To Investors,
The South African Reserve Bank estimated that annual GDP for 2026 will be around 1.4%. It’s possible that this number is conservative, and GDP may look more like 2% for 2026.
Improvements in energy production, the logistics environment, booming agriculture, growth-inducing monetary policy, lower inflation, and tourism all offer favourable conditions that will likely make GDP in 2026 surprise to the upside.
Let’s double-click into each of these…
Energy
Eskom has seen a remarkable turnaround in 2025. The Generation Recovery Plan implemented in 2023 is now paying off.
According to a media statement from Eskom, the State-Owned Entity announced that it predicts no loadshedding over the summer period – September 2025 to March 2026. This is a positive catalyst coming on the back of the following announcements published by Eskom last Friday:
The Energy Availability Factor (EAF), which measures the percentage of time the generation fleet is available to produce electricity, stands at 66.12% in December, to date. This is compared to 57% in the same period last year. If operational improvements continue, we will likely see this number hit or even exceed the 70% benchmark frequently in 2026.
On 39 occasions, the EAF already exceeded 70% this year, reinforcing energy stability and security.
Eskom also reported a net profit of R16 billion in the financial year ended March 2025, ending an 8-year streak of losses.
Noting the operational improvements recorded for financial year 2025, Eskom results also predict that these improvements added R2.3 trillion to the South African economy. If Eskom keeps this up, this will be great news for the economy.
Private Energy
On the private energy side, there’s been a lot of investment in residential and commercial property solar energy across the country. According to an article from Moneyweb, the total estimated rooftop solar energy capacity in South Africa is around 7.3 GW as of August 2025.
An article from Bizweb, among other sources, also estimates that only about 4% of homes in South Africa have rooftop solar energy. With more people becoming aware of the fact that solar energy means not just energy predictability, but also lower cost of electricity; and with the influx in solar energy asset imports from China, and eruption of independent solar energy installation providers, it’s possible that private solar will grow rapidly in 2026 alone.
This also takes further strain off of the main grid, and will again positively impact Eskom and economic productivity in South Africa.
Zooming back out to national solar energy, we still have a long way to go when comparing solar energy capacity in South Africa to China and the US. But again, positive sentiment for solar energy in South Africa is continuing to grow.
Growth in solar energy capacity in South Africa is virtually non-existent when compared to the U.S. and China (obviously because these economies are orders of magnitude larger, and are more productive). See the chart below comparing solar energy production for South Africa vs China and the United States.
However when isolating South African data, amid a drop in total electricity generation from January to September 2025 of 720 GWh vs the same period in 2024, solar energy generation actually increased by 880 GWh in the same period.
The reason why I’m interested in solar energy is because it’s the least costly to scale. Solar installations scale over 1-2 years vs 10+ years for nuclear, while scaling coal is also difficult due to the requirement for infrastructure upgrades and regulatory requirements.
I also asked Gemini to table a current estimated cost per kWh for solar energy vs other forms of energy in South Africa, see below…
Logistics
In October this year, International Container Terminal Services Inc. (ICTSI) won its legal battle against APM Terminals, reinstating a contract bid that ICTSI won to invest in and operate Durban Container Terminal Pier 2 (DCT). The entire logistics industry is looking forward to this landmark private-public partnership, amongst efforts to improve port efficiencies nationally.
Using Moves Per Crane Hour as an efficiency gauge, we see in the chart below that efficiency at all major ports in South Africa has fallen off a cliff since 2016 to 2018, and has continued to trend downwards.
Policies like Operation Vulindlela aim to address this exact issue.
Now, going back to the Port of Durban (the largest shipping port in South Africa by TEU capacity), we’re all excited to see if this partnership with ICTSI works out well, because it will also set a great example for similar investments in the other South African ports.
In that same breath, in September 2025, Transnet signed a 10-year partnership agreement with Swiss-German giant Liebherr.
Liebherr is a global, family-owned technology group that stands as one of the world’s largest manufacturers of construction and mining equipment while maintaining a diverse portfolio including maritime cranes.
So, the deal with Liebherr includes the supply of ship-to-shore (STS) cranes, rubber-tyre gantry (RTG) cranes, rail-mounted gantry cranes (RMG) and mobile harbour (LHM) cranes.
A crucial part of this deal is a 20-year asset management program, where Liebherr provides lifecycle support, maintenance, and local service engineers.
Additionally, Liebherr is building a new Technology Campus and Competence Centre in Durban to train local technicians and provide 24/7 support.
These are all supportive announcements, also coming on the back of African Development Bank disbursing the first tranche of the bank’s R18 billion loan to Transnet in support of Transnet’s infrastructure development plans.
But that’s not all…
Transnet also invited mining giants (like Anglo American/Kumba Iron Ore) to participate in a capacity allocation process to co-invest in the Iron Ore Export Corridor, ensuring the rail line is upgraded to handle higher export volumes.
One more thing…
Grindrod South Africa & Eyamakhosi Resources were awarded R285 billion to jointly invest in, develop, and operate a new container handling facility at the Port of Richards Bay. The aim is to boost capacity in Richard’s Bay from 50 000 to 200 000 TEUs annually to diversify the port from bulk commodities. This public-private partnership is an effort to transform the port into a smart logistics hub and is expected to be operational by 2028. But in that run-up, this means jobs, jobs, jobs; and is a win for the economy.
All of this is momentum from Operation Vulindlela, introduced by President Ramaphosa in 2020.
Agriculture
I asked Gemini to help me comb through this section and offer suggestions on some positive developments in the Agricultural sector that will make a massive contribution towards the predicted 2% GDP growth for 2026.
Per Gemini, here are some thoughts:
La Niña-Induced Rainfall Recovery
After a period of erratic weather and heatwaves, the 2025/26 summer season has seen the return of La Niña conditions. This has led to improved soil moisture and dam levels across major production regions.
GDP Impact: Better water security ensures high yields for summer grains (maize, soy) and supports the irrigation-heavy horticulture sector, which will manifest in higher output and export volumes in early-to-mid 2026.
Record Maize and Summer Crop Harvests
South Africa achieved a massive maize harvest of 16.44 million tonnes in the 2024/25 production season (the second-largest on record), with 2025 ending on a high note as planting for the 2025/26 season expands by 1%.
GDP Impact: The “marketing year” for these crops extends into 2026. Robust exports – forecasted at 2.4 million tonnes of maize – will improve the trade balance and boost the 2026 GDP.
Nationwide Foot-and-Mouth Disease (FMD) Vaccination
A massive logistical undertaking began in 2025 to vaccinate the national herd of 12 million cattle. This includes the involvement of private laboratories to solve the vaccine supply shortage.
GDP Impact: Controlling FMD is the “golden key” to reopening lucrative international red meat export markets. As these markets stabilise in 2026, the livestock sub-sector (which accounts for nearly 50% of agricultural gross income) will see significant value growth.
Port Efficiency and Logistics Reforms
Through initiatives like Operation Vulindlela, 2025 saw notable improvements in port efficiency, despite weather-related challenges in the Western Cape. Agricultural exports grew by 10% in value during the first three quarters of 2025.
GDP Impact: Faster turnaround times at ports like Durban and Cape Town reduce “dead costs” for farmers. This increased profitability and efficiency will allow for higher export volumes of high-value products (citrus, grapes, and nuts) in the 2026 seasons.
Expansion of Export Markets
The 2025 period saw the removal of trade barriers, such as the vegetable export ban from Botswana, and intensified efforts to open Far East markets for South African produce.
GDP Impact: Diversifying export destinations reduces reliance on traditional markets and allows for the absorption of the projected “ample harvests” of 2026, preventing a domestic price crash while bringing in foreign currency.
Additionally, it was announced last week that South Africa has just harvested its largest soybean crop in history, about 2.77 million tons.
According to Agricultural economist Wandile Sihlobo, a decade ago, South Africa was importing nearly a million tons of soybean oilcake every year to feed our poultry industry.
A massive 180!
Interest Rates & Inflation
Inflation plummeted to between 2.8% and 3.3% in 2025 – the bottom of the Reserve Bank’s target range. But what’s more interesting is that in the mid-term budget speech this year, Finance Minister Enoch Godongwana (in collaboration with the SARB and National Treasury) set a 3% inflation target – lower than the 4.5% previous target.
Lower inflation means lower costs of goods and services for consumers, and investors benefit from higher real returns.
If inflation is predictably lower, interest rates can also come down… and they have.
The SARB has already cut interest rates by 150 basis points since late 2024, with prime lending rates falling toward 10.25%. This increases disposable income and lowers the cost of capital for business expansion.
All of this, together with South Africa existing the FATF Grey List, while Standard and Poor’s upgraded South Africa’s national bonds for the first time in almost 20 years, is a catalyst for more local and foreign direct investment.
The “Hidden” Economy & Tourism
The informal sector (Spaza shops, hair salons, street trade) contributes roughly 6%-7% of GDP and accounts for ~20% of total employment, according to statssa.
In KZN, Gauteng, and the Western Cape, there appears to be a lot of small businesses and trade businesses continuously springing up. This means jobs, and more consumption spending.
According to a report by the Western Cape government, “between the 1st quarters of 2020 and 2025, informal employment in the Western Cape grew by 19.5 per cent, nearly four times the national growth rate of 4.9 per cent.”
This matters as the informal sector acts as a cushion to support employment in the economy and maintain/boost economic productivity and growth.
According to a report by BizCommunity, South Africa’s inbound tourism sector continued its strong recovery, with international arrivals up 30.2% year-on-year in August 2025, reaching over 900 000 visitors in one month. “Between January and August, the country welcomed 6.79 million tourists, a 15.8% increase compared to the same period in 2024.” This is a vital source of foreign currency and labor-intensive job growth.
But wait, there’s more…
According to World of Statistics and Insider Monkey, South Africa is ranked as the country with the second most potential to be a major tourist destination. I asked Grok what South Africa needs to do to grow tourism, and one thing that popped out at me is the need for a streamlined visa process and perhaps e-visa access.
South Africa is already rolling out a streamlined visa process.
In February this year the Trusted Tour Operator Scheme was rolled out. And in October, South Africa began a pilot for an Electronic Travel Authorisation (ETA) system.
The ETA is a digital-first entry system designed to replace paper-based visas with an automated, AI-driven process. It features real-time approvals and facial recognition at airport e-gates. The pilot is being carefully rolled out with tourists from China, Indonesia, India, and Mexico.
TTOS streamlines visas for large tour groups. It allows vetted (”trusted”) tour operators to handle bulk applications digitally, bypassing traditional embassy bottlenecks. TTOS has specifically focused on the massive tourism markets of China and India — and let’s say it together this time: jobs, jobs, jobs.
Wrapping Up
It’s been an awesome year for South Africa, despite a few niggles like disinformation spread by U.S. social and political influencers, and a few squirmishes within the Government of National Unity. I think what’s most important going forward, especially to ensure we hit and possibly exceed that 2% annual GDP growth number for 2026, is that South African political leaders need to somehow move past political traumas that are perhaps perpetuating the existence of poor economic policies. We all know what these policies are.
There’s a lot of great work being done already in the spaces I mentioned above, let’s focus on those.
Let’s stay positive about South Africa, and I’m particularly optimistic about Energy, Logistics, Agriculture, and the Tourism and “Hidden” economies — all supported by productive monetary policy that is trending the right way.
It’s exciting to see South Africa move from being a survivalist economy to a growth-oriented one.
On my journey to becoming a master capital allocator, one lesson down, a billion more to go.
Happy holidays to everyone!
-Mansa
