AGP Executive Report

Economic Outlook: GDP rebasing puts South Africa’s economy at about R8.044-trillion, roughly 5% larger than previously estimated and widening its lead over Nigeria. But Reserve Bank data offer a mixed picture as inflation pressures build. Trade Risks: Pretoria says it is ready for any outcome as a US decision on South Africa’s AGOA access looms on November 2; the country is the programme’s largest beneficiary. Aviation Deal: Harith has won approval to buy FlySafair, setting up a major ownership change for one of South Africa’s biggest airlines. Logistics and Investment: South Africa’s logistics bill is forecast to reach R1.156-trillion this year, while business leaders warn that stalled anti-corruption reforms could put the country at renewed risk of financial-crime greylisting.

GDP Revision: Stats SA’s rebasing puts South Africa’s economy about 4.9% larger than previously estimated: 2022 GDP rises to R7 trillion, with wider coverage of activity including illegal mining. It improves the debt-to-GDP picture but does not mean the economy suddenly grew. Auto Industry: At SA Auto Week, industry leaders are weighing the shift towards Chinese brands, hybrids and electric vehicles as prices and fuel costs reshape buying habits. Aviation Deal: The Competition Tribunal approved Harith’s proposed R7bn purchase of FlySafair, subject to remaining approvals; the deal could close by year-end. Manufacturing: Aspen expects its factory earnings to more than double to over $100m in 2027, after restructuring helped offset the loss of a major contract. Trade and Industry: A study finds tariff investigations now take an average 40 months, up from six in 2019, risking outdated decisions for local businesses. Energy: South Africa’s first major gas-to-power tender attracted no successful bidders, as firms could not guarantee fuel supply—complicating plans to replace ageing coal capacity.

Energy Bottleneck: South Africa’s gas-to-power tender failed to appoint any preferred bidders, despite receiving proposals for 2,830MW. Bidders could not guarantee long-term gas supplies, leaving another setback for power plans. Prices and Rates: Inflation could reach 5% by year-end as fuel costs rise, while motorists await November price changes and the SARB’s next rate decision. Investment and Reform: Morocco has overtaken South Africa in investment rankings, even as local reform momentum improves, according to BLSA’s tracker. Trade and Exports: Agriculture posted a Q2 trade surplus of $2.14bn, but exporters face risks from weaker US sales, port constraints and a delayed Chinese cherry-export approval. South Africa’s logistics costs have also climbed to $69.6bn as rail failures raise export expenses. Johannesburg Renewal: Gauteng’s R16bn Kopanong Precinct project aims to regenerate Johannesburg’s CBD, while City Power is spending R236m to replace infrastructure damaged by cable theft.

Energy: South Africa’s latest gas-to-power tender produced no winning bids: all four proposals failed mandatory criteria, chiefly because they lacked long-term gas-supply assurances. The failed 2,000MW procurement underscores the challenge of attracting investment without reliable fuel arrangements. Public finances: The IMF praised Treasury’s spending restraint and debt-stabilisation efforts, but said faster reforms and more public investment are needed to lift growth. Trade and farming: Agriculture posted a $2.14bn trade surplus in the second quarter, up 11.6% year on year, but farmers plan their smallest corn planting area since 2019 amid rising input costs and El Niño drought concerns. Financial standing: Business Leadership South Africa warned the country risks returning to the FATF greylist, which could raise compliance costs and make cross-border payments and trade finance more difficult. Business funding: UK fintech Zvilo aims to provide up to R10bn in working capital to South African SMEs over three to five years, targeting suppliers waiting on payments from large companies.

Banking: FirstRand is pursuing a mid-sized Kenyan bank to expand its services in East Africa, where lenders are competing for a fast-growing market. Agriculture: Farmers plan to cut maize plantings by 12.4%, with white maize acreage down more than 18%, as El Niño risks combine with high input costs and weak prices. The record 4.3-million-tonne carryover offers a buffer, but a smaller harvest could push up food prices. Retail: Pick n Pay narrowed its first-half loss by 32%, signalling progress in its recovery. Water Infrastructure: Rand Water warns municipal debt has reached R23.7-billion, while nearly half of treated water is lost—threatening maintenance and service delivery. Investment: Morocco has overtaken South Africa in Africa’s investment rankings, adding pressure for the country to improve its appeal to investors.

Retail Recovery: Pick n Pay’s first-half supermarket loss narrowed by nearly a third, offering a sign of progress in its turnaround. Debt Outlook: Fitch warned that South Africa’s debt could rise again despite budget gains, with weak growth still a key risk. Banking: South Africa withdrew HSBC’s banking licence after 31 years, ending the global lender’s local banking operations. Trade and Investment: China-bound trade is growing after a zero-tariff deal, while South Africa expects China to approve cherry exports by year-end. Johannesburg’s Network: MTN says new technology can lift 5G capacity by making more efficient use of existing microwave spectrum. Public Contracts: The cidb has removed 75 contractors from its register in just over two years, including 13 more firms found to have misrepresented their credentials.

Financial Sector: South Africa’s plan to let fund managers invest 100% of portfolios offshore is part of a wider push to establish the country as a global financial centre. Retail: Pick n Pay is narrowing losses as its turnaround gathers pace, while online sales surge; the retailer’s next test is sustaining growth as new CEO Spencer Sonn prepares to take over. Pay TV: Canal+ and MultiChoice are cutting DStv prices and simplifying packages from November to win back subscribers amid competition from streaming services. Trade: South Africa’s trade with China is rising after a zero-tariff deal, offering exporters more certainty and an alternative market. Johannesburg: A proposed R16-billion Kopanong precinct aims to regenerate the CBD, as local businesses contend with crime and failing services. Public Finances: Government says its finances have improved and it has identified R11-billion in savings, but the challenge is turning fiscal gains into jobs and better services.

Retail Turnaround: Pick n Pay narrowed its half-year headline loss 31.9% to R299 million, with sales growth at Boxer helping lift group turnover 2.4% to R60.5 billion. Its core supermarkets remain loss-making. Power Investment: Cape Town’s new R220-million solar-and-storage plant is expected to save residents at least R400 million over 20 years and reduce reliance on Eskom. Business Climate: The city says 51 reforms have cut average wayleave approvals from 40 days to six, and business licensing times from 44 days to 18. Industrial Growth: Renergen’s Virginia project has achieved stable liquid helium production, with first deliveries being prepared. Trade and Infrastructure: South Africa’s zero-tariff deal with China is opening export opportunities, while work continues on a R797-million N7 upgrade due for completion in March.

Digital Payments: South Africa is BPC’s fastest-growing region as demand rises for digital payment services. Investment Rules: A proposed financial-centre framework would allow 100% offshore investment, opening a new route for international capital. Logistics: South Africa’s logistics bill is forecast to hit a record R1.16 trillion in 2026, adding pressure to trade and business costs. Public Finances: Treasury says debt is stabilising as it steps up infrastructure investment, while economists warn that debt restraint alone will not fix unemployment. Retail: Weak consumer spending is weighing on retailers ahead of the festive season, with the sector facing a tougher investment outlook. Trade: South Africa’s trade with China is growing after a zero-tariff deal, offering exporters an alternative market. Banking: HSBC’s South African banking licence has been withdrawn, completing its planned exit after 30 years; RMB took over its corporate and investment-banking business.

Clean Energy: Mark and Brett Levy’s BluEnergy has started building a R360-million solar plant at Springs Fresh Produce Market. The 25.6MW project will supply Ekurhuleni under a 20-year deal and is expected to generate enough power for about 6,000 households. Fuel Costs: Rising oil prices are eating into November’s fuel-levy relief: petrol may fall by only about 23 cents a litre, while diesel could drop by around R1.76. Public Finances: Treasury says a court ruling on the SRD grant could nearly double its annual cost, from R36-billion to R74-billion, putting added pressure on the budget. Tax Collection: SARS collected R2.01-trillion in 2025/26, its first time above R2-trillion, and is expanding digital tools and data checks to improve compliance and target illicit trade. Economic Outlook: Global energy and food price volatility threatens to raise costs for South African businesses, though stronger demand for transition-related metals could benefit parts of the mining sector.

Municipal Finances: Treasury wants ministerial approval for municipal pay rises and senior finance appointments, with penalties for councils that ignore spending rules. Tax and Growth: Government plans no income-tax or VAT hikes, but is proposing a 20% betting levy; the growth outlook remains weak at 1.2%. Energy Investment: A R360m solar plant at Springs Fresh Produce Market will sell power to Ekurhuleni under a 20-year deal, without upfront cost to the city. State-Owned Firms: SAA faces fresh scrutiny over its cash position after salary delays and questions about its finances. Trade and Industry: South Africa’s trade with China has surged following a zero-tariff deal, while the state is moving towards a takeover of Lakshmi Mittal’s struggling steel business.

Johannesburg Business: City Power says it owes contractors about R900 million and is working to clear overdue invoices after a protest over delayed payments. A Johannesburg company also won a court challenge against SARS over tax returns allegedly filed without its approval. Cost-of-Living Relief: Government’s R10 billion fuel-levy package will cut diesel levies by R3 a litre and petrol by R1.50 from 4 November to 1 December, aiming to ease pressure on households and businesses. Trade and Investment: South Africa’s trade with China is rising after a zero-tariff deal, while Special Economic Zones have secured investment commitments of more than R548 billion, projected to support over 60,000 permanent jobs once operational. Municipal Finances: Treasury plans tighter oversight of municipal spending and appointments as water-sector debt reaches R28 billion and service failures persist. The new tracker will assess all 144 water authorities.

Johannesburg Water: Rand Water will restrict supplies to Johannesburg and Tshwane after both metros exceeded their daily allocations, raising the risk of low pressure and interruptions as summer approaches. Jobs and Retail: Pick n Pay has dropped its proposed 22,000 job cuts after reaching a deal with SACCAWU. Trade and Investment: South Africa’s trade with China is surging after a zero-tariff deal, while a proposed framework would let local funds invest all their assets offshore. Logistics: Freight industry body SAFLA has launched a Gauteng chapter, with border delays and port bottlenecks high on its agenda; national logistics costs are forecast to reach R1.16-trillion. Electric Mobility: Bolt has launched electric ride-hailing in Johannesburg, expanding beyond Cape Town and targeting 500 EVs nationwide by December. Steel Industry: The state is moving towards a $610-million takeover of Lakshmi Mittal’s struggling steelmaker, with the IDC preparing to assume $430-million of debt.

China Trade: South African exports to China rose nearly 25% to $5.3 billion from May to August, as zero-tariff access lifted agricultural exports by more than 35%. Fuel Relief: The temporary levy cut is expected to lower diesel by about R1.70 a litre, but petrol by less than 25 cents; parties are calling for relief to last beyond January. Growth and Fiscal Policy: Treasury has cut its 2026 growth forecast to 1.2% and proposed a fiscal law to anchor spending, though critics warn it may not prevent politically driven commitments. AI Startups: A Vodacom-Bowmans analysis warns that costly, European-style AI rules could squeeze homegrown firms while larger global platforms absorb compliance costs.

Fiscal Outlook: National Treasury has cut planned bond auctions by R700-million after the mid-term budget and will introduce a buyback programme to manage upcoming debt redemptions. Finance Minister Enoch Godongwana says investment-grade status could be within reach by 2028, though the 2026 growth forecast has fallen to 1.2%. Temporary fuel-levy cuts offer some relief to motorists. Trade: South African exports to China rose nearly 25% year on year from May to August after Beijing’s zero-tariff offer, as Pretoria seeks to narrow its trade gap with its largest partner. Financial Hub: Treasury and the Reserve Bank have invited comment on draft rules for a Synthetic Financial Centre, designed to attract more international investment-management business to South Africa.

Budget and Growth: Godongwana cut South Africa’s 2026 growth forecast to 1.2%, even as stronger tax receipts and stabilising debt gave Treasury room for temporary fuel-levy cuts worth R10bn. The relief starts on 4 November; economists warn it may soften, not reverse, high pump prices. Tax Collection: SARS expects R4bn–R4.5bn of a R6.9bn appropriation to fund modernisation, including automated VAT assessments and tighter tracking of excisable goods. Trade and Industry: Exporters have a two-year zero-tariff window to sell qualifying goods in China; customs declarations rose 199% year on year from June to August. Chery is also preparing to build the Omoda C4 at the former Nissan plant in Rosslyn, turning it into a manufacturing and export base. Investment Climate: Godongwana blamed constitutional and regulatory hurdles for holding back investment, while mining’s higher tax payments—up more than 17% in the first half—highlight the revenue and growth potential of unlocking stalled projects.