarupen mentioned government initiatives to ringfence municipal revenues for essential services such as water and electricity as a step toward ensuring that funds are reinvested into infrastructure maintenance and development.
Over time, these improvements are expected to support more disciplined financial management and improved service delivery outcomes.
South Africa Welcomes Investors, But Compliance Matters
From the discussion it was clear that South Africa is widely regarded as a strategic gateway into Africa and remains one of the continent’s most industrialised economies, making it an attractive destination for foreign direct investment and regional expansion.
According to Richan Schwellnus, Senior Tax Attorney at Tax Consulting South Africa, international businesses entering the South African market should ensure they have a clear understanding of the country’s regulatory environment from the outset, particularly in relation to corporate structuring, tax residency and cross-border operations.
“Foreign companies expanding into South Africa, or multinational groups deploying expatriate employees into the country, should take South Africa’s tax, immigration and exchange control requirements into consideration. While these frameworks are well established, they can be complex for first-time entrants and often require a coordinated, multidisciplinary compliance approach.”
Businesses establishing a local presence in South Africa may need to address a range of regulatory obligations, including company registration requirements, exchange control approvals and reporting obligations with both the South African Reserve Bank and the South African Revenue Service.
Balancing Opportunity with Reform
The engagement underscored a constructive outlook for South Africa, with a strong focus on ongoing work to realise investment and growth potential.
Hattingh stressed that there is a lot of capital in South Africa. Despite all the challenges from around 2007, 2008 from a domestic policy point of view, policy choices, it is encouraging to see how resilient the middle class, businesses – big and medium to smaller businesses – are.
“Should we get some more tailwinds internationally and domestically if those reforms accelerate, then you do see the growth picking up because business already has that muscle memory built in and are able to weather the storms,” he said.
There is growing recognition that the country has made meaningful progress, largely under the Government of National Unity, which took office in June 2024. At the same time, structural challenges remain, particularly in infrastructure, regulatory efficiency, and economic growth.
Encouragingly, South Africa is moving in the right direction, with strengthening collaboration between government and the private sector providing an important foundation for stronger growth and unlocking private sector investment.
