Fewer crises, slower progress in SA’s strange stability of 2026

Reform progress has lowered SA’s risk premium, but crime, unemployment and coalition politics continue to limit momentum. The outlook marks a cautious step toward recovery amid modest gains and persistent constraints. SA enters 2026 in a strange place. The lights stay on more often, inflation has cooled, and the economy feels more predictable than it has in years. Yet for many, daily life is still unsafe, difficult, expensive and stagnant.

Both things can be true at once and understanding that tension is key to understanding where the country is heading this year. A system that works, SA’s economic system is working more reliably than it has in years, even if few people would describe it as fixed.

Several developments over the past year point to a more predictable operating environment, particularly for business. One of the clearest signals of this shift was SA’s removal from the Financial Action Task Force’s grey list in October 2025, reflecting strengthened anti-money laundering and counter-terrorism efforts. This helped restore international confidence and has made financial transactions smoother for our local financial firms.

More recently, S&P Global Ratings upgraded SA’s sovereign credit rating to BB with a positive outlook – the first such move in two decades – thanks to steady(ish) growth, relatively successful fiscal reforms, and improved performance at Eskom. Eskom’s improved performance, and resulting power stability, has been the standout change. After years of disruption, more than 265 days without scheduled blackouts has reduced diesel reliance, lowered emergency mitigation spending on generators and other power sources and restored a degree of operational normality.

Limits of political consensus

Recent developments in the electricity sector underscore how this progress has been achieved. President Cyril Ramaphosa’s decision to sideline the electricity minister from Eskom‑related planning also reflects a broader trend: reform has advanced where operational control has been centralised and shielded from day‑to‑day political contestation. While this approach has improved delivery and reduced disruption, it also highlights the limits of political consensus. Stability in the power system has been driven less by coalition agreement than by executive intervention, effective for now, but not yet a substitute for wider institutional resolution.

Inflation has also eased back into the Reserve Bank’s target range, helping firms plan without assuming constant price shocks.

Logistics are also showing signs of recovery, with Transnet reporting increased rail volumes and throughput.

Finally, the rand has strengthened against the US dollar, in large part due to rising commodity prices for exports like gold and platinum.

Collectively, these improvements signal a more stable environment, allowing businesses to plan with greater confidence and less uncertainty. These shifts point to a system that is functioning better at the national level.

Yet this improvement does not feel like a turnaround for most South Africans. Daily life remains shaped by high crime levels, failing local services – particularly water infrastructure – and limited economic opportunity. These issues are particularly true in metros like the City of Johannesburg and Tshwane, where the political will and stability to address challenges has been lacking and coalition infighting has been rife.

Nationally, unemployment remains structurally entrenched, even after the reported marginal improvements at the end of 2025. Taken together, these pressures dominate the average South African’s lived experience far more than incremental gains in macroeconomic stability. The government’s growing reliance on the SANDF to assist with anti‑crime initiatives also highlights broader systemic patterns. While military deployments may serve to temporarily control violence in heavily afflicted areas of the Western Cape, Gauteng and the Eastern Cape, they suggest a focus on managing immediate symptoms rather than tackling the fundamental causes of crime and social unrest.

Crime, protest and industrial strain

Crime and protest continue to present major obstacles for businesses operating in SA. These issues are not isolated incidents, but rather persistent elements within the operating environment. The typical response to such disruptions has been limited and inconsistent, with authorities often resorting to short-term interventions rather than comprehensive solutions. While these strategies may help uphold a degree of overall stability, they inevitably lead to increased operational costs for businesses, which must adapt to a landscape where security and unpredictability are ongoing concerns.

The manufacturing sector, in particular, has borne the brunt of these challenges. In 2025 alone, the industry suffered significant job losses, exacerbating the country’s broader employment crisis. Key sectors such as automotive and steel have been especially hard hit, with over 14 component companies closing their doors during the year. The primary factors driving these closures include persistently high energy costs, frequent infrastructure failures, and dwindling consumer demand. Together, these pressures have left major industries struggling to remain viable, underlining the fragility that persists beneath the surface of SA’s recent economic improvements.

The economy, in other words, while no longer in intensive care, is still far from healthy.

The reality of progress — a window of business opportunity

Despite these constraints, the recent progress in SA’s operating environment is both concrete and measurable. For businesses, the most meaningful change has not come from sweeping new policy announcements, but from the gradual stabilisation of fundamentals that matter more than reform rhetoric.

With fewer disruptions, firms face less need for costly emergency measures and workarounds, and can finally look beyond mere survival. The shift away from constant “firefighting” has allowed many businesses to revisit shelved projects, reassess capital expenditure, and operate with slightly longer planning horizons. This has lifted sentiment and allowed activity to resume in pockets of the economy, even if demand remains weak. However, it would be a mistake to interpret these improvements as a full structural turnaround.

The underlying weaknesses of the economy persist, and progress remains fragile. This period should be understood as a narrow window; one that requires continued fiscal discipline and follow‑through on reform implementation. The year 2026 is therefore shaping up to be a year of more stable, if modest, progress. Its significance lies less in rapid growth than in the relative absence of major shocks for businesses and households alike. After a decade marked by relentless disruption, even this steadier environment represents a meaningful, if limited, shift.

Crucially, this window is not just economic or operational – it is political. The same configuration that has reduced shocks and stabilised the system has also placed limits on how quickly decisions can be made and reforms pushed through. Understanding the political mechanics of the current moment is therefore central to understanding both why conditions have improved and why progress is likely to remain slow.

The political limits of the window

As such, any assessment of the current moment must contend with the Government of National Unity. In its present form, the coalition has made policy less erratic and reduced the risk of the sudden ideological swings that previously unsettled investors and businesses. In that sense, it has done its job. What it has not done is make the state more decisive. Coalition politics has replaced volatility with negotiation, and speed with caution. The result is a political system that is steadier, but slower, i.e. more predictable, but also more encumbered. This matters because it helps explain why the current window for business opportunity is likely to remain narrow: SA’s biggest political risk in 2026 is not policy reversal, but lag.

As the municipal elections approach, political incentives will naturally shift toward local positioning, coalition arithmetic within the big metros, and at the end of it all post-election internal bargaining. At the national level, cooperation between the ANC and the DA will continue, but it will probably become increasingly transactional, particularly on issues that cut close to electoral constituencies, or on those that linger close to the political future of any of the parties. Their respective leadership competitions spring to mind, on this front. For business, this will not necessarily translate into renewed instability so much as administrative drag.

The practical implication is a familiar one. The direction of travel remains broadly intact, but momentum becomes harder to sustain. In 2026, political risk will express itself less through dramatic rupture than through creeping inertia, a dynamic that rewards patience, collaboration and realistic timelines rather than assumptions of swift execution.

2026: Stability and recovery, not crisis

SA is not on the brink of a boom. Growth will remain constrained by weak demand, high unemployment and a state that still struggles to translate policy intent into delivery.

But the country is in a better position than it has been in years for businesses to plan, invest cautiously, and avoid the constant shocks that have defined the past decade. What has changed is not the scale of ambition, but the rhythm of the system.

Power is more reliable, inflation is contained and politics is less erratic, creating an environment that is steadier, if still frustratingly slow to move. For business, this means fewer emergencies to manage and more space to make deliberate decisions, even as timelines stretch and approvals lag in the latter part of the year amid the likely local election noise.

The year 2026 is therefore likely to be a year of fewer crises, slower progress and louder politics. That is a modest outcome by most measures, but in a business environment long defined by operational disruption, it marks a meaningful shift. The risk ahead is not collapse, but complacency, mistaking stability for resolution, and delay for reform. Whether this narrow window leads to lasting change will depend less on new promises than on the state’s ability to keep doing the basics well, consistently, and without backsliding. DM

Otlotleng Mokgatle is senior risk analyst for Southern Africa at Control Risks, a global risk advisory firm.