The race begins

2 March 2026 — How will a Hill-Lewis lead DA engage with the GNU? Can Motsepe renew the ANC? Did Godongwana deliver a good budget? What is the immediate economic fallout from conflict in the Middle East?

The race begins

The Democratic Alliance (DA) leadership race offers some glimpses of how the party might position itself in future.

As had been widely anticipated, Geordin Hill-Lewis, the mayor of Cape Town, announced on Friday that he would run for the position of party leader. He will likely run uncontested. Three of the four priorities he named in his announcement suggest that he will pursue some subtle shifts in emphasis if elected.

The first priority is a continuity claim: the DA must continue governing well. The next three describe areas where Mr Hill-Lewis sees room for improvement.

The first is that the DA must get better at creating a connection “with the millions of South Africans who have never voted for us before”. He points out that many people see the DA as distant and feel a disconnect which the DA will have to address if it wants to grow.

The second is that the DA should play a more assertive role within the Government of National Unity. While endorsing the party’s decision to join the GNU as having been the correct one, he says that “a DA that drifts along quietly inside the GNU” is weak and vows that a DA under his leadership will work “to shape the direction of government”. This is intended to send a message to DA supporters who have become concerned that the DA is being co-opted by the African National Congress (ANC) and possibly signals a new chapter in the nature of the GNU and how the DA and ANC relate.

The third priority he identifies is the lack of a purposeful and positive vision for South Africa: “There is a strain in our politics that thrives on decline — that says the country is finished, that nothing can be fixed.” Mr Hill-Lewis rejects such defeatism, vows to restore hope and wants the DA to promote a “can-do mindset” and a willingness to confront problems head-on.

In his opening remarks, Mr Hill-Lewis also drew a distinction between the DA and other groupings that promote cultural, ethnic or regional divisions between South Africans, saying that such individuals and parties “keep telling us that one group or community is the problem, or that these are the ones you should blame.” In contrast, the DA’s vision is one of a South Africa “filled with good people”, who “share many of the same values, and want the same thing: A country that works, and a sense of hope that our future is getting better.”

The ANC, which can feel the DA breathing down its neck, will be watching its rival’s evolution with close attention and some trepidation, given its current weakness of form.

A fresh broom for the ANC?

The ANC’s own leadership election is still a long way off, scheduled for the end of 2027. But manoeuvres have already begun, as rumours continue to swirl that mining magnate Patrice Motsepe — an early beneficiary of the ANC’s Black Economic Empowerment policies, and President Cyril Ramaphosa’s brother-in-law — will run for ANC president.

A new website, launched last week at the address pm27.org.za, describes PM27 as a “movement to rally South Africans behind Patrice Motsepe” with the purpose of promoting Mr Motsepe “as the most credible, unifying and visionary leader to guide the ANC and South Africa into a new era”. It is unclear whether the site is backed by Mr Motsepe.

In polling done by the Social Research Foundation in November 2025, Mr Motsepe was the preferred pick for ANC leader, with 22.5% of all respondents supporting him. He was followed by the party’s secretary general, Fikile Mbalula, at 18.5%, and its deputy president, Paul Mashatile, at 13.3%. When respondents were asked who they thought stood the best chance of becoming leader, Mr Motsepe was chosen by 21.8% of respondents, versus 19.4% for Mr Mashatile and 17.3% for Mr Mbalula.

While both Mr Mashatile and Mr Mbalula represent the entrenched party establishment, Mr Motsepe’s stature as a relative outsider — as well as his track record of success in business — could put him in good stead if the party concludes that it needs a new broom to clean out the rot in the party and restore it to its winning ways.

A hopeful budget

The national budget delivered on Wednesday by the finance minister, Enoch Godongwana, struck a positive note. Buoyed by surging gold and platinum prices and a slight lift in economic activity, revenue outperformed projections. Gross tax revenue for 2025/26 was revised up R21.3 billion, driven by stronger-than-expected collections from net VAT, corporate income tax and dividends tax. This windfall allowed government to scrap the R20 billion in provisional tax increases flagged in May 2025.

Personal income tax brackets and rebates were fully inflation-adjusted for the first time in years, and medical tax credits were increased. The limit on tax-free savings accounts was lifted from R36,000 to R46,000; the retirement-fund deduction cap was raised from R350,000 to R430,000. Some capital-gains exemptions were raised, including those on primary residences (up from R2 million to R3 million) and on small-business sales (up from R1.8 million to R2.7 million). The only tax increases were inflation-linked hikes on fuel levies, alcohol and tobacco excises.

The debt-to-GDP ratio is projected to peak at 78.9% in 2025/26, declining to 77.3% in 2026/27 and 76.5% by 2028/29 — the first stabilisation in 17 years. However, there is some doubt over whether the debt projection will hold up because Treasury has tended to underestimate the debt growth trajectory.

Hitting the target will hinge on sustained primary surpluses, lower borrowing needs and stronger revenue — all of which depend on a higher domestic growth rate. The 2026 GDP figure is forecast to grow by 1.6%, possibly then keeping pace with population growth, while the medium-term growth forecast is 1.8%. The consolidated deficit is projected at 4.5% of GDP in 2026/27, falling to 4% and 3.1% over the next two years.

Treasury’s point of view is that South Africa has “turned a corner” compared to where it found itself after the Covid-19 lockdowns. But while some of the headline-grabbing numbers are positive, South Africa’s underlying economic illnesses and fetters on growth remain untreated.

War in the Middle East

Last week we flagged that the United States (US) was poised to strike the regime in Iran. On 28 February the blows fell. US and Israeli cruise missiles and bombs struck government and military targets. By Saturday evening, Iranian state news confirmed the Ayatollah Ali Khamenei’s death.

In his first address following the strikes, US President Donald Trump called on the Islamic Revolutionary Guard, Iranian armed forces and police to lay down their arms “or in the alternative face certain death”. To the Iranian people he said, “When we are finished, take over your government. It will be yours to take. This will be, probably, your only chance for generations”.

Retaliation from Iran hit US bases and civilian infrastructure in countries including Saudi Arabia, the United Arab Emirates, and Qatar, drawing strong condemnation from those countries and strengthening an anti-Iran regional coalition. South African citizens in the region have criticised a lack of official communication and support from South Africa’s diplomatic representations.

Immediate economic fallout from direct and proxy Iranian retaliation could affect global oil supply and prices. South Africa is especially exposed in this scenario, given the country has only one operational refinery and is dependent on imported oil and fuel.

The events currently unfolding in Iran will reshape Middle East power relations and have global repercussions.

Iran has played an important role in driving hostility towards Israel, in supporting Russia with military technology, in supplying China with cheap oil, and in funding and supporting terror organisations globally. The ANC and South Africa’s foreign relations department have maintained a close relationship with the Iranian government and its proxies.

All of these parameters are now in flux. We will keep CRA subscribers up to date with the latest analysis as events unfold.