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25 August 2026 – South Africa could regain its investment-grade credit rating by 2028, according to Investec, which would mark a significant turnaround after more than a decade of being rated below investment grade.
Investec’s South African Asset Allocation Committee says there is a reasonable chance of the country returning to investment-grade status in 2028, moving out of the junk rating that characterises South Africa as less likely to repay debt and, as a result, causes higher charges when the country borrows.
S&P Global Ratings upgraded South Africa last November, the first such change in two decades. Moody’s affirmed its rating in May 2026 but moved its outlook to positive, and Fitch upgraded the country a notch in June.
“The positive outlook reflects South Africa’s gradually strengthening fiscal performance and sustained commitment to structural reforms, with prospects of increasingly tangible results,” said Moody’s at the time.
What it means
An increase to investment grade should not only make it cheaper for government to borrow money but also enable better terms for companies and consumers when they borrow.
1life said the benefits for consumers could include job retention. South Africa’s unemployment rate crept up to 33.6% in the second quarter from 32.7%, with 345,000 jobs lost over the period.
The insurer also noted that benefits could translate into manageable debt costs, preserved value of assets such as retirement contributions, property and other savings, and no loss of disposable income.
Currently, the prime lending rate is 10.5%, with the South African Reserve Bank having increased the rate in May before opting to hold last month.
Still work to do
However, the ratings turnaround has so far been driven largely by improvements in the fiscal position, and the next phase will require stronger economic growth and continued structural reform, Bureau for Economic Research chief economist Lisette IJssel de Schepper told Moonstone.
South Africa’s real GDP grew by 0.5% in the first quarter of 2026, following growth of 0.4% in the final quarter of 2025. The economy grew by 1.1% during 2025, having averaged around 1% annually for a decade.
The consensus forecast for 2026 is modestly between 1.0% and 1.4%, with 2027 expected to grow at a slightly faster pace of between 1.4% and 1.7%.
Positive drivers that would affect growth include electricity grid improvements, private sector participation in transport and logistics, and declining inflation – although this has increased as a result of the war in the Middle East.
However, risks include subdued global commodity demand should desire for metals swing again, volatile international oil prices, and constrained domestic fixed investment.
Bad management
ETM Analytics director and head of research George Glynos cautioned, via Moonstone, that years of maladministration and poor management across some public institutions had created liabilities that remained outside the headline debt numbers but could ultimately place pressure on public finances.
“There’s a lot of work to do off balance sheet that I think South Africa still needs to focus on, and that I think is South Africa’s Achilles heel at the moment,” Glynos said.
This comes at a time when National Treasury is trying to deal with severe issues at several major metros, with failings reflected in Auditor-General reports that flag aspects such as unauthorised expenditure.
Yet Investec still believes investment grade is possible by 2028, pointing to improving economic growth, a rand approaching fair value and greater energy stability as the key factors behind its view. Source: IOL Business Report