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Three pieces of good news arrived last week, and they all point in the same direction. GDP growth beat forecasts. The World Bank ranked Durban the most improved port in the world. And Fitch upgraded South Africa's credit rating for the first time in 20 years. The reform agenda is starting to deliver real results.

The Fitch upgrade follows S&P's upgrade late last year with a positive outlook, and confirmation from Moody's that it too has a positive outlook. While we are still a few notches from the all-important investment grade level, the momentum is heading in the right direction.

As Fitch noted in its announcement, the upgrade reflects improvements in fiscal management and progress with structural reforms. These two factors mean the country will benefit from an improving GDP trend combined with improving government finances, stable debt levels and primary fiscal surpluses. Fitch noted particularly that electricity availability and improved logistics performance will support the supply side of the economy.

These positive signals have been reflected in the relatively good performance of the rand and our investment markets, with both bonds and equities holding steady despite the global turmoil driven by the Middle East war. Key reforms are taking hold and investors are beginning to notice.

On ports, the World Bank's container port performance index shows Durban made the biggest jump of any port in the world between 2024 and 2025, rising from 403rd to 398th. The improvement is more significant than the ranking movement suggests. Ships now spend 76% of their time productively in berth loading and unloading, up from 52%, meaning far less time is wasted sitting at anchor waiting for a berth slot. The queue of vessels waiting ahead of incoming ships has fallen from 20 to zero. As the World Bank notes, these improvements reflect new investment and increased private sector participation, including the ongoing impact of concessioning the Durban Container Terminal. Coega and Port Elizabeth were also among the 20 most improved ports in the world.

There is no room for complacency – Durban still ranks far too low and performs below the levels it sustained before Covid. But it is solid proof that the reform approach is working.

The challenge is that structural reforms take time to shift investment decisions across the economy. In 2023, when we had 300 days of load-shedding, no sensible investor was going to greenlight a major new factory or construction project. Even though we have now been over a year without load-shedding and logistics are becoming more reliable, investment figures in last week's GDP report remain very weak at 13.5% of GDP – far short of the 30% we need to turn South Africa into a construction site.

Why hasn't investment responded yet? Several factors explain the lag. Investors need sustained evidence that reforms are durable, not just temporary improvements. We need several consecutive years of operational reliability before investors put their capital at risk. Policy uncertainty in areas like procurement and B-BBEE – which we've discussed in recent newsletters – adds risk premiums to investment decisions. And global uncertainty from the Middle East war is making investors cautious across emerging markets generally. These are solvable problems, but we need to be clear-eyed about what's holding the investment cycle back.

Once confidence is there and investment picks up, growth enters a virtuous cycle as businesses invest to increase output to meet expected future demand. South Africa needs to spark that positive cycle. The growth rate of 0.5%, while an upside surprise, is still paltry. The IMF expects sub-Saharan Africa to grow 4.3% this year, with neighbours Botswana and Zimbabwe growing close to 5%, and Ethiopia at 9.2%. Increasing our investment rate is the single most important economic task we face in order to get our economy growing in line with the region.

To achieve that, we must remain steadfast in delivering reforms. There is still much to do in logistics and electricity – we need competitive markets with private sector operators able to compete in both. We cannot waver on that path. It is the only way to spark the investment cycle we need.

We must also remain vigilant against backsliding on governance. It took a remarkable effort to get South Africa off the FATF grey list earlier this year. Being on that list added extensive frictions to our engagement with the global financial system, raising transaction costs and deterring investors who need clean counterparties. The FATF is now evaluating us again, with an updated report due to its plenary in October 2027. The revelations coming out of the Madlanga Commission – corruption deeply embedded at the top of our police service – are exactly the kind of evidence FATF assessors will examine. If we backslide, we risk returning to the grey list, which would directly undermine the investor confidence we are working so hard to build.

The Commission's work is therefore not just a governance matter but also an economic one. Having observed the work of the Madlanga Commission and having watched the commissioners methodically and fearlessly interrogate the evidence before them, I have little doubt that their final report will contain robust and practical recommendations for rooting corruption out of the criminal justice system. My concern is whether we will have the political will to implement those recommendations fully and with the urgency they will undoubtedly require.

The uncomfortable reality is that the evidence emerging before the Commission does not merely expose weaknesses within the criminal justice system. It exposes the extent to which politics itself has become entangled in, and in some instances enabled, the very rot the Commission has been established to investigate. What is coming out of the Commission already implicates political actors, points to political interference and political failures of oversight. Will the political establishment have the courage to implement recommendations that may limit its own power, expose its own shortcomings and hold its own members accountable?

The true test of the Madlanga Commission will therefore not be the quality of its findings. I have every confidence those will be thorough and compelling. The true test will be whether the political leadership of this country has the stomach to act on them. South Africans should settle for nothing less than the full implementation of the Commission's recommendations. We then need to act on those recommendations with the same urgency we brought to the original grey listing crisis.

On all these fronts, we are heading in the right direction. The credit upgrades, port improvements, end of loadshedding and modest GDP recovery are not coincidences – they are the result of deliberate reform. The foundation of the economy is being rebuilt. Investment decisions will follow. But we must stay the course to get there.

Issued by Business Leader South Africa