Same old: the ANC’s “new” economic action plan

13 October 2025 — Will the ANC’s "new" economic action plan turn SA’s fortunes around? Why are SA companies holding such large cash reserves? What is SA’s role in the World Bank’s growth forecast for sub-Saharan Africa? What do the stats say about SA’s financially best-run municipalities? Why is the US dollar weakening? What lies behind the latest escalation in US-China trade relations?

Same old: the ANC’s “new” economic action plan

For the African National Congress (ANC), having its bank accounts frozen and the sheriff carting off R140,000 of its office furniture over an unpaid debt did not stop it from formulating a new 10-point economic action plan.

The plan was approved by the party’s National Executive Committee (NEC) and places the state front and centre of efforts to boost South Africa’s lacklustre growth. It reiterates the ANC’s commitment to broad-based black economic empowerment and notes progress made in recent years regarding transformation, the capacity to increase infrastructure investment, and the use of public employment programmes.

However, it also notes — correctly — that none of this has actually boosted growth or addressed the unemployment problem. South Africa’s economy remains stuck at below 1% growth per year, and unemployment is solidly anchored above 30%, with the latest quarterly figures coming in at 33.2%. The party concludes that what is required is action, acceleration and a “massive” scaling up of efforts.

Its action plan is premised on doubling down on more heavy-handed interventions in the economy. It proposes tariffs on the export of chrome and manganese to incentivise local beneficiation, import duties on competitors, electricity subsidies for ferrochrome, manganese and steel, and the professionalisation of “the project management cadre”.

Public employment programmes are to be scaled up “massively”, “municipal local economic development technical units” are to be established, and small and medium enterprises are to receive more financial support. Industrial parks with localisation targets are to be revitalised and linked to special economic zones and economic corridors. All this is to be coordinated by an “economic war room” to be established in the presidency.

In contrast, business-friendly measures such as lightening the burden of regulation, reducing taxes, doing away with cadre deployment, beefing up property rights or ending race-based laws in public procurement and private business are conspicuous by their absence. As we highlighted in last week’s Risk Alert, such reforms will be resisted if they are seen to threaten vested interests.

Our assessment is that while the plan pays lip service to growth, it reflects little understanding of what must be done to trigger it. The plan leaves core ANC ideology and associated legislation untouched. South Africa will therefore remain stuck with low fixed investment and low economic growth.

SA Inc: cash rich, investment poor

In a note published last week, the South African Reserve Bank (SARB) observes that non-financial companies in South Africa are holding R1.8 trillion in cash, a record amount.

The growth in cash holdings reflects reluctance to deploy funds into investments, driven by a lack of opportunity combined with a heightened sense of uncertainty. South Africa’s stagnant economy offers limited investment opportunities, and the political and policy environment does not inspire confidence.

The SARB emphasises that companies are not stockpiling cash for the sake of it, writing: “They are responding to economic conditions and balancing risk with readiness to invest when confidence returns.” This means that substantial financial resources are available to be deployed should the government adopt meaningful pro-growth reforms.

Positive growth outlook for sub-Saharan Africa

Seven out of ten chief economists recently surveyed by the World Economic Forum expect moderate or strong growth in sub-Saharan Africa this year. This marks the region as an outlier when contrasted with the rest of the world, with 72% of economists across all regions expecting global conditions to deteriorate because of trade conflict, policy uncertainty and technological disruption.

In a report released last week, the World Bank forecasts growth in sub-Saharan Africa at 3.8% in 2025, an upward revision by 0.3 points. Its outlook for the next two years is bullish, as it expects growth to accelerate to an average of 4.4% in 2026/27.

However, it notes that growth is being dragged down by the underperformance of the region’s three largest economies, Angola, Nigeria and South Africa. Excluding those countries, growth in the region is anticipated to reach 5.6% in the next two years.

The bank expects the South African economy to expand by just 1.2% over the next two years and flags high unemployment, skill deficits, a weak business environment and logistics bottlenecks as factors holding back growth.

Municipal stats vindicate the president

Three weeks ago, we reported on President Cyril Ramaphosa’s unusual praise for a political rival, the Democratic Alliance (DA). A new report by Ratings Afrika, a governance rating agency, proves the president right.

The agency rated the financial sustainability of 115 South African municipalities based on their financial ability to deliver services, to develop and maintain infrastructure, and to absorb financial shocks.

By its measure, nine of the ten top performers were towns in the DA-run Western Cape, while the remaining municipality, fourth-ranked Midvaal in Gauteng, is also run by the DA. Among the metros, DA-run Cape Town was the top performer, with a score of 70. It was the only metro considered financially sustainable.

The national average score was 36 out of 100. This low average was dragged higher by the Western Cape municipalities, which averaged 55. The Free State municipalities recorded the lowest average, of just 20. In total, the 115 municipalities assessed posted an operating loss of R35 billion in the 2024 financial year, with a cash shortfall of R105 billion limiting their ability to pay suppliers like Eskom and water boards.

Dollar weakens, SA benefits

The US dollar has weakened considerably since the beginning of the year, with the dollar index — which measures the performance of the dollar against a basket of leading currencies — down about 10%.

The index registered above 109 points on 20 January 2025, when United States (US) President Donald Trump was inaugurated for his second term, but had fallen to below 99 points by 10 October amid US growth uncertainty, trade tensions, rates cuts by the Federal Reserve, and mounting doubts over the sustainability of US debt and deficits.

For South Africa, this moment offers a window of relative strength. The rand has appreciated about 8.7% against the dollar in the year to date, from R18.82 to R17.21 per dollar. This reduces the rand cost of dollar-priced imports and limits the impact of imported inflation on prices. The Reserve Bank’s decision to hold interest rates steady while advanced economies cut theirs has supported carry flows into rand assets.

However, this strength is fragile, and any renewed dollar rally could unwind these gains quickly. The rand’s current reprieve reflects global dislocation more than domestic resilience. South Africa’s stability remains tethered to external forces beyond its control.

China-US trade tensions escalate

A notice issued last week by China’s Ministry of Commerce introduces stricter rules on exports containing rare earth materials originating from China or made using Chinese refining or magnet-making technology. The rules are scheduled to come into force between 8 November and 1 December.

The provisions, which apply only to foreign entities, also require them to seek Chinese approval before re-exporting certain goods manufactured outside of China if they contain even 0.1% of such materials or products originating from China.

Mr Trump retaliated by announcing that the US would raise tariffs on Chinese imports to 130% starting in November and threatening to cancel his planned meeting with Chinese President Xi Jinping at the APEC Summit in South Korea.

China controls around 60% of global rare earth mining, 90% of processing and refining, and 93% of magnet production. Rare earths play an important role in many supply chains, including the manufacture of electric vehicles, wind turbines, hard drives, advanced computer chips, camera lenses and mining and processing technology.

They are also used in F-35 fighter jets, submarines, missiles, radars, drones and smart bombs. The new Chinese rules would automatically deny export licences where the materials are to be used for foreign military purposes.

What began as a dispute over tariffs has thus expanded into a confrontation over strategic resources and technology.

Yet the move could backfire if the US and its allies accelerate efforts to reduce dependence on Chinese inputs, for example by sourcing rare earths and battery metals from other regions. Africa, particularly countries like South Africa, Namibia, and the Democratic Republic of Congo, are positioned to gain from this shift.

Rising demand could boost investment in mining and processing. But in the meantime, higher global prices will raise costs for manufacturers and consumers in a context of growing trade conflict and uncertainty.