Budget 2026 for economic infrastructure to trigger miracle growth – SABC News

By Miyelani Mkhabela
The Budget Speech must focus on allocation for economic infrastructure and Special economic zones or manufacturing villages for light and heavy manufacturing. The rapid miracle growth in South Africa will be triggered by strong state intervention, export-oriented industrialisation, heavy investment in human capital, and favorable geopolitical conditions. South Africa can shift from poverty and high unemployment to high-income status by adopting export-led strategies, focusing on manufacturing, and, in some cases, using authoritarian governance to push industrial development.
The South African government must intervene with increased spending on infrastructure to boost economic activity. Active government intervention on economic infrastructure, boosting demand to trigger a multiplier effect or miracle growth and counter cyclical policy are the solution for South Africa to turnaround and report buffalo miracle growth. The minister of finance must present a budget that portrays a state interventionist approach.
Antswisa Macroeconomics, Trade, and Investment real Gross Domestic Product (GDP) forecasts for 2026 stand at 1.6%, with a gradual improvement expected to 2.0% in 2027 and 2.2% in 2028. Our nominal GDP growth forecast, which includes the effects of inflation, is higher at 5.3% in 2026, rising to 5.7% in 2027 and 5.9% in 2028. While the economy is expected to expand steadily over the medium term, a significant portion of overall growth continues to reflect pressures rather than a sharp increase in real output.
South Africa’s 2026 Budget arrives at a pivotal moment. Debt is lingering near 78% of GDP. Growth is forecast at just 1.6%. Debt-servicing costs absorb around 5% of GDP. And yet, bond yields have fallen, sentiment has improved and Standard & Poor keeps a positive outlook. Is this genuine fiscal stabilisation or simply a window of opportunity? Antswisa Capital Partners believes South Africa has landed in an attractive opportunity to mobilize infrastructure and Industrial development funds to trigger a buffalo miracle growth.
The fiscal update is expected to reflect incremental consolidation, supported by modest macro revisions and favourable financial conditions, but without a structural shift in the debt trajectory. Real GDP is likely to be revised marginally higher over the MTEF period, while CPI and nominal GDP projections are adjusted slightly lower. The softer nominal path tempers revenue buoyancy despite improved real activity.
The main budget deficit and primary balance are expected to improve by approximately 0.5pp of GDP relative to the November 2025 MTBPS.
Revenue and policy measures: Commodity-related revenue gains largely offset the fiscal cost of baseline tax adjustments and smelter subsidies, leading to a smaller net increase. FY25/26: Revenue modestly above target (+R8bn) alongside expenditure underspending (~R5bn). FY26/27: A net tax increase of R8bn (+R35bn in taxes, partially offset by baseline tax increase of R20bn and R10bn smelter subsidy to Eskom). Expenditure projection is kept unchanged.
The primary surplus improves in FY25/26 (0.9% to 1.1% of GDP) and remains broadly stable at 1.2% in FY2026/27. Gross debt-to-GDP is likely to be revised slightly lower, with ICIB projecting 76.4% (National Treasury 76.0%) of GDP. Improvements are driven more by lower debt-service costs, inflation, and a stronger rand than by materially stronger growth.
Financing strategy: The closing cash balance benefits from pre-funding and a slightly improved deficit outcome. A lower borrowing requirement in FY26/27 creates scope to scale back Treasury bill and FRN issuance as indicated in the November 2025 MTBPS. Following the reduction in SAGB supply of R750m per week, we expect issuance parameters to remain broadly unchanged until the MTBPS, pending confirmation of the durability of commodity-driven revenue gains.
Credit rating outlook: Market focus remains on whether Moody’s could revise South Africa’s Ba2 (stable) rating outlook to positive, especially after Standard & Poor Global’s recent one-notch upgrade, which aligns its foreign currency rating with Moody’s and maintains a BB+ positive outlook on local currency debt. A key focus is boosting private sector fixed investment as structural reforms gain traction. Debt servicing costs remain elevated at more than 5% of GDP. Our baseline forecast is the rating will remain unchanged unless reforms are implemented more quickly.
Economic Infrastructure investment and Special Economic Zones need a R1 trillion allocation for the budget 2026
There has been progress in electricity and logistics reforms. However, this has not yet significantly impacted economic growth activity and projections. It is viewed as a medium-term dynamic, as regulatory and legislative reforms are implemented.
President Ramaphosa’s SONA address highlighted that business is now viewed more as a partner in driving growth, rather than ‘just’ providing capital, to a cash-strapped government. The Budget is expected to provide more details on several key announcements already made, including:
Energy security and Grid Expansion: The original unbundling plan for Eskom will remain unchanged, with transmission assets transferred to an independent TSO, after the Minister of Electricity approved plans to keep the assets with Eskom. This could affect the ability to raise the R440bn in financing needed to expand the grid. It will continue to keep transmission assets independent of Eskom.
Logistics and Freight Rail: Ports and Terminals and logistics need R300 billion investments, that can be a 60 percent government intervention and private sector investment to build a state of the art ports and terminals to support supply chains connectivity.
Municipal infrastructure: Municipal Infrastructure Operations and maintenance needs R100 billion for metros and district municipalities that implement specific reforms to boost service delivery for the water, electricity and sewerage systems. Water Infrastructure Maintenance, Sewerage systems and municipal electricity agencies performance will need competent human capital for infrastructure operations and maintenance.
Technology, Telecoms and Space networks: Technology, Telecoms and Data Centers need R60 billion allocation to boast operational efficiencies of our infrastructure and smart factories.
SEZ and Manufacturing Factories: Special Economic Zones (SEZs) need state intervention to install factories for light and heavy manufacturing. The finance minister needs to allocate R100 billion for SEZs for export-oriented production and employment growth. South Africa has a competitive advantage on minerals and agricultural products, while production machines are at an advance stage to meet the high-tier skills needed for production.
Presidency and National Treasury
Antswisa Capital Partners infrastructure and industrial development team recommends National Treasury to provide sovereign guarantees for institutional investors to have security on infrastructure mega projects. The MTBPS announced the need to attract private capital and promote alternative delivery mechanisms to speed up infrastructure development.
This includes (1) an infrastructure bond, and (2) a Credit Guarantee Vehicle (CGV) in partnership with the World Bank. The latter will guarantee large-scale infrastructure projects, reducing investment risk for all project stakeholders, including financiers.
Antswisa Capital Partners infrastructure and Industrial development team believes the   Credit Guarantee Vehicle (CGV) is intended to replace the traditional guarantee provided by the government and will significantly lower fiscal risk because issuing a traditional guarantee for infrastructure projects is a contingent liability that could become an enforceable liability if the project does not go as planned. The CGV will operate as a private, special-purpose vehicle, non-life insurance entity with an AAA rating to attract global institutional investors. Its shareholders will include the National Treasury, the World Bank, multilateral development banks (MDBs), and institutional investors.
While the market can source coverage from the private sector, it is costly, limited, and therefore does not mitigate key risks. The cost of coverage is passed to the procuring government as part of the service tariff, which diminishes the expected cost savings in a PPP structure. Despite the costs of the CGV, the shareholder structure will ensure the cost aligns with the broader value-for-money benefits expected in PPPs. In addition to reducing reliance on sovereign guarantees, the CGV will improve access to financing. More importantly, financiers will have a backstop for a bankable instrument. Currently, the focus is on raising around R80bn (US$5bn) over the next five years, with National Treasury initially contributing up to R20bn.
Key aspects of the new approach for sustainable Credit Guarantee Vehicle
Credit Guarantee Vehicle (CGV): A $500-million vehicle (with 20% Treasury injection) is being established to support private investment in infrastructure without relying directly on government guarantees, which reduces contingent liability on the national budget.
Infrastructure Bond Issuance: In late 2025, the National Treasury initiated its first-ever Infrastructure and Development Finance Bond to raise funds for Budget Facility for Infrastructure (BFI) projects, including energy, water, and transportation.
Reconfigured BFI: The BFI has been updated to run four bid windows annually, allowing for faster processing of funding requests from state-owned entities, provinces, and municipalities.
Focus on Energy: The CGV is specifically designed to support Phase I of the Independent Transmission Projects (ITP), with the final Request for Proposal (RFP) expected in 2026 to, among other things, build new high-voltage lines.
Risk Management: While moving to this new model, the Treasury still mandates that any existing direct contingent liabilities and guarantees from the government must be fully disclosed.
This shift aims to attract institutional investors while protecting the national balance sheet, marking a significant change in South Africa’s infrastructure finance landscape. Beyond the initial rollout, the CGV will need to be scaled up significantly to fully guarantee the long pipeline of infrastructure projects, including the rail corridor private sector participation (PSP) projects, as these projects can only advance if a guarantee, like the CGV, is provided within the fiscal constraints of National Treasury.
South Africa’s military strengthening needs an R150 billion for 2026/2027 budget. While the international benchmark for defence spending is often cited as 2% – 2.4% of GDP, South Africa spends about 0.7%, far less, in spite of its associations with global superpowers and graced with massive precious metals, inviting security threats and concerns.
Economic Infrastructure such as transport, energy, water, and telecommunications support economic activity, drive growth, and improve productivity. The quality of a nation’s infrastructure is a critical index of its economic vitality. Electricity is the oxygen of developing and advanced economies. Infrastructure is the backbone of economic growth. It improves access to basic services such as clean water and electricity, creates jobs and boosts business.
Miyelani Mkhabela is a CEO and Chief Economist at Antswisa Capital Partners  

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