The forgotten crisis crushing South Africa’s economy 

Investors still remain highly concerned about South Africa’s challenges in tackling ramping crime and corruption, with questions surrounding whether the era of State Capture is over or continuing in another guise. 

While the government has made strong progress in reforming key sectors of the economy, such as electricity and logistics, it has struggled to address the third pillar of its reform agenda, which is crime and corruption. 

This continues to negatively impact investor sentiment towards the country, limiting its growth prospects and hampering other reform efforts. 

While South Africa has managed to get off the Financial Action Task Force’s greylist, it has to demonstrate an ability to prosecute those involved in corruption and fraud to attract significant investment. 

Former National Treasury director-general Ismail Momoniat says South Africa is moving at a snail’s pace in this regard.

“Basically, South Africa did get grey-listed because our institutions were weakened during State Capture, and we have struggled to regain law enforcement capacity,” Momoniat told Newzroom Afrika. 

“It is a long process to get back to where we were in 2009 and 2010. To get off the greylist, we have had to demonstrate that we could identify and address money laundering and terror financing.” 

Momoniat explained that this is a significant achievement, but it only symbolises one step on the way to getting back to where South Africa should have been over the past decade. 

“We have just gotten back to the norm, but we need to get above that norm because exiting the greylist just means we have started to tackle our problems, not solved them,” Momoniat said. 

“We still have to do much more, given the high levels of corruption in our procurement system and some of the incidents that have been highlighted in the Madlanga Commission. We can clearly see there is much more work to be done.” 

Momoniat said that this is key, with the country needing to be rid of corruption to attract investment for faster economic growth. 

Simply put, businesses will not be willing to invest or expand their operations in South Africa if their employees do not feel safe. 

Crime is the number one concern

With strong progress being made in reforming key sectors of South Africa’s economy, crime has become the number one issue for investors. 

The Centre for Risk Analysis (CRA) noted that stability has returned to both Eskom and Transnet, with the utilities successfully implementing turnaround plans. 

Load-shedding has largely become something of the past, and the decline in South Africa’s railways and ports has been arrested. 

Crucially, both utilities are implementing reforms to increase private sector participation in their two sectors of the economy. This should result in increased investment and faster economic growth as a result. 

However, the CRA did point out that both Eskom and Transnet remain severely indebted, with previous measures having a limited impact on reducing their debt burdens. 

“Along with these basic macroeconomic levers of electricity and logistics, the national, provincial, and municipal governments must prioritise the endemic problem of crime,” the organisation said. 

“On domestic and international fronts, crime is regularly highlighted as a major issue impacting the decisions of businesses and investors to establish a presence or expand in South Africa.” 

The organisation explained that in many of its overseas briefings, companies regularly bring up concerns regarding South Africa’s challenges in tackling crime. 

“In CRA briefings to government and business audiences in the United States, Europe, and Latin America in 2025, the conversations were dominated by concerns regarding South Africa’s crime and service delivery challenges,” it said. 

Along with crime, basic service delivery issues, especially water infrastructure breakdowns, will dominate most citizens’ concerns over the short to medium term.

Water outages have become increasingly regular, particularly in South Africa’s economic hub of Gauteng and parts of KwaZulu-Natal.

This threatens economic growth and has resulted in a noticeable uptick in social unrest, with communities strongly protesting against the government’s service delivery failures. 

The deep rot identified in law enforcement agencies by the Madlanga Commission shows that the police may be unable to contain widespread social unrest if it breaks out.