How Policy Credibility Has Enhanced Resilience in South Africa’s Economy

The escalating tensions between Israel and Iran have once again brought geopolitical risks to the forefront of global discussions. Amidst these developments, the resilience of the South African economy has emerged prominently, with the rand showing notable strength compared to past global crises.

This robustness is primarily due to a strategic enhancement in policy credibility, which encompasses a lower inflation target, a primary budget surplus that has been on the rise since 2023/24 following 15 years of deficits, and a fiscal outlook projecting that government debt will peak at 78.9% of GDP this year and decline towards 75% by 2030.

At last week’s African Economic Conference in Abidjan, Konstantin Makrelov, the newly appointed head of economic research at the Reserve Bank, highlighted the country’s improved fiscal indicators as a crucial element of its resilience.

He noted that South Africa is significantly better equipped to manage economic shocks, thanks to sound fiscal and monetary policies, in contrast to scenarios characterized by increasing debt-to-GDP ratios or high inflation. He referenced the market’s harsh response to the 2015 ousting of finance minister Nhlanhla Nene as an illustration of the challenges involved in regaining lost credibility.

Fiscal discipline has also led to credit rating improvements: in November 2025, S&P upgraded South Africa’s long-term foreign currency rating for the first time in two decades by one notch.

Likewise, Moody’s adjusted its outlook from stable to positive in late May 2026, while on June 5, Fitch elevated South Africa’s long-term credit rating for the first time in 21 years.

Advancements in the financial sector, particularly those addressing FATF obligations, have strengthened this resilience.

The Corporation for Deposit Insurance has made deposit insurance operational, and the country has improved its emergency liquidity and resolution frameworks.

These reforms have fortified an already sophisticated and esteemed financial services sector, featuring robust companies and institutions such as the Reserve Bank, National Treasury, and Prudential Authority.

Fundzi Tshazibana, the CEO of the Prudential Authority, remarked that this strength acted as a buffer during the Iran conflict, making South Africa more resilient to external shocks than it was during the Covid-19 pandemic or the market upheaval following Russia’s invasion of Ukraine.

This resilience is now being extended to fuel security.

Gwede Mantashe, Minister of Mineral and Petroleum Resources, has unveiled a draft Strategic Petroleum Stocks Policy aimed at transitioning South Africa from a voluntary fuel stockholding approach.

The draft mandates the state to sustain 60 days of strategic crude and refined reserves, with private wholesalers bearing the cost of an additional 21 days—the first increase in strategic reserves since the 1970s.

Minister Mantashe’s proposed intervention is a progressive step.

It also addresses a historical error: the 2015/16 sale of 10 million barrels from the country’s strategic oil reserves at discounted prices, which was later deemed unlawful by the Western Cape High Court, with no criminal charges brought in this case.

In another encouraging development for South Africa, Toyota introduced the ninth-generation Hilux at its Prospecton plant in Durban last week, supported by a R10.4bn investment for retooling—the largest single-product investment in the company’s South African operations.

This reflects confidence as other markets compete for such investments.

President Cyril Ramaphosa’s comments during the launch were particularly inspiring.

He mentioned that South Africa’s essential minerals, coupled with advanced manufacturing and local beneficiation, position the country as a promising “leading global hub for future mobility.”

President Ramaphosa added: “To fully unlock this potential, we must continue to improve the efficiency of our logistics system.

“Reliable ports. Efficient railways. Modern infrastructure.

“These… are critical to our global competitiveness.”

Though he may come across as overly optimistic, he rightly points out that seizing these opportunities depends on the vigorous pursuit of necessary reforms.

In this context, we will soon publish the results of the BLSA Reform Tracker for April-June. While there is some encouraging news, certain areas still raise concerns.

One significant challenge facing South Africa’s ambitious reform agenda, particularly in key sectors like energy, transport, water, and local government, is its complexity. These reforms frequently necessitate multiple layers of coordination and require time to implement, which means results are likely to manifest over the long term.

In times of setbacks, I remind myself that these efforts are aimed more for our children and grandchildren than for our own generation.

Thus, it is uplifting to observe that we are beginning to reap some benefits from this challenging journey.

The more components of this extensive reform program that are successfully executed, the closer we will come to establishing an efficient backbone for the economy, enabling businesses to operate effectively and drive accelerated economic growth.

Ultimately, that is the best strategy for job creation and a meaningful reduction in the unemployment rate.

Although we cannot dictate global events, and further external shocks are likely, we can manage our preparedness for the next crisis.

We are making solid progress in fiscal matters and moving steadily in a positive direction with reforms.

The more unified we become as a nation, the more effectively we can tackle challenges and lay the groundwork for future generations to flourish.

*This column was first published in the Business Leadership South Africa (BLSA) weekly newsletter. The author, Busisiwe “Busi” Mavuso, is the CEO of BLSA.

*The views Busi Mavuso expresses in this column do not necessarily reflect those of The Bulrushes