Ramaphosa promises end of an era for South Africa

South African President Cyril Ramaphosa pledged to accelerate measures to fire up the economy, draw investment and make the government more efficient, an undertaking that will provide further impetus to a blistering markets rally if implemented. 

The building of new roads, port, dams and other infrastructure is proceeding apace, government debt is on a clear path toward stabilization and investor and business confidence is rising, Ramaphosa said in his state-of-the-nation address to lawmakers in Cape Town on Thursday.

“Although we are moving forward, we must not claim any easy victories,” he said. “We are still far from where we need to be.” 

A 10-party coalition government has prioritized growing the economy and creating jobs since it took office in 2024, after the African National Congress failed to win a parliamentary majority for the first time since apartheid ended.

The so-called government of national unity is credited with fostering a more pro-business approach to tackling South Africa’s infrastructure challenges and since its formation there has been significant progress in ending power cuts that hobbled output and investment for more than a decade, with outages having ceased over the past eight months.

A recent study commissioned by the Business Leadership South Africa lobby group found the country’s broad trajectory remains positive and the reform agenda is delivering tangible results.

It found almost a quarter of the 245 measures that had been identified to enhance efficiency having been fully implemented and most others work in progress. 

Goolam Ballim, chief economist at Standard Bank, this week said the economy had entered its strongest phase in a decade and growth may accelerate if efforts to clear an infrastructure backlog gain traction.

In its regular economic health check published Wednesday, the International Monetary Fund said the country has proved its resilience in the face of global challenges, with gross domestic product projected to expand 1.4% this year and 1.5% in 2027, up from 1.3% last year. 

The ongoing turnaround in the government’s performance along, with a rally in metals prices, has underpinned the surge in South African asset prices. 

The rand has gained almost 4% against the dollar this year, adding to a 14% jump last year, while yields on 10-year government bonds have dipped to below 8%, the lowest in more than a decade.

South African stocks have also been on a tear, with the FTSE/JSE All Share Index up 45% since the start of 2025. 

Despite the optimism, South Africa continues to grapple with deep social challenges. The official unemployment rate has exceeded 30% for more than five years, and runs even higher when those who have stopped looking for work are taken into account.

Millions of people go hungry on a regular basis and insecurity is a perennial problem.

Ramaphosa described organized crime as the most immediate threat to the country’s democracy and announced that the army would be deployed to help the police to combat gang violence and illegal mining.

An additional 5,500 police officers will be recruited this year, adding to some 20,000 that were previously hired, while the criminal justice system and procurement practices will be fundamentally reformed to stamp out corruption, he said.    

Dysfunctional municipalities

The president acknowledged that scores of municipalities were deeply dysfunctional and unable to provide basic services — as evidenced by recent water outages in Johannesburg, Pretoria and other towns — and said the problems are being addressed. 

“We have committed R156 billion for water infrastructure and sanitation over the next three years,” he said, adding that he will chair a national water-crisis committee to ensure supplies improve. 

The shortcomings of local government will take center stage when municipal elections are held within the next 12 months, a vote that will test the cohesiveness of the fractious ruling alliance anew. 

Finance Minister Enoch Godongwana will give details on how the initiatives announced by the president will be funded when he presents his annual budget on 25 February.