After basking in the success of hosting the G20 summit, President Cyril Ramaphosa received more encouragement ahead of a tough ANC national general council (NGC) this weekend: the economy grew 0.5% quarter on quarter in Q3 and signs of a more meaningful recovery are mounting.
The growth was not a big win, but at least it wasn’t a contraction — and it’s another piece of good news for Ramaphosa. And it couldn’t have come at a better time: there has been speculation of a possible revolt at the NGC, prompting the ANC Women’s League, the ANC Veterans’ League and Luthuli House to defend his presidency.
South Africa has also been removed from the Financial Action Task Force’s greylist, and the country’s credit rating has been upgraded. The medium-term budget was also largely positive.
This was the fourth consecutive gain for the economy. Nine out of 10 supply-side industries improved. Mining & quarrying (2.3%); agriculture, forestry and fishing (1.1%); and trade, catering and accommodation (1%) recorded the highest growth rates in the quarter.
Electricity, gas & water remained a drag, contracting 2.5% due to lower production and consumption and shaving 0.1% from overall GDP.
Citibank economist Gina Schoeman pointed to a number of small wins in a bigger recovery for the economy.
“We need to demonstrate a better track record of GDP performance and this data is doing that,” she says. “What was nice was looking at the year-on-year growth of 2.1%. The last time we had a number even close to 2.1% was in the middle of 2023. So it’s good to see a nice, firm footing for Q3 at 2.1%.
The downside of the fixed investment story is that we don’t yet have evidence that the private sector is more obviously investing in South Africa
— Gina Schoeman
“Overall, the outcome of the Q3 GDP means we still expect 1.2% growth for South Africa this year. That would be an improvement on 2024 and paves the way for further upside in 2026.”
The big indicator of whether the economy is moving in the right direction will be if the structural reforms in rail, electricity and local government put in place by Ramaphosa’s administration lead to investment by the private sector.
“If you look at gross fixed capital formation … you’ll see that the quarter-on-quarter momentum for the overall fixed investment picture in South Africa moved [in a positive direction] and quite a lot; it swung from negative 1.6 to positive 1.6,“ Schoeman says.
“The downside of the fixed investment story is that we don’t yet have evidence that the private sector is more obviously investing in South Africa … that is the missing piece.”
Still, it’s a relatively good story for Ramaphosa to whip out should he face a revolt at the NGC. The FM understands that his opponents and some disgruntled allies have a plan to remove him as president two years before the end of his term.
Ramaphosa has taken the threat seriously enough to speak about it as he closed the last ANC national executive committee (NEC) meeting last month, uncharacteristically daring his opponents to “bring it on”.
Some media reports have suggested the supposed revolt would be supported by most of the ANC’s top brass in the NEC — up to 60 of the 80 members. However, canvassing key NEC leaders, the FM has established that this narrative is “rubbish”, with its roots in the remnants of former president Jacob Zuma’s RET faction, which does not command the majority in the party’s top structure.
This group sought to use disgruntled Ramaphosa allies to oust him, including deputy ministers Mondli Gungubele and Joe Phaahla, both previously staunch Ramaphosa allies. They were said to be upset at their demotion from full ministerial positions. However, the move against Ramaphosa emerged mainly from former RET proponents, including former public enterprises minister Malusi Gigaba, who stepped aside from the NEC last month and called for the disbanding of the present NEC after the party’s 2024 electoral performance. A number of other former Zuma allies on the NEC are under pressure, facing, or about to face, charges. They include former National Assembly speaker Nosiviwe Mapisa-Nqakula and deputy water & sanitation minister David Mahlobo.
Removing Ramaphosa at the NGC is unlikely, and now he has a strong arsenal of economic data to put forward this weekend.
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