{"id":875223,"date":"2026-09-14T10:18:58","date_gmt":"2026-09-14T08:18:58","guid":{"rendered":"https:\/\/businesstech.co.za\/news\/?p=875223"},"modified":"2026-09-14T10:19:01","modified_gmt":"2026-09-14T08:19:01","slug":"harsh-reality-check-for-south-africa-2","status":"publish","type":"post","link":"https:\/\/businesstech.co.za\/news\/business-opinion\/875223\/harsh-reality-check-for-south-africa-2\/","title":{"rendered":"Harsh reality check for South Africa"},"content":{"rendered":"\n

The contraction of GDP in the second quarter and rising unemployment in South Africa are a harsh reality check for just how fragile the country’s economy is.<\/p>\n\n\n\n

According to Business Leadership South Africa (BLSA) chief executive Busi Mavuso, the situation “should humble all of us”.<\/p>\n\n\n\n

Despite the turn in sentiment towards South Africa and the positive trajectory of reforms over the past few years, the latest numbers show how quickly things can turn.<\/p>\n\n\n\n

Stats SA’s figures for GDP growth in Q2 2026 showed a 0.2% contraction. Just a few weeks earlier, figures from the Quarterly Labour Force Survey indicated that unemployment was rising to 33.6%.<\/p>\n\n\n\n

Mavuso said the 0.2% contraction of the economy shows just how fragile it is and how much work still lies ahead. <\/p>\n\n\n\n

“Trade, manufacturing and mining activity all shrank during the quarter, with agriculture growing only slightly and electricity and transport providing more upside support,” she noted.<\/p>\n\n\n\n

While reforms in sectors such as electricity and logistics are filtering through to a more positive outlook for South Africa, two key ingredients are missing.<\/p>\n\n\n\n

The first is that the reforms are working to repair the foundations of South Africa’s economy, not necessarily to grow the economy.<\/p>\n\n\n\n

Mavuso said that reliable electricity and logistics are growth enablers, but businesses need to build confidence in their reliability and in the outlook to really commit to investing.<\/p>\n\n\n\n

This feeds into the second key ingredient that is missing: investment.<\/p>\n\n\n\n

The CEO said that investment was notably lacking over the last quarter, with gross fixed capital formation (GFCF) at 13.6% of GDP\u2014down 0.2 pp from the previous quarter. <\/p>\n\n\n\n

President Cyril Ramaphosa has targeted GFCF at 20% of GDP to push South Africa to the ideal 3% GDP growth rate needed to create jobs.<\/p>\n\n\n\n

Mavuso noted that private investment was relatively stable over the quarter, but investment by the state-owned enterprises and government was weak. <\/p>\n\n\n\n

“This is partly by design, in that the new electricity-generating capacity and some of our logistics capacity are now being financed through private investment,” she said.<\/p>\n\n\n\n

“But the public sector also has substantial targets for its own investment, spelt out in the annual budget but never delivered. Those now need to be achieved, improving the capacity of the economy to grow.”<\/p>\n\n\n\n

To do that, the balance sheets of state-owned enterprises need to be capable of financing investment, she added.<\/p>\n\n\n\n

Eskom and Transnet are finally helping<\/h2>\n\n\n\n
\"\"<\/a>
Business Leadership South Africa Chief Executive, Busisiwe Mavuso<\/figcaption><\/figure>\n\n\n\n

Two major players here, Transnet and Eskom, have given positive signals and signs of improvement. But each has their own troubles to deal with.<\/p>\n\n\n\n

Transnet reported a R4.6 billion profit compared to a R1.9 billion loss the previous year, and Eskom recorded a massive R30 billion in profit, building on its swing to profitability last year.<\/p>\n\n\n\n

For Transnet, profits were mixed, with one-off transactions boosting its bottom line. The group still needs to increase its carry volumes significantly to be sustainable over the long term.<\/p>\n\n\n\n

Eskom also faces its own challenges, with municipal debt, declining sales volumes, and a murky pricing path casting a dark cloud over its trajectory.<\/p>\n\n\n\n

Nevertheless, Mavuso said that South Africa’s key network service providers are stabilising their financial positions.<\/p>\n\n\n\n

This will allow them to increase investment to fund critical new infrastructure and support their long-term financial sustainability.<\/p>\n\n\n\n

But the GDP figures and unemployment reality show that this is far from guaranteed.<\/p>\n\n\n\n

“Improved infrastructure and policy reform create the conditions for growth but do not guarantee it,” she said.<\/p>\n\n\n\n

“What triggers growth is investment, and investment requires confidence.”<\/p>\n\n\n\n

Mavuso said the reality is that the government needs to build that confidence, working with businesses, for trading partners and investors.<\/p>\n\n\n\n

Building that confidence is the work of Phase 3 of the business-government partnership, she said.<\/p>\n","protected":false},"excerpt":{"rendered":"

The contraction of GDP in the second quarter and rising unemployment in South Africa are a harsh reality check for just how fragile the country’s economy is.<\/p>\n","protected":false},"author":10,"featured_media":867059,"comment_status":"open","ping_status":"closed","sticky":true,"template":"","format":"standard","meta":{"_sma_x_autopost_status":"posted","_sma_x_autopost_error":"","_sma_x_post_id":"2099412830676013504","_sma_facebook_post_id":"191437357620492_2205073863646346","_sma_instagram_post_id":"18452370352190447","_sma_x_attempts":1,"footnotes":""},"categories":[4],"tags":[15351,17507,1164,2138],"class_list":["post-875223","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-business-opinion","tag-blsa","tag-busi-mavuso","tag-eskom","tag-transnet"],"_links":{"self":[{"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/posts\/875223","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/users\/10"}],"replies":[{"embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/comments?post=875223"}],"version-history":[{"count":1,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/posts\/875223\/revisions"}],"predecessor-version":[{"id":875233,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/posts\/875223\/revisions\/875233"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/media\/867059"}],"wp:attachment":[{"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/media?parent=875223"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/categories?post=875223"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/tags?post=875223"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}