ANC targets the SARB

15 September 2025 – Would expanding the SARB’s mandate cure growth woes? Is the GDP lift in Q2 a sign of a larger upswing? How is crime impacting corporate SA? Can SA secure a deal with the US? How is Russia testing NATO?

ANC targets the SARB 

The African National Congress (ANC) is considering expanding the mandate of the South African Reserve Bank (SARB) beyond ensuring price stability to explicitly include “pursuing employment and growth”. This proposal is contained in a discussion document produced for the party’s National General Council (NGC) meeting, scheduled to take place in December. 

In addition, the document proposes that “government should be willing to run deficits to finance growth-promoting investments, as long as debt remains sustainable in the long run”, while the SARB should consider accepting “slightly higher inflation in exchange for lower interest rates to stimulate investment”. 

This is a risky proposition. It seeks to shift the responsibility for South Africa’s lacklustre economic growth from Parliament and the executive, where it is properly situated, to the central bank. The central bank does not have the tools or the ability to set the policy conditions for economic growth, even if it had the authority.  

Widening the SARB’s mandate to pursue employment and growth will not address the government’s ideological barriers to business activity, capital formation and job creation. Supply-side constraints in the SA economy, which drove the average growth rate down to 0.8% between 2012 and 2023, will remain untouched. 

Furthermore, encouraging the government to run deficits to boost growth ignores that the government has already been running large deficits for more than 15 years, with very little growth to show for it. Here again, the ANC is seeking to divert attention away from the tough policy reforms needed to spark growth, towards the comfortable notion that spending more money will solve South Africa’s problems. 

The suggestion that the SARB be encouraged to pursue lower interest rates even if it means higher inflation is similarly misguided. South Africans, and especially lower-income households, are already groaning under the rising cost of living. Accelerating living expenses further and faster is a recipe for immiseration and unrest. 

Even though the ANC is weakening politically, it is still the largest party in government. Such forays as this – and others that seek to extend the party’s control over the state and the economy – represent a clear risk to South Africa’s development and business prospects. 

Small GDP lift in Q2 

Following 0.1% quarterly growth in Q1 2025, South African GPD increased by 0.8% quarter-on-quarter in Q2. The uptick in the second quarter represented the strongest quarterly performance since 2023. However, year-on-year the economy grew by a meagre 0.6%, almost unchanged from the 0.5% growth recorded in 2024. 

Boosted by higher platinum group metals, gold, and chromium ore output, the mining and quarrying sector carried second quarter growth, expanding 3.7% (after a 4.1% contraction in Q1). Increased household spending, on the back of interest rate cuts, also helped to boost GDP.  

But for South Africa to attain consistently higher growth rates, the country must shift from relying on bouts of increased commodities volumes and prices. Despite the growth increase in Q2, structural and policy barriers remain untouched. This means the country will struggle to achieve 1% growth in 2025. If reforms at Eskom and Transnet improve the energy and logistics outlook, growth could exceed 1% next year. But in the absence of policy reforms it will only be by a small margin. 

One of the key indicators to watch is gross fixed capital formation (GFCF), which measures investments in fixed assets such as factories, machines and infrastructure as a share of GDP. The global average is 26%. South Africa lags far behind, at around 15%.  

This low rate both reflects low trust in the investment environment and acts as a constraint on the economy’s ability to grow. In Q2 2025 South Africa’s fixed investment rate decreased further, by 1.4% – the third consecutive quarter of decline. South Africa is not convincing domestic business and international investors to sink a meaningful amount of fixed capital into the country. This means its economic growth will continue to underperform. 

Corporate CEO speaks out about lawlessness 

High rates of crime and corruption are one of the main contributors to South Africa’s low fixed investment rate. They represent a direct threat to private property rights and the ability of individuals and companies to operate safely a reliable, rules-based order.  

In a rare example of a large corporate speaking out about South Africa’s unfavourable policy environment, Hendrik du Toit, CEO of Ninety One, South Africa’s largest asset manager, said: “When the legal establishment is fear-struck or corrupted, the rule of law collapses. Without the rule of law, commerce as we know it cannot operate. That means capital flight, job losses and the risk of social instability.” 

Mr du Toit was commenting after insolvency lawyer Bouwer van Niekerk was murdered in his office on 5 September 2025. Two years previously, insolvency practitioners Cloete Murray and his son Thomas were murdered. No arrests have been made, cementing a pattern of widespread impunity for murder, crime and corruption.  

Mr du Toit expressed the helplessness many South Africans feel when he added: “Unfortunately our government is too feeble and too infiltrated by criminals and thieves to save us. It is time for the citizens to stand up for law and order.” The lack of interest from the ANC in government in addressing this is palpable. 

Inching closer to a trade deal 

A delegation led by the minister of trade and industry, Parks Tau, is in Washington for high-level talks with the United States (US) government. President Cyril Ramaphosa confirmed on 9 September that officials from the Presidency and the department of trade and industry were preparing for “further formal negotiations”. 

South Africa faces a 30% tariff from the US, double the regional average of 10-15%. Despite strained relations, engagement has been persistent at the highest levels, including a direct call between the two presidents on 6 August, two days before the imposition of tariffs, and a meeting between the minister of international relations, Ronald Lamola, and the US chargé d’affaires, David Greene, in Pretoria. 

Washington has rejected Pretoria’s trade proposals repeatedly since May. However, there are signs of progress, and this latest in-person engagement is a notable shift. Any deal now under discussion is expected to reduce and not eliminate tariffs, and could plausibly bring them down to the regional average of 15%. 

Uncertainty over tariff levels continues to complicate contract pricing, supply chain planning, and investment decisions. Added to this, the US Supreme Court will hear the cases over the legality of tariffs in November, raising further uncertainty over whether South Africa’s duties will remain high, be lowered to the regional levels, or scrapped entirely. 

Though any deal is likely to be presented by Pretoria as a great victory, current indications are that much more could have been achieved through a more creative and open-minded approach to the negotiations – not just in the context of a trade deal, but in the context of growth-stimulating reforms for South Africa.  

Russia probes NATO 

During the early morning of 10 September, amidst a major Russian air attack on Ukrainian territory, between 19 and 23 Russian kamikaze drones entered Polish airspace. North Atlantic Treaty Organization (NATO) air power scrambled, and Polish fighters supported by Dutch, Italian, German and Belgian aircraft engaged the drones and shot down between 4 and 8 of them.  

Poland has claimed that these drones were deliberately targeted at Polish airspace. One of the drones damaged a house, but no injuries were reported. While Russia has denied intentionally targeting Poland, it is highly unlikely that the incursion was accidental. 

This penetration of Polish airspace is likely designed to frighten European NATO members into strengthening their own defensive capabilities and reducing the flow of arms – especially air defence systems – to Ukraine. This would help bolster Russia’s position on the battlefield by weakening Ukraine.  

At the same time, the aerial incursion allows Russia to probe NATO aerial capabilities and its political resolve. How Poland, NATO, and the US react will determine Russian President Vladimir Putin’s next steps.The attack is typical of Russian “salami slicing” tactics: small ambiguous attacks used to slowly shift the strategic position without providing your opponent a clear moment to make a choice to respond.  

Poland has invoked NATO’s article 4, triggering emergency consultations among alliance members. This is the third time since 2014 that such a step has been taken. The overall NATO response, and especially that from the US, has been weak, suggesting that more incidents like this will follow.