South Africa must accelerate economic growth alongside maintaining fiscal discipline if it hopes to attract meaningful investment, Finance Minister Enoch Godongwana said Thursday, warning that meeting budget targets alone would not revive investor confidence in Africa’s most industrialised economy.
Speaking a day after presenting the country’s 2026 national budget, Godongwana said improved public finances were encouraging but insufficient without sustained economic expansion capable of driving jobs and private sector activity.
“Managing fiscal targets alone is not going to be enough in the absence of growth,” the minister said, underscoring government concerns over persistently weak economic performance.
South Africa’s latest budget projections show the country on course to achieve a third consecutive primary budget surplus — where government revenue exceeds non-interest expenditure — while public debt is expected to peak during the current fiscal year.
The improving fiscal outlook has been supported by stronger domestic demand and favourable global commodity prices, which have boosted tax revenues and eased pressure on government finances.
However, economic growth remains subdued after averaging below one percent over the past decade, weighed down by structural constraints including energy shortages, logistics bottlenecks and weak investor confidence.
Growth is projected to rise modestly to about 1.6 percent this year following a slight recovery in 2025, still well below levels required to significantly reduce unemployment and inequality.
Godongwana said ongoing structural reforms aimed at stabilising electricity supply, improving infrastructure efficiency and strengthening macroeconomic management were beginning to gain traction among investors.
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“I think we’re in a better space now to achieve structural reforms and macroeconomic stability,” he said, adding that improved policy certainty could serve as a “pull factor” for private investment over time.
Authorities are also working to introduce a formal fiscal anchor — a framework designed to guide government borrowing and spending decisions to ensure long-term debt sustainability.
The finance minister said further details on the proposed fiscal rules would be unveiled during the mid-term budget review expected later this year.
South Africa has faced mounting pressure in recent years to stabilise public finances amid rising debt-servicing costs, slow growth and demands for increased social spending.
While fiscal consolidation efforts have reassured financial markets, economists have repeatedly warned that without stronger growth, improvements in debt metrics may prove difficult to sustain.
Analysts say higher investment — particularly in energy, manufacturing and infrastructure — will be crucial to lifting productivity and restoring economic momentum.
Godongwana, who has served as finance minister since 2021, signalled continuity in economic policy, saying he expected to remain in office through the end of his term in 2029.
Investors are closely watching whether the government can translate fiscal stability into tangible economic expansion, as South Africa seeks to rebuild confidence after years of sluggish performance and structural challenges.
Economists note that achieving faster growth will likely depend on accelerating reforms, improving governance at state-owned enterprises and unlocking private sector participation in key industries.
For now, officials hope that a combination of fiscal discipline and reform implementation will gradually strengthen investment inflows and place the economy on a more sustainable growth path.
