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 recovery was real; it has gone further. 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 widening primary surpluses and reform in energy and logistics.

The real economy has followed. First-quarter GDP rose 0.5 percent quarter on quarter and 1.9 percent year on year, its strongest 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 exports against falling imports.

Set against March, this deepens the frame rather than changing it: every one of these numbers comes from 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 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, when the city queued for a rationed twenty-five litres a head. They never closed, but the crisis reset the city: meters repaired, pressure managed, the maintenance budget walled off. The irony is that the metro that came closest to running dry now loses the least. 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.

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

Pretoria’s answer is to move distribution to regional boards. The fair objection: a board only relocates the problem, since debt and deferred maintenance follow the pipes. But it changes who is accountable, 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. The allocations add 24 million tonnes initially and up to 52 million over five years, against a target of 250 million tonnes a year by 2029.

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 changes who carries the risk: an operator that fails 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. Allocated paths become moved tonnage only where access terms are enforceable and the incumbent cannot quietly starve a rival of slots. What to watch is not the tonnes on paper but the first commercial departures this half, and whether they 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.

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 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 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 rewards young hires that would often have existed anyway, and does little for someone two years out of work. The Presidential Employment Stimulus has reached real numbers since 2020, but most are short school-assistant stipends rather than a route to lasting work. The SETA skills levy fits worst: it trains people already close to work, while the long-term unemployed, with no foothold to train from, fall outside it. The instruments aim at the edge of the market; the problem has moved to its middle, and none reaches those out of work the longest.

The Decisive Ballot Is a Municipal One

On 30 April the President set 4 November as the date for the local government elections, at which 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, which 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 revenue, and section 139 intervention where a council collapses.