SONA 2026: Growth promise meets harsh fiscal reality
President Cyril Ramaphosa’s 2026 State of the Nation Address (SONA) has signalled a decisive shift from decline toward growth.
Yet industry experts warn that the true test lies in the “arithmetic” of the upcoming budget.
Ramaphosa’s address last night, characterised by a frank acknowledgment of municipal collapse and infrastructure decay, has left the business and property sectors with a sense of cautious optimism tempered by a demand for transparent execution.
Investec chief economist Annabel Bishop describes SONA as a strong statement on South Africa’s turning point. Quoting the President, she notes that the country is “leaving behind an era of decline and turning towards an era of prosperity and growth.”
Bishop points to several financial market victories mentioned in the address, including South Africa’s removal from the FATF greylist, an S&P credit rating upgrade, and a stronger rand.
A virtuous cycle of infrastructure investment could lift medium-term growth to 3.5% by 2030, supported by the acceleration of reforms through Operation Vulindlela phase two, said Bishop.
Bishop also noted that, as the economy grows, the rate of unemployment has finally started to decline.
The fiscal reality check
However, the positive market sentiment is met with a stern reminder of the trade-offs ahead.
Kristof Kruger, senior fixed income trader at Prescient Securities, argues that while the GNU has restored predictability, “stability buys time, but only credible fiscal trade-offs will buy lasting investor trust”.
Kruger said the upcoming Budget must clarify how recurring costs – like National Health Insurance (NHI) and massive infrastructure upgrades – will be funded.
“South Africa does not suffer from a shortage of policy frameworks; it suffers from execution constraints and fiscal limits,” Kruger warned.
Kruger also emphasised that the real test shifts from rhetoric to arithmetic, as debt-service costs remain one of the fastest-growing line items in the national budget.
Property sector pins hopes on infrastructure
The property sector has reacted with particular enthusiasm to the President’s focus on crime and water security. Stephen Whitcombe, MD of FIRZT Realty, welcomed the “hard-hitting tone” which confronted the scale of South Africa’s challenges head-on while outlining a series of decisive reforms, should be welcomed by the property sector.
Whitcombe said the “planned consolidation of intelligence, deployment of multidisciplinary intervention teams, establishment of a dedicated criminal justice reform initiative in the Presidency and deployment of an additional 5,500 police officers this year is positive news”.
In addition, Whitcombe said that he is “enthusiastic about the commitment of more than R156bn over the next three years for water and sanitation infrastructure, the creation of a National Water Crisis Committee chaired by the President, and the establishment of a National Water Resource Infrastructure Agency”.
The company also applauds the plan to hold failing municipalities and municipal managers accountable where service delivery collapses.
“There are too many instances where water revenues have been diverted to ‘other projects’ while water pipes, reservoirs and pumping stations were not maintained and fell into decay as a result. This is at the root of many of the water outages that residents across South Africa are currently experiencing,” Whitcombe said.
Similarly, Stephan Potgieter, CEO of BetterBond, highlighted the proposed State Property Company – aimed at managing 88,000 buildings and five million hectares of land – as a transformative move.
“The shift from state-built homes to subsidy-supported private ownership is significant,” Potgieter explained. “It will meet the growing need for well-located, mixed-use developments that serve a rapidly urbanising population.”
The implementation gap
Despite the optimism, the shadow of past failures looms large. CEO of the Organisation Undoing Tax Abuse, CEO Wayne Duvenage remains sceptical, stating: “South Africa does not have a shortage of plans. We have a shortage of implementation, transparency, and accountability.”
Whitcombe concurs. “South Africa never has any shortage of ideas or plans. What is required now is disciplined execution.”
This sentiment is echoed by concerns over local government. Bishop notes that the Auditor-General’s recent findings characterise local government by “insufficient accountability and failing service delivery”.
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