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THE BRIEF: Ramaphosa ignored by his own military, it’s WEF in Davos
Hello from Johannesburg,
I’m back, and wishing you the very best for 2026.
It’s already clear that this will be an eventful year in both economics and politics. We won’t run out of news; there will be plenty to analyse and debate.
THE POLITICS
One of the major stories this past week was the extension of the African Growth and Opportunity Act (AGOA) by the United States. This is positive for African economies, especially after uncertainty over whether it would be renewed during the Trump administration. The extension brings relief to many in business and government.
Whether South Africa will remain a beneficiary of AGOA is another matter. US–South Africa relations continue to deteriorate, and tensions could escalate this year. US President Donald Trump hates the ANC and has repeatedly embarrassed Ramaphosa’s administration. It would not be surprising if South Africa is removed from AGOA or if targeted sanctions are imposed on ANC leaders this year.
Also, in the headlines this past week was the “Will for Peace 2026” naval exercise involving China, Russia, South Africa, and Iran under the BRICS Plus banner. I’ve long argued that these exercises are South Africa’s geopolitical mistakes. There are reports suggesting President Ramaphosa instructed that Iran be excluded from the naval exercise and was ignored — an embarrassing signal about his authority over the military, if true. Defence Minister Angie Motshekga has now established a Board of Inquiry to investigate the matter.
Given our strained relationship with the US, this is precisely the kind of engagement South Africa should avoid. Even without the tensions, aligning militarily with China, Iran and Russia is unwise and damaging to our relations with the US, especially at this time.
THE ECONOMY
The World Bank has revised South Africa’s growth forecast to 1.3% for 2025, up from 0.6% in 2024. The improvement is expected to come from more reliable electricity supply, a stronger agricultural harvest, and rising business confidence.
While 1.3% remains far below the growth South Africa needs, it would still mark an improvement after two consecutive years of 0.6%. The truth is that nobody knows what growth will be in 2025 or this year. But with load‑shedding largely behind us and a commodity upswing over the past year, an uptick from 2024 would not be surprising. Commodity booms have historically lifted growth and strengthened the fiscus — as seen during the Mbeki years. The challenge is that whatever growth South Africa achieves in 2025 is unlikely to exceed population growth and will remain far below what is required to meaningfully reduce the country’s sky‑high unemployment rate.
The week ahead on South Africa’s economy
The World Economic Forum (WEF) kicks off in Davos this week. The Forum’s theme this year is “A Spirit of Dialogue”. There was much optimism at last year’s WEF; let’s see if there’ll be similar optimism this year.
President Cyril Ramaphosa is skipping this WEF, with Finance Minister Enoch Godongwana leading the delegation. Godongwana does have some positive developments to highlight in Davos: improved business confidence, electricity supply stability, South Africa’s removal from the FATF greylist, and a credit rating upgrade from S&P Global.
On the data front, mining production numbers arrive Tuesday and inflation data on Wednesday. Mining grew 5.8% in October — the sixth consecutive month of growth — but overall output remains lower than a decade ago. Structural challenges persist in our mining sector, and the sector’s contribution to GDP has slipped over the years. For deeper insight, watch my interview with mining expert Peter Major (Episode 67 of The Phumlani Majozi Show on YouTube).
Inflation remains largely under control, supported by a stronger rand. I expect at least one repo rate cut in the first quarter — welcome news for consumers.
Have a great week ahead. PM #markets #politics #economy #macro #MajoziCommentary
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