The Road to November

The National Recovery Is Real, and It Is Only National

In March we called the ratings cycle the clearest sign the national clock was keeping time; it has run further the same way. S&P upgraded in November 2025; Moody’s shifted to a positive outlook in May, its first since 2007; and Fitch upgraded on 5 June, its first move on South Africa since 2005, citing the swing from primary deficits to widening primary surpluses and reform in energy and logistics.

The real economy has followed, modestly. First-quarter GDP rose 0.5 percent quarter on quarter and 1.9 percent year on year, the strongest reading since mid-2025, with nine of ten industries growing. The current account surplus reached R190.7 billion, or 2.4 percent of GDP, its widest since 2021, on stronger gold and merchandise exports against falling imports.

Set against March this deepens the frame rather than changing it: every one of these numbers is produced by a national institution, and not one measures whether a service reached a household.

Water Became the Constraint Electricity Used to Be

The 2025 Green and No Drop updates, released 31 March, assessed 848 wastewater plants across 144 authorities. Nearly half were in a critical state, five of the eight metros among them.

The financial mechanism is the one that took down the grid. Water lost before billing costs about R26 billion a year; Johannesburg loses 48.4 percent of what it buys, and the national repair bill is put near R400 billion. Cape Town runs non-revenue water in the low-to-mid twenties against Johannesburg’s high-forties on the same rainfall; the difference is metering, pressure management and a ring-fenced maintenance budget. The loss is a management outcome, not a hydrological fate.

Cape Town did not learn this in a seminar. In 2018 it counted down to Day Zero, the morning the taps were to close and the city queued for a rationed twenty-five litres a head. They never closed, but the fright rewired the place: meters repaired, pressure managed, the maintenance budget walled off. The quiet irony is that the metro that came closest to running dry now loses the least. And a litre lost from a Johannesburg main has been dammed, pumped, treated and pushed across the city, then billed to no one; it costs more than bottled water, and no one pays for it.

That is the encouraging and the hard news at once: management is exactly what an election does not directly change.

Pretoria’s answer is to move distribution to regional water boards. The fair objection is that a board only relocates the problem: the debt and deferred maintenance follow the pipes. But a board changes who is accountable for it, one entity that can raise ring-fenced tariffs, borrow against them and be held to a plan, in place of 144 that cannot. It is the move that made Eskom fixable: not a guarantee of repair, but a way to make repair addressable.

The Railway Actually Opened

On 13 May the Transnet Rail Infrastructure Manager concluded access agreements with eleven operators, taking the network from one operator to twelve across five corridors. The allocations add 24 million tonnes of capacity initially and up to 52 million over five years, against a national target of 250 million tonnes a year by 2029.

The base is low and recovering. Freight fell from 226 million tonnes in 2017/18 to about 152 million in 2023/24 on cable theft, locomotive shortages and deferred maintenance, and has since climbed back toward 170 million tonnes this year. The reform matters because it changes who carries the risk: an operator that fails to run its slot loses its own money, a first for South African freight.

History says to watch the conversion, not the allocation. When Mexico concessioned its freight railways in the late 1990s, private volumes took most of a decade to build, but build they did. Brazil’s concessions moved fast on bulk minerals and slowly on general freight, stalling where access disputes went unresolved. The lesson is that allocated paths become moved tonnage only where access terms are enforceable and the incumbent cannot quietly starve a rival of slots. The thing to falsify is not the 24 million tonnes on paper but the first commercial departures this half, the tonnage that moves against them, and whether slots and tariffs survive contact with an operator Transnet does not own. If it cannot convert on rail, it is hard to see it working on water, where ownership never changed at all.

Output Went Forwards, Employment Went Backwards

In the same quarter the economy grew for the sixth time running, the labour market gave back a year of gains. The official unemployment rate rose 1.3 points to 32.7 percent, employment fell 345,000 to 16.8 million, and the labour force itself shrank by 44,000.

The distribution is worse than the rate. Every province except KwaZulu-Natal shed jobs, discouraged jobseekers rose 178,000 to 3.9 million, youth unemployment reached 60.9 percent for those aged 15 to 24, and long-term unemployment now accounts for 77.4 percent of the unemployed, up from 64.9 percent a decade ago. That last figure matters most: it describes people whose link to work has been cut rather than paused, and growth does not reconnect them.

In March we called this severance, not slack, and ducked the policy test. What reaches the severed, and does it fit? Three instruments carry the load. The Employment Tax Incentive subsidises young hires but rewards jobs that would often have existed anyway, and does little for someone two years out of work. The Presidential Employment Stimulus has reached real numbers, well over a million placements since 2020, but most are short school-assistant contracts, a stipend, not a bridge to a standing job. The SETA skills-levy system spends billions a year and fits worst: it trains people already close to work, while the severed cohort, with no foothold to train from, falls outside it. The instruments aim at the edge of the market; the problem has moved to its middle. None is built to rebuild a connection already broken, which is now the job.

The Decisive Ballot Is a Municipal One

On 30 April the President set 4 November as the date for the local government elections. All eight metros, 205 local and 44 district municipalities are reconstituted at once, contested by 508 parties across 4,488 voting districts. Turnout in 2021 was 45.79 percent, an eleven-point fall on the cycle before.

This is the first municipal vote since the national coalition formed in 2024, and the layer being elected holds the unresolved constraints. Be cold about what a ballot can do: turnout at local elections has fallen every cycle since 2011 while services deteriorated, so participation drops as delivery drops, closer to exit than to accountability. Metro control has churned too: Johannesburg cycles through mayors almost yearly, and the churn is why nothing is maintained, since each coalition reshuffles the officials who would run a multi-year repair.

There is a fair counter-reading: where a mayor serves a full term, delivery visibly improves, Cape Town the standing example, Midvaal a smaller one. It concedes the point, though: stability is not what these coalitions produce. The arithmetic in Johannesburg, Tshwane and Nelson Mandela Bay again points to three- and four-party pacts with no majority. Our view, at moderate confidence: November changes who administers the municipal layer, not whether it is administered. The levers that move water and billing are administrative, not electoral: distribution to a water board, ring-fenced water and electricity revenue, and section 139 intervention where a council collapses. Next issue we score three: authorities that hand distribution to a board, metros that ring-fence water revenue, and whether any coalition in the three contested metros survives its first budget.