As we concluded 2025 much of investors’ and bankers’ conversation was anchored in the exceptional performance of South African assets.
The assets, from the currency and bonds to equities, excelled last year. The all share index delivered 38% in rand and 57% in dollars, a performance last seen in the 2000s.
Global factors such as robust commodity prices, a weak dollar and strong flows into emerging markets played a role in this performance. However, sound domestic policy choices — particularly about fiscal stability and monetary policy — strengthened returns, especially in government bonds.
By December the sense of relief was palpable: many of the outcomes hoped for during 2025 had materialised and the markets delivered a verdict that confirmed this progress.
This positivity set us up for a great festive season. La Niña also brought generous rainfall, leaving the country green, fresh and full of life. Yet this optimism co-existed with the underlying reality that South Africa continues to underperform relative to its potential.
This is the challenge we take into 2026. With major gains already extracted from macroeconomic reforms in 2025 (fiscal stabilisation and strengthened inflation targeting), South Africa must now tackle deeper, more complex issues.
We must overcome weaknesses in the state that limit service delivery and policymaking, structural problems in key sectors, political economy bottlenecks that limit progress, and institutional weaknesses that constrain growth.
Top of the wish list for 2026 is restoring the integrity and functionality of the criminal justice system. The revelations at the Madlanga commission were illuminating but unsurprising. The inquiry has been deeply discouraging, indicating a crisis imposing severe costs on citizens and the economy.
Much like load-shedding in 2023, systemic criminality now represents a national economic threat. Urgent and decisive reforms in this area are essential if the country is to achieve its potential.
South Africa’s mining sector remains a powerful but constrained lever for growth. The country has become one of the least attractive destinations for new mining investment, exploration has stalled, and mining’s contribution to GDP has shrunk.
This limits the ability to benefit from global commodity demand — historically a driver of exports, employment and economic expansion. A targeted approach is needed to revive the sector and reposition the country competitively. It would be great to see this sector unlocked in the years ahead.
Meanwhile, global realignments among major powers demand a more thoughtful and strategically coherent foreign policy stance from South Africa. The world is entering a period in which intelligent, well-designed industrial and trade policy will be crucial.
How we navigate these changing tides will help or hinder economic progress. Momentum must be maintained in other reform areas too, including in electricity generation, logistics and municipal governance.
The need to address structural bottlenecks in economic activity remains acute. South Africa must lift its growth potential to 2.5%-3% to achieve macroeconomic stability and deliver a better life for citizens. Economic projections are just shy of 2%.
Though the verdict on local assets in aggregate was positive in 2025, sectors exposed to South African demand continued to reflect the weakness in the underlying economy. We are not yet out of the woods.
In early February President Cyril Ramaphosa will deliver the state of the nation address (Sona), setting out the administration’s vision for the country, the strategy for navigating the challenges of 2026 and priorities for structural and institutional reform.
The hope is that the intense policy and strategic work now will translate into a Sona that accelerates progress toward the future South Africans want.
While 2025 offered strong performance and encouraging signs, the road ahead remains complex. South Africa must build on recent wins, address entrenched obstacles and commit to meaningful institutional reforms.
May 2026 be a year of continued progress — built not just on favourable winds but on deliberate action.
• Lijane is global markets strategist at Standard Bank CIB.
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