Fuel Shocks, Iran War Fears Drag South African Private Sector into May Contraction
South Africa’s private sector activity contracted in May as output and new orders plunged under the weight of surging fuel prices and escalating geopolitical uncertainty surrounding the Iran war, a business survey showed on Wednesday. The S&P Global South Africa Purchasing Managers’ Index (PMI) fell below the critical 50.0 no-change threshold, dropping from April’s expansionary reading to signal a sharp reversal in the country’s economic momentum. Firms reported that escalating global tensions disrupted supply chains and stoked inflation. Rising operating costs forced businesses to hike selling prices, directly depressing domestic demand and causing clients to pull back on new orders. “The May survey highlights how vulnerable domestic demand remains to external shocks,” said David Owen, Senior Economist at S&P Global Market Intelligence. “Higher fuel prices and geopolitical anxiety squeezed corporate margins and chilled consumer spending.” The downturn coincides with a tough macroeconomic environment. Statistics South Africa recently reported that consumer inflation accelerated to 4.0%, driven by a 35.4% jump in diesel prices that heavily impacted local logistics. The South African Reserve Bank (SARB) has kept its benchmark repo rate steady at 8.25% to combat these persistent price pressures, further constraining borrowing and capital investment across the private sector. The manufacturing and construction sectors bore the brunt of the May slowdown. Managers noted that defensive stockpiling of raw materials, triggered by shipping delays, tied up critical cash reserves. Economists warn that the contraction threatens broader economic growth. High unemployment, which currently stands at 32.7%, leaves little room for the domestic economy to absorb sustained global supply shocks and elevated energy costs.
Mozambique Confirms Five Dead in South African Xenophobic Attacks
Five Mozambican nationals were killed during weekend anti-immigration violence in Mossel Bay, marking the first official fatalities linked to a new wave of xenophobic protests sweeping across South Africa. According to a Mozambican government press office statement, roughly 800 of its citizens were caught in the southern coastal town’s unrest, which broke out on Friday following a march against undocumented immigrants. Two additional Mozambicans died in a road accident while fleeing. The statement warned that the situation remains volatile, adding that “given the volatility… a worsening of the current situation is expected.” The violence erupted ahead of an unofficial June 30 deadline set by citizen-led vigilante groups demanding the expulsion of all irregular migrants, sparking widespread panic among foreign worker communities nationwide. The escalating crisis has forced regional governments to intervene. Ghana repatriated 300 citizens last week, while Nigeria, Kenya, and Zimbabwe issued urgent safety advisories warning their nationals to exercise extreme caution. South African authorities are facing intense regional pressure. Ghana has formally requested a debate on the attacks at the upcoming African Union Mid-Year Coordination Summit in Cairo, scheduled for June 24. South African police confirmed they are investigating the assault deaths of two men in a Mossel Bay informal settlement, though they have not officially verified the victims’ nationalities or protest links. Mossel Bay Mayor Dirk Kotze expressed “deep concern and dismay at the current xenophobic attacks where people have been murdered, houses burned and families displaced,” as emergency repatriations commenced. Analysts state the unrest reflects deep-seated economic anxieties regarding soaring domestic unemployment and crime. Political factions are actively weaponizing anti-migrant sentiment to garner public support ahead of South Africa’s November local government elections. South Africa’s Department of International Relations and Cooperation stated it is improving immigration management capacity, noting, “We should never allow the legitimate concerns of our communities about illegal migration to breed prejudice.”
Oil Shock Threatens South Africa’s Recovery Despite Fiscal Progress – S&P
LAGOS — Rising global oil prices triggered by intensifying Middle East conflicts pose a severe threat to South Africa’s consumer-led economy, potentially derailing recent momentum, S&P Global Ratings warned on Tuesday. The credit rating agency noted that while the state’s fiscal consolidation push remains broadly on track, external geopolitical shocks could heavily suppress domestic growth. South Africa remains vulnerable to energy shocks as a net fuel importer. Escalating Brent crude prices directly spike domestic pump costs, driving up food and transport inflation for struggling households. S&P left South Africa’s sovereign credit ratings unchanged at BB for foreign-currency and BB+ for local-currency, maintaining a positive outlook following its upward revision last November. “South Africa is consistently ranking near the bottom on growth — a weakness that feeds into fiscal pressure through softer revenues,” warned Ravi Bhatia, director at S&P Global Ratings. The agency revised its baseline oil price forecast to $100 per barrel for the remainder of the year, threatening to reverse the country’s recent inflation downward trend. National Treasury data shows domestic resilience, with the main budget deficit narrowing to 4.3% of GDP and the primary surplus outperforming initial projections at 1.1% of GDP. However, analysts warn fiscal discipline alone cannot shield the economy if sustained triple-digit oil prices depress retail consumer spending, which serves as the primary engine for GDP growth.
South Africa: Impeachment Committee Formed Over Ramaphosa’s “Farmgate” Scandal
South Africa’s parliament has scheduled the first meeting of an impeachment committee for Monday to probe misconduct allegations against President Cyril Ramaphosa, the Democratic Alliance (DA) party announced Thursday. The 31-member parliamentary committee will investigate the “Farmgate” scandal, which involves the 2020 theft of $580,000 in foreign cash hidden inside a sofa at Ramaphosa’s private game farm. The upcoming meeting marks the next stage of an impeachment process that was officially revived this month after the Constitutional Court ruled a previous 2022 parliamentary vote blocking the inquiry was invalid. “The good thing is that parliament seems to be moving forward,” said DA parliamentary leader George Michalakis, noting that the committee’s first order of business will be electing a chairperson. The DA is currently the second-biggest party in a coalition government with Ramaphosa’s African National Congress (ANC) but maintains that the committee chairperson should not be a member of the ANC. Ramaphosa has consistently denied any wrongdoing, maintaining the cash was legitimate proceeds from a buffalo sale. On Tuesday, he filed court papers to challenge the initial independent panel findings that triggered the probe. The president has also threatened to seek an urgent court injunction to halt the impeachment proceedings entirely if parliament continues the inquiry while his legal challenge is pending in court. Although the ANC holds only nine of the 31 seats on the newly formed committee, it commands 40% of the National Assembly, giving it substantial leverage to block the final impeachment vote. Any final vote to remove the president from office requires a two-thirds majority in parliament, meaning Ramaphosa could survive if his party lawmakers remain united behind him.
Moody’s Upgrades South Africa’s Sovereign Outlook to Positive Amid Debt Improvements
LAGOS — Moody’s Ratings on Friday upgraded South Africa’s sovereign outlook from stable to positive, making it the only G20 nation with a positive trajectory amid a global wave of downgrades. The agency affirmed the country’s long-term issuer rating at Ba2, two notches below investment grade, citing robust fiscal consolidation and steady progress on structural economic reforms. Moody’s expects South Africa’s general government debt to peak at 87% of GDP in 2025 before declining to 85% by 2028, reversing years of fiscal deterioration. Driven by disciplined expenditure control, the primary budget surplus is projected to reach 1% of GDP for the fiscal year ending March 2026 and expand to 2% by 2028. Concurrently, accelerating structural reforms in electricity and logistics are expected to lift real GDP growth to 2% by 2028, a significant increase from the 0.8% average seen since 2023. “The positive outlook reflects the growing likelihood that South Africa’s fiscal performance and economic growth will continue to improve,” Moody’s lead analyst stated in the official ratings release. The National Treasury welcomed the announcement, noting it validates ongoing efforts to stabilize public finances and implement the energy and transport sector turnarounds under Operation Vulindlela. The rating action provides a major sentiment boost, arriving shortly after South Africa’s highly anticipated exit from the Financial Action Task Force (FATF) global financial grey list. However, the agency lowered near-term growth forecasts for 2026 and 2027 by 20 to 50 basis points due to geopolitical conflicts fueling inflation via global fuel shocks. Despite the positive outlook, structural challenges persist, as South Africa’s debt-service costs still consume nearly 19% of government revenue, a figure significantly higher than its peer economies.
South Africa’s Power Company Eyes World Bank Funding for New Multi-Billion-Dollar Nuclear Programme
South Africa’s state power utility Eskom is in exploratory talks with the World Bank to fund a new multi-billion-dollar nuclear build programme designed to launch within 12 months, officials confirmed Wednesday. The state-owned utility plans to issue a Request for Information for up to 5,200 megawatts of nuclear capacity to secure long-term energy security and accelerate its transition away from coal reliance. The strategic procurement will split capacity between 4,800 megawatts of conventional pressurized water reactors and 400 megawatts of small modular reactors, according to Eskom Group Executive for Generation Bheki Nxumalo. Bheki Nxumalo, Eskom’s group executive for generation, confirmed the global funding push at a Cape Town energy summit, stating, “We are engaging development finance institutions, including the World Bank, to structure a sustainable multi-vendor financing framework.” At least 200 megawatts of the small modular reactor capacity will be directly deployed for Eskom’s coal-to-nuclear strategy, repurposing aging coal-fired stations scheduled for mandatory decommissioning over the next decade. The financing discussions mark a significant shift for global lenders like the World Bank, which historically prioritized funding for solar, wind, and battery storage over highly complex nuclear generation infrastructure. South Africa recently designated Thyspunt in the Eastern Cape as the preferred site for the conventional reactors, though the decision faces immediate environmental and legal challenges from local community coalitions. The nuclear expansion builds upon recent structural gains, following Electricity Minister Kgosientsho Ramokgopa’s announcement that Eskom achieved a consecutive 400-day streak without national rolling blackouts due to improved plant maintenance.
South Africa Inflation Spikes to 4.0% as Fuel and Power Shocks Hit Target Ceiling
South Africa’s headline consumer inflation accelerated sharply to 4.0% year-on-year in April, up from 3.1% in March. The surge brings price growth exactly to the upper limit of the central bank’s target. Data released by Statistics South Africa on Wednesday showed a month-on-month consumer price index increase of 1.1%. This represents a significant acceleration from the 0.6% monthly pace recorded in March. The inflation spike was primarily driven by severe supply-side energy shocks. Domestic fuel prices jumped 18.2% month-on-month, tracking global oil benchmarks that recently breached $100 per barrel amid escalating Middle East conflicts. Additionally, administered prices put intense pressure on consumers. Public utility Eskom implemented an 8.76% average electricity tariff hike during the month, pushing total administered price inflation to 8.3% year-on-year. Conversely, food and non-alcoholic beverages offered relief, slowing to 2.9% from 3.6%. Cereal products remained in deflation for a third consecutive month, offsetting a structurally high 9.4% meat inflation rate. The data shifts focus to the South African Reserve Bank’s Monetary Policy Committee meeting on May 28. Policymakers previously held the repo rate at 6.75% during their January and March sessions. The 4.0% print tests the strict 3 – 4% formalized inflation target adopted late last year. It marks the first major breach of the anchor since the policy framework was adjusted. Analysts indicate the central bank may hold rates next week despite the spike. However, the MPC is expected to adopt an aggressively hawkish tone to prevent second-round effects from embedding into the economy.
South Africa Raised Steel Import Duties To 30% Amid China Import Surge
South Africa has increased import duties on several steel products to between 10% and 30% via a government notice to protect its struggling domestic manufacturing sector from weak demand and foreign competition. The updated tariffs target essential upstream and downstream products like flat-rolled iron, non-alloy steel, bars, rods, tubes, and pipes. Previously, the nation applied import duties ranging from zero to 15%. Cheap foreign shipments heavily pressure the local market, where imports constitute roughly 36% of total steel consumption. China alone drives the vast majority of these inflows, accounting for 73% of those imports. The continuous influx of low-priced steel has forced major regional manufacturers, including ArcelorMittal South Africa, to idle various mills and downsize operations over the past year to mitigate severe financial losses. “We are hoping that this decision will provide the local industry necessary space to adjust in a manner that allows them to invest in their capability,” ITAC Chief Commissioner Ayabonga Cawe stated. The broad intervention aligns with the maximum legally permitted import tariff rates under World Trade Organisation rules. Finance Minister Enoch Godongwana signed the emergency adjustment to prevent further widespread industrial job losses. This policy follows separate emergency trade actions executed in March, when South Africa enacted harsh, five-year anti-dumping duties reaching 74.98% on Chinese structural steel and up to 47.92% on coated flat steel.
South Africa’s Q1 2026 Jobless Rate Climbs to 32.7% Amid Mounting Economic Pressure
Despite hostility towards black foreigners, South Africa’s unemployment rate rose to 32.7% in the first quarter of 2026, up from 31.4% in late 2025, according to official data released Tuesday by Statistics South Africa. The 1.3 percentage point increase means the number of unemployed individuals rose by 301,000 to reach 8.1 million. Total employment fell by 345,000 to 16.8 million during the first three months of the year. The report highlights a deepening labor crisis, with youth unemployment for those aged 15 to 34 surging by 2.0 percentage points. Nearly half of the country’s young people are now officially without work. Sectoral data showed heavy losses in community and social services, which shed 206,000 jobs. The construction industry followed with a loss of 110,000 positions, while manufacturing and mining saw modest gains. The quarterly decline was most severe in the North West and Gauteng provinces. KwaZulu-Natal was the only region to report a slight increase in employment, adding 6,000 jobs during the period. This spike in joblessness follows recent anti-immigrant marches and “worker audits” by groups like Operation Dudula. These tensions have drawn condemnation from the United Nations and the African Commission on Human Rights. Ghana and Nigeria have recently expressed grave concerns over the safety of their nationals. Protesters in Johannesburg and Durban continue to blame foreign workers for the scarcity of business and employment opportunities. The data arrives as the Reserve Bank navigates sticky inflation and high fuel costs. Analysts suggest that the rising unemployment rate may complicate fiscal efforts to stabilize the economy through the remainder of 2026.
MTN Group Earnings Surge 27.9% as Nigeria and Ghana Drive Q1 Growth
MTN Group reported a 27.9% rise in first-quarter core earnings to R27.6 billion ($1.67 billion) on Tuesday, bolstered by a significant operational recovery and surging data demand in its key West African markets. The South African telecommunications giant saw constant-currency service revenue climb 21.1%, while its earnings before interest, tax, depreciation and amortization (EBITDA) for the three months ended March 31 expanded to 47.6%. This performance was primarily anchored by a 165.9% jump in profit from its Nigerian subsidiary. Strong results in Nigeria and Ghana offset a flatter trajectory in South Africa, where service revenue grew by just 1.2% amid intense prepaid competition and a challenging domestic macroeconomic environment. In Nigeria, the stabilization of the Naira and a net foreign exchange gain of N33.3 billion marked a sharp turnaround from the currency volatility that hampered the group’s 2025 fiscal performance. Data consumption remains the group’s primary engine, with average monthly usage per subscriber in Nigeria hitting 14.3 GB. Consequently, the company has nearly doubled its network investment in the region this year. This growth follows a strategic period of recapitalization for MTN Nigeria. Recent central bank policies and infrastructure master plans in major hubs like Abuja have further supported the digital economy’s expansion. “A more supportive macroeconomic and foreign exchange backdrop in key markets like Ghana, Nigeria and Uganda supported accelerated investment to meet robust demand and to capture the future opportunities we have identified,”Group President and CEO Ralph Mupita commented. Management confirmed it remains on track with its “Ambition 2025” strategy. This includes the structural separation of its fintech business and ongoing efforts to deleverage the group’s balance sheet.
