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SIMON BROWN: I’m chatting with Jason Swartz, portfolio manager at Old Mutual Investment Group. Jason, appreciate the time again. If we look back to 2025, particularly locally, it was full of surprises. Perhaps the surprising part was that the surprises were mostly to the upside. My question: The green shoots that we’re starting to see – are these really the beginning of a potentially more durable growth path for South Africa?
JASON SWARTZ: Yes, I think that’s definitely on the cards. It’s been a long time since South Africa has had so many positive tailwinds to benefit from. So hopefully we can take this through to be a bit more enduring. Obviously, you’ve seen credit rating upgrades, you’ve seen us being removed from the grey list – and then also some kind of activity-based stuff that hasn’t really seen growth yet; you’ve had lower cost of capital with bond yields and currency and more market-related tailwinds. And then obviously the budget because of the commodity boom in terms of trade.
So everything has kind of gone right in 2025. It’s really a case of can we translate that into job-enhancing growth that will benefit the economy over the next three years? That is a big question. But we are hopeful and optimistic about it, I would say.
SIMON BROWN: I want to come to that ability to use that good fortune. A lot of it is frankly our own doing. We got off the grey list; we did that as a country. There was a team at FIC [the Financial Intelligence Centre], but certainly we will all take credit for some of it. I’m thinking of the precious metal boom. That’s one of those things that when it comes along you grab it because it’s beyond our control.
JASON SWARTZ: Correct. I think there are active steps to make sure we do benefit from some of these tailwinds that only happen kind of once in a couple of years. If you think about what’s happening with National Treasury [which is] trying to implement fiscal policies that sustain us over longer periods of time, obviously there needs to be more discipline around spending because some of these terms-of-trade boosts that we have seen are not really going to last for that long.
So you are seeing that discipline come through. I think – politically with the GNU and what’s happening there – you are seeing, at least in terms of policy implementation around reform and Vulindlela, I think there is hard work being done that acknowledges that we are going to kind of have our time in the sun; but next year or 2027/28 could be tough years and we need to be able to kind of withstand that with a little more durability.
SIMON BROWN: Some of this is slow. With Eskom it feels like load shedding in a sense did kind of disappear overnight. There was a lot happening in the back end. But I think, for example, of logistics. Kumba Iron Ore saying, yes, things are better, but there is still a lot of backlog. It is a slow process, even if it is in the right direction in many cases.
JASON SWARTZ: I would agree. I think a lot of it is just undoing a lot of the bad work that was done in the past decade, and a lot of it is just unwinding or being able to change regulation, for example. I think logistics is a critical policy lever that, in combination with private-sector participation, is probably the biggest factor that will drive higher growth. But you are seeing better, I guess, operational performance in Eskom. You are seeing better operational performance in Transnet – you had an update in December on that. But these things don’t, as you say, change overnight.
So we need to be committed about keeping that progress and that momentum going forward and I think you are seeing some of that, yes.
SIMON BROWN: The trade tensions – let’s call them that the world over at this point – are not going away anytime soon, I suspect. They are certainly not helping, but maybe they haven’t been as bad as many anticipated this time last year. Agoa has been renewed, albeit just for a year. We’re talking with China. The impact has not been as severe.
JASON SWARTZ: No. I think that uncertainty has definitely faded, which has been good for SA. A little bit of renegotiation, kind of bilateral renegotiation, a lot of countries and companies kind of stocking up ahead of tariffs has also helped. But I just think about all of the geopolitical attention that’s happened. If, let’s say, the Iranian ship scandal happened or some Eskom issue happened at the same time last year or the year before, you would have seen a very different response from investors to our bond market or to our currency market, whereas some of the kind of poor political news and trade-tension stuff that is currently happening, if you look at it within the context of some of the reform and the growth and the better fiscal story, all creates this ability for South Africa to withstand the crosswinds a lot better.
So on the one hand the global [environment] has been little better from a clarity and certainty perspective. But I think we’re also doing the work on the ground, which is great.
SIMON BROWN: That’s an important point. A last question. We’ve got municipal elections late this year. As a country we do elections very well. Is this a potential risk, or is this just maybe some noise on the horizon?
JASON SWARTZ: It’s not clear yet. You haven’t really seen what the campaigns are going to look like –whether the DA and the ANC are actually going to try and stick it to each other, whereas on the national level they kind of work together. But there definitely are key battlegrounds where they are fighting – for example, in Johannesburg. So it will definitely be a test in terms of the stability of the national coalition. But I would say we need to wait and see. It’s not clear exactly how the campaigns from a tone perspective are actually going to claim victories in some of these municipalities – whether they are going to call out their partners or whether they are going to do it in the spirit of nationally things working a lot better. For now, I’m going to think about it more as noise as opposed to a significant political risk.
SIMON BROWN: And hope it stays just as noise.
We’ll leave it there. Jason Swartz, portfolio manager Old Mutual Investment Group, always appreciate the time.
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