South Africa is being judged by yesterday’s fears rather than today’s facts. Yet markets, the canary in the coal mine, are already signalling renewal. The JSE, long treated by global investors as the bellwether of our economy, has surged since the establishment of the government of national unity (GNU) in May last year.
From May 2024 to September 2025, the FTSE/JSE Top 40 rose ~55% in USD, outpacing the MSCI Emerging Markets Index (~28%), the MSCI World (~27%), and even the Nasdaq 100 (~41%). JSE Ltd’s own share price climbed 63% (in USD) over the same period.
Markets are already pricing South Africa better than our current rating suggests, with the 5-year CDS spread of 165bps down from over 250bps before the formation of the GNU, and markedly lower than similar-rated mid-70% sovereigns. Markets, in other words, are already pricing in a better future. Yet South Africa’s sovereign credit rating remains stuck in sub-investment grade, a verdict rooted in forecasts that never materialised.
When the downgrades came, they were justified by dire projections: debt moving towards 100% of GDP, deficits spiralling, anaemic growth and weakening governance. Instead, debt is stabilising in the mid-70% range, with nearly 90% rand-denominated and long-dated, far more resilient than peers with high FX exposures. For the first time in 15 years, South Africa has delivered back-to-back primary budget surpluses, a signal of durable fiscal repair.
Inflation, once threatening to run away, is at 3.3% as of August 2025, under the watch of one of the most credible and independent central banks in emerging and many developed markets. South Africa’s banking system is healthy and well-capitalised; agencies note it could absorb more government debt while still remaining less exposed than peers such as Brazil, Mexico, and Turkey. These are structural shifts that change our fiscal trajectory.
On growth, South Africa’s GDP growth has disappointed and lagged emerging market peers for over a decade. That said, the constraints that once throttled the economy are easing. While infrastructure reforms are yet to translate into growth, the basic underpin to growth is in place.
Fiscal repair and monetary credibility have anchored a stable macro framework
Business is partnering with government to address power, logistics and security. Power cuts have largely ceased at the national level as Eskom restructures and private generation accelerates, with the energy availability factor on track to reach 70% by 2026 and a private pipeline of over 22,000MW already in development. In logistics, rail freight has risen by 10MT, with new operators expected to add another 20-million by 2026, while port concessions are advancing.
Governance, too, is regaining credibility: corruption convictions and billions in asset recoveries have strengthened institutions, and South Africa is poised to exit the FATF grey list on a faster‑than‑median timetable. The GNU, once feared as a source of instability, has instead delivered continuity and policy discipline, giving investors confidence that reforms will stick.
These improvements reflect a broader policy architecture. Fiscal repair and monetary credibility have anchored a stable macro framework. Structural reforms through Operation Vulindlela are unblocking bottlenecks in energy, transport, water, visas and digital infrastructure.
State capability is being rebuilt, from Sars to infrastructure delivery. Most visibly, infrastructure has been scaled up, with R1.03-trillion allocated over the next three years to projects that can unlock growth and competitiveness. In short, the four pillars of growth identified by the National Treasury — a clear and stable macroeconomic framework, implementing economic reforms for growth, restoring the implementation capability of the state through targeted intervention and supporting growth-enhancing public infrastructure investment — are beginning to take hold on the ground, and investors are responding.
None of this is to deny the challenges. Growth remains modest, and unemployment is intolerably high. But sovereign ratings are designed to measure creditworthiness, underpinned by fiscal credibility, growth and governance. On that score, the case for South Africa being grouped with fragile economies is threadbare. Our financial markets are the deepest in Africa; our judiciary and constitution remain robust; our debt structure is superior to many BB-rated peers.
Remaining mis-rated burdens public finances dearly. Even a modest upgrade would save around R30bn in interest costs over the next five years, enough to build as many as 10 new district hospitals. It also raises borrowing costs across the economy, with banks effectively capped at the sovereign, and it excludes conservative global funds from our bonds. In short, the “junk” label is not only outdated, it is expensive and self-reinforcing.
Ratings agencies applied multiple notches of qualitative downgrades when governance faltered and reforms stalled. Those very factors have since shifted: institutions are stronger, reforms are advancing and fiscal consolidation is real. To keep the rating frozen deep in junk grade despite clear improvement is to penalise progress and ignore that investors have already voted with their wallets.
Greece’s stock market was one of the world’s best performers in 2023, long before the agencies upgraded. South Africa’s rally is echoing that sequence; investors are already moving, ratings have yet to follow.
- Fourie is the Group CEO of the Johannesburg Stock Exchange, with over 30 years of global experience in banking, capital markets, and payments
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