The cumulative value of used vehicles sold reached R14.32 billion in January, up from R12.89 billion in December, and R12.59 billion a year earlier. The average transaction price moderated slightly to R416,082 from R419,537 in December 2025, while average mileage declined to 70,938 km, continuing a gradual downward trend.

Toyota continued to capture the majority share in the used vehicle market, with 5,876 units sold in January, ahead of Volkswagen (4,733) and Ford (3,577).

Decoding Ford’s figures, more than half of the total came from Ranger sales, underscoring the continued strength in the bakkie segment. This highly competitive, core automotive market focuses on utility, durability, and lifestyle.

The best-selling used vehicles

According to AutoTrader data, at the model level, the Ford Ranger retained its position as South Africa’s best-selling used vehicle, with 2,069 units sold, up 6.3% year-on-year, followed by the Toyota Hilux (1,604 units), and Volkswagen’s Polo Vivo and Polo. Together, these four maintained their positions among the top four best-selling models.

Compact and value-driven models showed some of the strongest gains. The Suzuki Swift moved ahead of the Toyota Fortuner in overall rankings, with 794 units sold and year-on-year growth of nearly 25%. The Toyota Corolla Cross and Hyundai Grand i10 also recorded notable annual increases, reflecting a continued shift towards smaller, more affordable vehicles.

None of the top 10 models posted a year-on-year decline, although performance varied across brands. Suzuki recorded the greatest month-on-month improvement, while Hyundai achieved the highest annual growth rate. BMW was the only major brand to register a monthly decline, although it remained up year-on-year.

AutoTrader’s “2025 Annual Car Industry Report” reveals the emergence of quite a few trends. One among them is established industry players maintaining strong sales figures. Among the vehicle categories, while compact hatchbacks gained a significant market space, SUVs further consolidated their dominance. If Chinese brands gaining measurable ground was the surprise factor, new energy vehicles (especially hybrid ones) gaining prominence gave a sneak peek at the African country’s direction towards a clean transport sector.

AutoTrader CEO George Mienie stated, “The used car market delivered solid growth. A total of 383,410 used vehicles were sold in 2025, generating R160.1 billion in sales value, representing a 7% increase over 2024. Four interest rate cuts in January, May, July, and November 2025, reduced borrowing costs and provided meaningful relief to consumers. However, while economic conditions improved, buyer behaviour remained disciplined. If anything, 2025 reinforced how firmly affordability and practicality now anchor local purchasing decisions.”

Which models were in demand

Among second-hand cars, search behaviour shifted at the brand and model level. BMW was the most-searched brand on AutoTrader, with 76 million searches. On a model level, the Volkswagen Polo was the most-searched, displacing the Toyota Hilux from its long-standing leadership position. On the search interest front, Ford Ranger, Volkswagen Polo Vivo, and Toyota Hilux continue to dominate overall sales volumes, indicating the strength of established names in the used market.

While the Ford Ranger maintained its position as the most-enquired bakkie vehicle, its demand remained in the higher territory, despite growing cost pressures. Compact hatchbacks have earned significant momentum in the used car market, with models such as the Suzuki Swift and Toyota Starlet capturing a larger share of the market.

“The Swift stood out as the fastest-selling used vehicle in South Africa, averaging just 26 days before sale. That turnaround time reflects strong underlying demand for vehicles that are affordable to finance, efficient to run, and practical for everyday use,” Mienie stated.

While the average used car price grew 3% year-on-year to R417,584 in 2025, the average vehicle age remains five years. The average mileage was 73,646 km.

Pragmatic approach to electric vehicles

The new energy segment (electric vehicles) grew by a strong 73% in 2025, powered by hybrid cars. Hybrids ended up accounting for nearly 85% of all new-energy vehicles sold. This growth also gave an insight into South Africans’ EV adoption strategy: choosing practical, money-saving options instead of waiting for full electric cars that need better charging networks and lower prices.

Hybrids (known for combining a petrol engine with an electric motor) saw sales jumping 76% compared with 2024, with 4,888 units changing hands. In total, 5,727 used hybrids and battery electric vehicles were sold by the end of December 2025, showing steady interest in greener driving options. This segment was dominated by locally built Toyota Corolla Cross Hybrid, with many buyers opting for the model’s reliability, affordability in the used market, and, most importantly, the absence of range anxiety of pure electric cars.

Other popular models included the Volvo EX30, and various Toyota and Lexus hybrids, vehicles that offer good fuel savings.

Battery electric vehicles, despite showing a 55% year-on-year increase, remained a distant second in the new-energy car market.

Used hybrids have proven to be game-changers for South African families and first-time car buyers, as these vehicles use less fuel than ordinary petrol cars, produce fewer emissions, and often come with lower running costs, during an age of high petrol prices, and living expenses. Because hybrids do not rely completely on charging infrastructure, they suit South African roads and lifestyles better than full electric cars for now.

China: New player in the sector

While European, American, Japanese, and Korean vehicle brands have been dominating both the new and used vehicle markets, 2025 witnessed the emergence of Chinese brands in the sector.

Chery Tiggo 4 Pro was the best-selling used Chinese car. The crossover, since 2025, has remained one of South Africa’s best-selling new passenger cars, with more than 1,000 units sold each month. Last year, 3,144 units were sold, underscoring the popularity of Chery’s smallest offering. With an average price of R284,779, it is one of the cheapest cars on the list, both on the new and used-car segments, despite its low average mileage of 21,970 km, and a registration age of just two years.

Next is the Haval Jolion, which competes in the same crossover class. However, with fewer models, particularly more budget-focused derivatives (the cheapest new version is R348,950), sales are slightly lower at 2,736 units.

The oldest entry on the list was the Great Wall Motor’s discontinued six-year-old Haval H2, which landed at the sixth spot with 1,063 units, while the much newer Omoda C5 came seventh with 806 purchases.

While vehicles like Chery Tiggo 4 Pro and Haval Jolion are mostly ICE (Internal Combustion Engine) vehicles with some plugless hybrid variants, Chinese automobile players have reportedly started offering more plugin options. These players, already known for their rapid global expansion (using affordability as a weapon), are now sweetening things further for their South African customers by adding more PHEVs (Plug-In Hybrid Electric Vehicles) and BEVs (Battery Electric Vehicles) to both the new and second-hand segments.

Sales of plugin hybrids (PHEVs) were up 280% in 2025 compared with 2024, with brands like Haval, Chery, Omoda, Geely and BYD leading the charge.

“Chinese vehicle manufacturers have learnt how to narrow the gap between cost and perceived value, delivering around 80% of the consumer experience at roughly 60% of the price of traditional players. By focusing on tangible performance and visible benefits rather than legacy branding, they have capitalised on a shift in consumer behaviour. As buyers become more informed and discerning, brand loyalty is weakening, replaced by an expectation for high-quality products that justify every rand spent,” Mienie told Creamer Media’s Engineering News.

Bakkies rule the roost

Bakkies, the Ford Ranger in particular, had a massive share in the used car segment. These are basically pickup trucks with open cargo beds. Renowned as ‘workhorses’ for cargo, bakkies have evolved into popular lifestyle vehicles in the African nation.

According to the AutoTrader data, the used car market shipped 30,742 vehicles in December 2025, with 1,744 being Ford Rangers. Buyers reportedly opted for four-year-old Rangers with an average mileage of 83,958km.

The average used Ranger sold last year fetched a price of R497,960, which represents a saving of nearly R80,000 compared to buying the cheapest variant of the popular bakkie brand new.

In contrast, the most expensive version of the Ranger is the 3.0T V6 Raptor double-cab, which fetches a handsome price of R1,271,000.

A used Ranger comes in many forms: single-cab workhorses, which are found on construction sites and farms, while double-cab variants are often used by families to haul children to and from school. Add the affordable price factor, and buying the vehicle becomes a win-win deal for average South Africans.

For businesses, Ranger, in its current-generation form, offers a reliable fleet option. Be it the powerful Raptor, or versions like XL single-cab and XLT double-cab, they offer varieties like the cheapest, mid-range, and most expensive models, both on the new and used markets.

With regard to Bakkie’s popularity in South Africa, Nissan sold a grand total of 434 units of NP200 in March 2025, despite the fact that the vehicle is no longer officially on sale. It was supposed to be the Japanese company’s last compact bakkie in the South African market, before its discontinuation in April 2024.

Despite Nissan pulling the plug on its NP200, citing ageing design as the primary factor, the model continues to be the workhorse for small businesses and will remain one of the dominating names in the second-hand car market.

Decoding the customer mindset

The year 2025 was the one when South Africa faced an acute cost-of-living crisis. The nation’s Competition Commission’s inaugural ’Cost of Living Report’, which came out in September, presented the harsh reality: prices for electricity, water, education, and food outpacing overall inflation.

Electricity prices saw a 68% increase, followed by water with 50%, exceeding the general inflation rate, which itself stood at 28%. Food staples, such as brown bread, maize meal, and eggs, were witnessing widening margins, or sticky prices in some cases, despite falling producer costs.

With this background, four interest rate cuts were implemented in the year, totalling 100 basis points. Customers bought cars, but with a lot of financial discipline and self-restraint, and that’s what ended up helping the second-hand car industry.

During an interaction with Dealerfloor, Mienie stated, “Buyers are still active, but they are more deliberate and value-driven than ever before. The brands gaining traction are those aligning product offering, pricing and perceived quality with real-world affordability constraints.”

While Ford Ranger, Volkswagen Polo Vivo and Toyota Hilux dominated overall transactions and bakkies topped the chart, reduced financing costs led to accelerated demand for smaller, more economical vehicles. What the recent cost-of-living crisis has told the South Africans is that financing costs for new vehicles go up with every cycle of interest rate climb. Add monthly repayments and insurance premiums, and the situation leads to cash bleeding. A second-hand car, by contrast, often delivers the same utility at a far gentler price point.

According to reports, buyers are also reducing long-term financing exposure by taking smaller loans while also lowering costs on insurance, licence and registration fronts.

The availability of vehicle history reports and online valuation tools allows consumers to assess pricing, mileage and ownership records with ease. If you factor in the dealers’ game of elevating their used-car offerings, providing certified pre-owned vehicles, service plans and warranties, customers are getting an experience similar to buying a new car.

Car ownership is increasingly becoming a practical tool rather than a status symbol. In a climate where every rand counts, buyers are bound to think whether they should complicate their financial health further by buying a brand-new car, with higher financing costs. Thus, the so-called second-hand, but tried-and-tested models, with widespread service support, are capturing the buyers’ minds.

More than swanky features, brands and models known for longevity are in high demand, particularly those with solid fuel economy and manageable maintenance costs. Priority is to choose cars that fit South Africans’ lifestyles, not just their aspirations.

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“The cumulative value of used vehicles sold reached R14.32 billion in January, up from R12.89 billion in December and R12.59 billion a year earlier. The average transaction price moderated slightly to R416,082 from R419,537 in December, while average mileage declined to 70,938 km, continuing a gradual downward trend,” the data noted.

Toyota remained the leading brand in the used market, with 5,876 units sold in January, ahead of its German and American rivals Volkswagen (4,733) and Ford (3,577). More than half of Ford’s total came from Ranger midsize pickup sales, underlining continued strength in the bakkie segment (the category which defines the light commercial pickup trucks). The segment is known for being competitive, dominated by the Toyota Hilux, Ford Ranger, and Isuzu D-Max. And of late, Chinese manufacturers like Chery, with new, modern, and potentially electric models, have made their presence felt.

At the model level, the Ford Ranger retained its position as South Africa’s best-selling used vehicle, with 2,069 units sold, up 6.3% year on year. The Toyota Hilux followed with 1,604 units and similar annual growth. The Volkswagen Polo Vivo and Polo maintained their positions among the overall top four best-selling models.

Compact and value-driven models, on the other hand, registered some of the strongest gains. The Suzuki Swift moved ahead of the Toyota Fortuner in overall rankings, with 794 units sold and year-on-year growth of nearly 25%. The Toyota Corolla Cross and Hyundai Grand i10 also recorded notable annual increases, reflecting a continued consumer shift towards smaller, more affordable vehicles.

“None of the top 10 models posted a year-on-year decline, although performance varied across brands. Suzuki recorded the strongest month-on-month improvement, while Hyundai achieved the highest annual growth rate. BMW was the only major brand to register a monthly decline, although it remained up year on year,” reported Bizcommunity.com.

AutoTrader CEO George Mienie termed the January figures as an indication towards sustained consumer demand despite a high price base in 2025, with buyers continuing to prioritise affordability and proven nameplates.

“Bakkies and compact hatchbacks remained the dominant vehicle types in the market, reinforcing their role as core segments in South Africa’s used vehicle landscape as 2026 gets underway,” Mienie concluded.

The post Toyota, Ford lead South Africa’s booming used car sales: AutoTrader data appeared first on International Finance.

This outlook will coincide with the redemption of bonds, which are maturing and require repayment, averaging approximately 208 billion rand annually in the coming years. To meet these obligations, the Treasury plans fresh debt issuance, to adjust repayment schedules or implement deeper spending cuts.

The Treasury will continue with “bond switches,” allowing investors to exchange bonds nearing maturity for longer-term instruments. While this mitigates short-term repayment pressure, it does not reduce overall debt levels.

Investors have been forecasting reduced weekly bond auction sizes. The Treasury previously signalled cuts would only occur if lower issuance proves sustainable rather than temporary.

In terms of external borrowing, South Africa raised USD 2.6 billion of the projected USD 5.3 billion for 2025/26 from multilateral development banks. It will raise the balance of USD 2.7 billion in global markets.

“Additionally, the Treasury plans to leverage South Africa’s gold and foreign exchange account to ease future borrowing. The buffer stood at 364 billion rand by March 31, well above the target of 260 billion rand. After allocating 50 billion rand from the account earmarked for the current fiscal year, funds totalling 31 billion rand will be utilised in 2026/27 to curb borrowing requirements,” reported Reuters.

Meanwhile, in his Medium-Term Budget Policy Statement (MTBPS) speech, Finance Minister Enoch Godongwana stated that his country’s focus will now be on growing the economy faster and attracting the investment needed to create jobs and improve the lives of all South Africans.

“Two years ago, we committed to stabilising public debt in the current year and then begin to reduce it. Despite a challenging environment of persistently low economic growth, we are on track to achieve this goal. We are also committed to removing South Africa from the Financial Action Task Force grey list. We have delivered on this commitment in just two and a half years. This is thanks to collaboration across government departments, law enforcement agencies and the private sector. Exiting the grey list enhances South Africa’s attractiveness to investors and makes it easier to do business with us,” Godongwana said.

The above-mentioned achievements have helped the government to not only lower the bond yield curve, but also to reduce the risk premium for owning government bonds, resulting in the freefall of debt servicing costs. As per Godongwana, this will lead to an improvement in South Africa’s credit rating.

Foreign participation in domestic bond auctions has grown from 24.8% in April 2025 to 26.8% in September 2025. This increase was supported by lower global risk aversion and improved sovereign risk perceptions, bolstering demand and lowering yields. During this period, credit rating agencies reaffirmed South Africa’s sovereign ratings and outlook, citing progress on fiscal consolidation and stronger external balances.

This has already led to lower debt service costs as debt service costs in the current year will be 4.8 billion rand lower than estimated in the 2025 Budget, supported by lower interest rates, lower inflation and a stronger currency.

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Johannesburg-based Absa has positioned its Commercial Business Bank as that kind of partner, with a clear value proposition centred on three core principles: client centricity, holistic solutioning, and personalised partnerships.

Stonie Steenkamp, Managing Executive for Commercial at Absa Business Banking, said, “At Absa Commercial Business Banking, we don’t just see ourselves as financial service providers. We are trusted advisors, partners in our clients’ ecosystems, and growth enablers. By combining deep sector expertise with tailored, holistic solutions, we ensure that our clients are empowered to succeed.”

In 2024, Absa refined its segmentation and coverage model to ensure it meets the diverse and complex needs of commercial clients. The model is delivered through dedicated client teams that include a trio of “Relationship Executive,” “Transactional Banker,” and “Credit Analyst,” supported by product and sector specialists. The result is personalised service, informed advice, and holistic solutions aligned to client complexity and ambition.

Absa’s sector focus is central to its future-fit approach. From agriculture and manufacturing to transport, renewables, wholesale, retail and franchise, public sector, and tourism, Absa leverages decades of experience and in-depth knowledge to support clients with tailored solutions.

For example, as the largest financier of agriculture, Absa has financed the sector for more than a century and provides farmers with strategic insights through its AgriTrends report, while partnerships with industry leaders such as John Deere and Rovic Leers unlock further value. When it comes to renewables, Absa has financed more than 1,500 projects and grown its ambition 17-fold in five years, helping businesses adopt clean energy solutions that ensure sustainability and resilience.

These sector-led strategies are combined with a holistic product offering, from Islamic Banking to advanced payment acceptance solutions that enable clients to grow, run, and optimise their businesses. Whether it’s working capital management, cash flow optimisation, or international banking, Absa ensures that businesses are equipped with the right tools to compete and succeed.

Absa’s commitment to clients extends beyond financial products. Their value proposition is enriched with beyond-banking offerings such as advanced data analytics that provide actionable insights into customer behaviour, and employee banking propositions that support financial wellness in the workplace. These solutions create shared value, benefiting businesses, their employees and communities.

The Game-changer Called Ecosystem Banking

SMEs form the backbone of the South African economy, as enterprises act as the engines of innovation, job creation, and community development. However, many SMEs face obstacles that prevent them from realising their full potential. While access to finance often serves as one of the barriers, entrepreneurs face a wider range of other challenges, which include a lack of skills, networks, and difficulty accessing markets.

The latest Small Business Growth Index (SBGI), a partnership between Absa Business Banking and the South African Chamber of Commerce and Industry (SACCI) and independently conducted by the Bureau of Market Research (BMR) at Unisa, highlighted issues like poor financial management, lack of digital knowledge, and cash flow management skills hurting the small businesses.

Skills gaps exacerbate these issues and continue to hinder growth and long-term sustainability. The solution lies in “Ecosystem Banking,” which combines access to capital with essential non-financial support such as training, mentorship, and networking opportunities. This approach recognises that while financial resources are vital, they are insufficient to boost sustainable growth. Absa’s solutions have revolutionised this approach.

“As the Bank of the Entrepreneur, we believe that SMEs need more than capital to succeed. That is why we design solutions that support the full entrepreneurial ecosystem. Our financial offerings provide the flexibility required to manage working capital or expand operations, while our non-financial initiatives offer access to skills, markets, and digital tools to drive competitiveness. Partnerships play a vital role as well. By working with government, corporates, and industry associations, we can strengthen supply chains and create an environment where SMEs can thrive,” said Vignesh Subramani, Head of Sales and Distribution for SME Business at Absa Business Banking.

This commitment to holistic SME support was recently recognised when Absa was named “Most Innovative SME Bank – South Africa – 2025” by the International Finance Awards. In addition, Absa also received the “Most Innovative Commercial Bank – South Africa – 2025” and “Best Shariah Compliant Banking Solutions Provider – South Africa – 2025” awards.
“The accolade acknowledges our role in building digital-first solutions, developing skills training programmes, and nurturing partnerships that give SMEs access to markets and networks. It recognises our ability to create an ecosystem where entrepreneurs can access funding, mentorship, knowledge, and growth opportunities,” Subramani stated.

Performing On The Climate Front As Well

Absa actively supports clients in adopting environmentally and socially responsible practices, aligning with the global “Sustainable Development Goals.” Through initiatives such as green financing for renewable energy and climate-conscious business models, Absa helps businesses future-proof their operations while contributing to a just energy transition.

An example is Absa’s active participation in the Energy Bounce Back Scheme, a National Treasury and SARB-backed initiative that makes solar financing more accessible. By March 2025, Absa had financed over R626 million through this scheme, helping businesses mitigate energy risks while contributing to South Africa’s low-carbon transition.

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However, the one industry that suffered the most from the crisis has been global merchant shipping. Both the Suez Canal and the Red Sea have become collaterals here. Egypt lost around $7 billion in revenues from the Suez Canal in 2024. The loss has been more than 60% of the canal’s revenues in 2024 compared with 2023.

Yemen-based Houthi fighters have carried out nearly 100 attacks on ships crossing the Red Sea in what they describe as solidarity actions with Palestinians. In response, shipping firms have diverted vessels from the Suez Canal to longer routes around Africa, disrupting global trade by delaying deliveries and sending costs higher.

The attacks by the Houthis have caused a significant shift in global trade. Ships using the Asia-Europe and Asia-Atlantic trade routes have been forced to avoid the Suez Canal and the Bab El-Mandeb strait, leading them to divert their shipping routes around Africa’s Cape of Good Hope. This change has had a devastating impact on Egypt, which relies heavily on the Suez Canal as a key source of foreign currency.

Is Africa missing the bus?

Diversions of the global shipping through the Cape of Good Hope route was what African ports needed to play a bigger role in the transportation industry. The rerouting has seen ships travel longer distances, adding an average of 14 days for a vessel to sail from China to Europe. These additional 11,000 nautical miles have disrupted global trade and added operational costs for merchant vessel liners.

Estimates show that each diversion adds approximately $1 million in fuel costs, with more going towards insurance premiums and security measures.

“The risks in the Red Sea are not short-term; they are now ingrained in shipping logistics forcing long-term adjustments,” told Bilal Bassiouni, Head of Risk Forecasting at South Africa-based Pangea-Risk, while interacting with the World Finance.

“For African ports, especially those that are strategically located on the maritime route around the Cape of Good Hope, the Red Sea diversions should have presented an opportunity for a boom from offering restocking and bunkering services. Durban, Cape Town and Gqeberha in South Africa, Toamasina in Madagascar, Port Louis in Mauritius, Maputo in Mozambique and Walvis Bay in Namibia are among ports that have the potential to seize the moment,” he added.

Data reveals that over the six-month period to May 2024, maritime trade through the Cape of Good Hope route surged by a staggering 125%. The number of container ships and LNG tankers using the route went up by 260% and 180% respectively. Other major African ports also witnessed increased traffic, including Mombasa in Kenya, Dar es Salaam in Tanzania and Beira in Mozambique.

George VanDyck, Lecturer at the Plymouth Business School, University of Plymouth, however, added that African ports were caught off guard by the sudden traffic surge. Blame poor infrastructure and operational bottlenecks, which have made it impossible for the continent to capitalise on the opportunities presented by the crisis, particularly restocking and bunkering.

Many ports are struggling with outdated equipment, insufficient storage facilities and a shortage of skilled workers. Moreover, inadequate investment in expansions and development has resulted in inefficiencies that are slowing down operations, contributing to long wait times and congestion.

The ports which are facing problems in Africa are exacerbated by corruption, bureaucratic delays, and inconsistent regulatory frameworks. Additionally, high logistics costs and limited connectivity between ports and inland transport networks contribute to inefficiencies. To make matters worse, the lack of deep-water facilities means that most ports on the continent cannot accommodate larger vessels.

Massive shipping congestion

The ports of Durban and Cape Town have become the poster boys of Africa’s deeply rooted infrastructural and operational inadequacies. A sharp increase in traffic by 328% from December 2023 to March 2024 ignited unprecedented congestion at the two facilities, literally bringing operations to a standstill.

Durban, South Africa’s biggest container seaport that handles approximately 60% of traffic, was the worst impacted. At one point, about 80 vessels were reportedly forced to wait offshore for weeks as the logjam crisis paralysed operations.

“South African ports seemingly lost their credibility in extending support services to vessels diverting through the Cape of Good Hope,” says Francois Vrey, Professor Emeritus in the Faculty of Military Science at Stellenbosch University, South Africa, while identifying that one critical area in which African ports have failed to rise to the occasion is on bunkering services.

The increased sailing distances have led to a surge in demand for bunkering services. Ports such as Port Louis, Walvis Bay, and Maputo have attempted to position themselves as refuelling hubs. However, they have encountered challenges in managing larger volumes, which have been exacerbated by fuel supply shortages and inadequate refuelling facilities.

Durban, the largest bunkering hub in South Africa, was expected to reap maximum benefits from the bunkering boom. Despite making progress in expanding capacity, limited investments in advanced infrastructure and services have denied the port a competitive edge. Elements like storms, severe winds and high waves have further worsened the situation.

Another big setback arrived for the African shipping industry in 2024 when a deal between South Africa’s state-owned logistics company, Transnet, and a company owned by Filipino billionaire Enrique Razon to expand and run Durban container port was put on hold. The decision in the Durban High Court was taken in October in response to an application after AP Moller-Maersk (APM Terminals) challenged the awarding of the deal to ICTSI, the Filipino port operator.

The likelihood of an all-out war in the Middle East may force the global merchant shipping industry to be dependent on African ports for an indefinite period. The continent has the chance to tap future windfalls.

However, the continent needs to prioritise investment in expanding port infrastructures, improving logistics networks and upgrading equipment to handle larger volumes of traffic. Besides, governments must improve the regulatory frameworks, strengthen regional cooperation and provide incentives for private sector involvement. A fiasco like the one involving Transnet must not be repeated.

Infrastructure: Another mess

Africa also needs to focus on enhancing the integration of ports with railways and road networks, which is critical in guaranteeing better connectivity between ports and inland markets. However, budgetary constraints and competing national interests force most governments to decide against mobilising the required resources.

South Africa alone requires a mind-boggling $9.2 billion to address the infrastructure woes plaguing its ports and rail network. Namibia, which has made significant offshore oil discoveries, needs $2 billion to expand port infrastructures.

Even though the continent has seen the capacity of its ports grow significantly over the years, a 2024 report from the Africa Finance Corporation said that these expansions, upgrades and investments have not led to better inland logistics and supply chains.

Since 2005, African ports have received an estimated $15 billion in investments, allowing them to accommodate larger ships and offload more cargo for transportation across the continent.

According to the African Development Bank, port development led to increased traffic. Between 2011 and 2021, containers passing through African ports increased by nearly 50%, from 24.5 million to 35.8 million.

However, Africa Finance Corporation’s 2024 report claims that the “state of Africa’s Infrastructure,” the increased capacity has yet to lead to an efficient logistical supply chain across the continent. As per the analysts, African governments have neglected road and railway networks, which are unevenly distributed, of poor quality and underused, which limits their usefulness.

In the words of Gabriel Sounouvou, a specialist in logistics and supply chain management based in Guinea, “bad roads make it hard to do business in Africa, especially outside coastal areas.” The road corridors are not suitable for truck movements.

Jonas Aryee, head of Maritime Economics and International Trade Modules at Plymouth University in England, said human factors also make it difficult to transport goods across Africa.

“Some countries are still not opening up, and they’re protecting their local industries from those of their fellow African countries. You will find several roadblocks — from police, from customs, from gendarmes — in many countries when goods are going through. And it’s made the cost of doing business in Africa so high,” Aryee said.

The Africa Finance Corporation further showed that the continent has 680,000 kilometres of paved roads, just 10% of the total found in India, which has a similar population but one-tenth the land area.

The experts noted that the roads connecting African countries have remained in bad shape because the governments have not formed a joint team to invest in, build and manage highways that could improve the free flow of goods and people.

Floating loans

African governments are also failing to raise massive resources, thereby being forced to bring on board global operators not only to invest but also to take over the running and management of ports with the sole objective of improving efficiency.

Francois Vrey, Professor Emeritus in the Faculty of Military Science at Stellenbosch University, South Africa, contends that while port infrastructure investments are critical, Africa must be conscious of the risk of overinvestments to avoid creating white elephants in the pursuit of short-term gains.

Kenya’s Lamu port offers a classic example of such irrational investments. While the government committed $367 million to build the first three berths that were commissioned in 2021, the port that was expected to become a transhipment hub is today largely a white elephant. Since its commissioning, less than 70 vessels have called at the facility.

Investments in port infrastructure are essential for Africa to compete effectively on a global scale. This is particularly important, as the World Bank’s Container Port Performance Index (CPPI) for 2023 shows that none of Africa’s ports are ranked among the top 100 in the world.

The Port of Berbera in Somaliland is the highest-ranked African port, coming in at position 103 globally. While improving infrastructure is crucial, Africa must also enhance maritime security to make its ports more appealing. There is still much work to be done for the continent’s ports, but addressing these issues could position them at the forefront of global maritime trade.

The post Are African ports ready for global trade boom? appeared first on International Finance.

The National Assembly speaker, Thoko Didiza, informed the lawmakers who had gathered to listen to the finance minister’s budget speech that it would now take place on March 12.

The African National Congress (ANC), which lost its parliamentary majority in an election last year, will require the backing of other parties for the first time since apartheid ended to pass the budget.

The budget has been delayed, according to the Democratic Alliance (DA), its primary coalition partner, because it opposed a plan to raise VAT by two percentage points to 17%.

DA leader John Steenhuisen welcomed the move, which he said was “a victory for the people of South Africa,” while claiming the VAT rise would have “broken the back of our economy.”

“I think that it is correct that, when such situations happen, we need to collectively think on the best way forward,” said Didiza, while announcing the postponement to lawmakers and describing the situation as “unprecedented.”

Finance Minister Enoch Godongwana said the government was “grappling” with ways to finance its plans.

“There is a general agreement in the current environment that we need to find a way of funding our priorities. Do we borrow more? Do we cut expenditure? Do we raise taxes? And what are the implications of that?” he told reporters.

The last-minute budget delay caught most people off guard, but there have been disputes between the ANC and DA since the coalition government was formed in June, including over legislation related to health and education.

According to Oxford Economics political analyst Louw Nel, the postponement created “serious questions about the coalition’s ability to deal with major disagreements” and resulted in three weeks of uncertainty.

This comes as US President Donald Trump has been attacking South Africa for several reasons, including the government’s land reform policy and genocide case against Washington’s ally Israel, which led to the suspension of aid this month. Moreover, the country’s economy has been struggling with rising inflation and severe inequality, with over 60% of the population affected by poverty.

According to an article in the Business Day newspaper, the goal of the proposed VAT increase was to fill a billion-rand revenue gap and fund social and educational expenditures.

The year 2018 saw the most recent increase in VAT. Rumours of a further increase have been strongly opposed by a wide range of political parties and labour unions, who claim that the poor will be disproportionately affected despite efforts to protect them with a list of “zero-rated” items.

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The South African city’s tallest structure, Portside Tower, is situated in Cape Town’s central business district and is anticipated to sell for a little over R600 million. It has 30 floors and is 136 metres tall, with FNB as its anchor tenant.

This famous building, which has a five-star rating from the Green Building Council of South Africa, has about 50,000 m² of office space. Different office sizes are available in the building. A balcony on the tenth floor overlooks the Atlantic Foreshore and Table Mountain. In addition, the facility has a wellness centre and a well-equipped staff cafe.

The Oceana Group’s headquarters on the Foreshore and the adjacent Thomas Pattullo building are among the other Cape Town properties that Accelerate Property Fund is selling. APF’s interim results for the six months ending September 30th, which were released the day before Christmas Eve, did not include the asset valuations.

The company is also selling The Buzz Shopping Centre and the nearby Waterford Centre in Fourways, Johannesburg, with an estimated R215 million in sales profits.

It is estimated that the sale of these assets alone, less the sales of the Thomas Pattullo building and the main office of the Oceana Group, will generate about R985 million. However, it’s crucial to remember that Accelerate has increased the amount by R153 million by revising the fair value of the five properties it is selling. This suggests that Accelerate has placed a higher value on these assets than their current market value.

APF has not yet revealed the identities of the potential buyers or the specific terms of the transaction.

As of September 2024, APF’s net debt was R3.7 billion. While certain notes from the JSE’s domestic medium-term note (DMTN) programme expire at the end of February, the majority of this debt (R3.3 billion) is scheduled to mature on March 31, 2025.

The DMTN programme is responsible for R1.8 billion of the debt, with Rand Merchant Bank (a division of FirstRand) owing an extra R1.2 billion. According to the fund, talks are already in progress to renew these facilities and provide them an additional term.

Only five of the company’s top ten properties will remain after these sales: the Citibank headquarters in Sandton, Cedar Square, BMW Fourways, Bosveld Mall in Bela-Bela, and Fourways Mall.

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Following a comparison of the development of the stock markets in South Africa, Russia, and Qatar during their respective hosting of the mega football event in 2010, 2018, and 2022, the firm came to this conclusion.

The analysis projects that Saudi Arabia’s hosting of the FIFA World Cup in 2034 will have a major economic impact and accelerate the growth spurred by “Vision 2030,” a national initiative to diversify the Kingdom’s economy away from its reliance on oil.

“The decision for the host is usually made roughly seven to 12 years in advance. Post announcement, equity markets generally performed well with South Africa showing the strongest return, followed by Qatar and Russia. Therefore, we expect the Saudi market to outperform emerging markets in the coming period,” SNB Capital said, as reported by the Arab News.

“FIFA 2034 also reflects positively on the equity market, leading to positive market return, valuation expansion as well as resilience and quick recovery from any potential global market headwinds,” it added.

Over the next one to four years, Saudi Arabia will reportedly invest heavily in infrastructure, such as stadiums, transit systems, and urban growth. The Kingdom’s steel, cable, and cement companies will be among the main beneficiaries of this time in the infrastructure and construction sectors.

“Construction firms will profit from these projects as they approach completion in the medium term, which is four to eight years. Over the next eight to twelve years, the tourism and hospitality industries will benefit, and the retail sector—which includes luxury stores and vehicle rental agencies—will also be in a strong position to gain,” SNB Capital noted.

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The country’s GDP expanded 0.4% in the April-June quarter. Seven of the 10 sectors tracked by Statistics South Africa registered growth in the latest three-month period, as the economy benefited from an unbroken stretch without power cuts for the first time in years. The factory activity, however, slumped in August 2024, indicating that business conditions remain highly volatile in key sectors.

International Finance will provide an in-depth analysis of the power cuts and their significant impacts on South Africa’s labour market.

What’s going on with SA’s power sector?

Haroon Bhorat, Professor of Economics and Director of the Development Policy Research Unit, University of Cape Town and Timothy Kohler, Junior Research Fellow and PhD candidate, Development Policy Research Unit, School of Economics, University of Cape Town, recently analysed the labour market effects of scheduled electricity outages in South Africa, referred to as load shedding.

They found that power outages have had negative effects on employment, as well as working hours and monthly earnings among those who remained employed. Effects on employment have been larger than effects on working hours or earnings, highlighting the threat that load shedding poses to job preservation and job creation efforts.

“These effects were not, however, the same for all firms. Workers in the energy-intensive manufacturing industry appear particularly vulnerable to losing their jobs. Also, small and large firms responded differently. Small firms tended to favour reducing working hours rather than introducing layoffs. Lastly, effects varied by load shedding intensity. Low levels of load shedding don’t affect the labour market strongly, but high levels did,” the duo observed.

Load shedding, since 2007-end, has become a consequence of frequent breakdowns at the national utility, Eskom, due to a combination of poor long-term planning, a lack of financial resources, rampant state capture and corruption, and ageing coal-fired power stations.

The year 2023 became the worst one on record for both the utility and the country, as load shedding occurred for 289 days. Eskom, however, stated in August 2024 that South Africa could have no scheduled power cuts over the next seven months if the state-owned utility’s unplanned electricity losses stay at their current level.

Eskom managed not to implement power cuts in more than 150 days, since late March, after a big improvement in the performance of its fleet of mainly coal-fired power stations. Apart from increased electricity availability at Eskom coal stations, renewable energy projects operated by independent producers have also delivered more electricity over the past year. The utility’s CEO Dan Marokane said Eskom should be able to say early 2025 when “load-shedding at the chronic level that it is behind us,” with an additional 2.5 gigawatts of generation capacity coming online in the next few months.

Despite the positives, worries remain

Eskom’s turnaround, to some extent, is praiseworthy. However, the damage already done is huge. In 2023, scheduled blackouts reached record levels and cost the already floundering economy about $90 billion and over 860,000 jobs, particularly hitting its mining and manufacturing sectors. Even at the micro level, South Africans have had to mould their lives around daily power cuts.

“Over the past five years, the worsening energy crisis has threatened the survival of businesses, including KFC, the popular American fast-food joint, and required costly fixes for companies that need a steady supply of electricity. Grocery retailer Shoprite recently reported spending $28 million in six months on diesel generators to keep its lights and refrigerators on,” Foreignpolicy.com reported.

To partially cover the shortfall in electrical output in 2023, Eskom ramped up its use of costly diesel-powered generators, further compromising its already unsustainable financial position. According to the utility, the unit cost of electricity from diesel generators is 14 times higher than the utility’s coal plants.

Eskom is now using its diesel-powered turbines to help meet surges in demand during the morning and evening peak periods. According to Eskom, it spent 1.1 billion South African rand, or roughly $60 million, on diesel in May 2024, a notable decline from the 3.1 billion rand spent in the same month in 2023.

Most notably, Eskom has brought several units of the Kusile power plant, located in the Mpumalanga province, back online. The utility was granted regulatory approval to temporarily operate those units without technologies that prevent toxic sulphur dioxide emissions. This has effectively increased Eskom’s available generating capacity by as much as 2,100 megawatts (MW), which is more than the average supply deficit throughout 2023.

In addition to Kusile, the rest of the utility’s coal fleet has remained in slightly better shape due to increased maintenance over the summer months (between October 2023 and March 2024) when electricity demand remains typically below average. Both of these have contributed to a meaningful decline in the number of unplanned outages so far in 2024.

“Meanwhile, a decrease in overall demand, owing to the weak economy and a boom in private renewable energy investments, has also helped. Eskom estimates that solar panels with a cumulative generating capacity of 5,500 MW have now been installed on the roofs of South Africa’s malls, office blocks, warehouses and households. Of that amount, roughly 2,100 MW was added in the last year alone—the vast majority of which is for self-use as the country doesn’t yet have a national feed-in policy,” Foreignpolicy.com added.

James Mackay, chief executive of the Energy Council of South Africa, a business group that is working with the government to resolve the power crisis, termed the reprieve as “a genuine shift and result of 18 months to two years of hard work.”

He reflected renewed efforts to clamp down on corruption, a fresh Eskom leadership team that has political support, an improved culture at the utility, and a stronger maintenance programme. The private sector’s involvement, partly in the form of capacity building, is also making a difference.

While the country’s electrical grid remains vulnerable, power cuts will be less severe going forward, Mackay predicted. By 2029, South Africa eyes to have a liberalised electricity sector, by ending Eskom’s century-long monopoly. The Electricity Regulation Amendment Bill, introduced in August 2024, will allow non-Eskom electricity trading for the first time and require the establishment of a fully competitive wholesale market within five years.

The government has suggested delaying coal plant shutdowns for the foreseeable future, despite the blockbuster $8.5 billion energy transition funding deal it agreed to at the COP26 climate conference in late 2021.

However, Eskom’s recent turnaround still provides an opportunity to accelerate South Africa’s green energy ambitions, to deal with the economic blow of the European Union’s impending carbon border taxes. As things stand, South Africa will be hit harder than any other nation due to its heavy reliance on coal.

President Cyril Ramaphosa wants to attract private-sector investment worth $110 billion in the next five years as South Africa leans more on its BRICS partners, while also seeking to maintain close ties to the United States, the United Kingdom, and Europe. To successfully court investors and reignite the moribund economy, South Africa needs to close the chapter on its load-shedding nightmare.

Bhorat and Kohler found that load shedding was significantly and negatively associated with employment, working hours and monthly earnings. On average, periods of load shedding were associated with a 2.6% lower chance of being employed, 1.3% fewer working hours per week (equal to about half an hour), and 1.7% lower real monthly earnings. These are large effects. The monthly earnings reductions were also driven by fewer working hours.

Low levels of load shedding (stages 1 and 2) did not have these associations. But they were markedly worse with higher levels (level 3 upwards). Stage 3 was associated with 1.9% lower employment, compared to 3.6% for stages 4 and 5 and almost 6% for stage 6.

Manufacturing, a relatively energy-intensive industry, was worst off by far. Here, load shedding was associated with nearly 17% lower manufacturing employment, about 6.5 times larger than the average of all industries. While most industries suffered from loss of working hours due to power cuts, workers in large firms were vulnerable to all outcomes. In contrast, those in small firms were only vulnerable to reductions in working hours, but not to job losses or wage cuts.

“One might expect larger firms to be less vulnerable, as they would have more resources to pay for alternative energy sources. While that’s probably true, large firms are more likely to operate in energy-intensive sectors. Our analysis suggests that small firms have tended to reduce working hours rather than laying off staff, an outcome which is not unique to South Africa,” the duo commented.

The “Electricity Regulation Amendment Act” envisages a hybrid market model, where competition, along with various pricing models will emerge and shape the sector’s health. New kinds of businesses will come up, such as traders in electricity, “prosumers” (consumers producing electricity for sale into the grid), market and system operators.

Load shedding has been devastating for South Africa’s economy, weakening the rand and contributing to inflation. South Africa’s central bank estimates that it has cut 2% from the country’s economic growth rate in 2024. In April, some 80% of public healthcare facilities said they were now affected by power cuts.

People have taken matters into their own hands. South Africa’s installed rooftop solar PV capacity increased from 983MW in March 2022 to 4,412MW in June 2023, registering a 349% increase in a little over a year. Other government data shows that in Q1 2023, the country imported five times as many batteries as it did in 2022, as consumers looked for more ways to retain power during outages.

The South African Government is actively encouraging the uptake of new rooftop solar with targeted policy, including a new rebate scheme announced in February 2024, which allows individuals who install new panels onto their homes to claim rebates equal to 25% of the cost of the panels.

The latest research from Morgan Stanley suggests that the decline in South Africa’s coal generation, coupled with the boom in private power supplies, means electricity generated from the private sector will exceed output from Eskom by 2025. This can be considered a rare silver lining, as the Ramaphosa government gears up to end the state-run utility’s market monopoly.

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This represents a change from previous immigration laws that have been denounced as being xenophobic.

The introduction of a remote work visa and the implementation of a new points-based system for work visas, which determines eligibility automatically if you meet certain requirements, are among the immediate changes.

He stated that both of these initiatives should be completed in “a matter of days.”

Attract Skills, Tourists

“Visa reform to attract tourists, to attract capital, to attract skills are some of the most powerful things we can do in the short term to kickstart economic growth,” Schreiber told Reuters in an interview.

Currently, foreigners who receive job offers in South Africa may have to wait months or even years to receive a visa, and their requests may occasionally be denied for unclear reasons.

Visas for Western tourists are typically easily obtained upon arrival; however, visitors from China and India, two potentially lucrative markets, must submit off-putting paperwork upon arrival.

The nation has a reputation for being particularly hostile to immigrants from other African nations, who are occasionally accused of “stealing” jobs with a third of the population unemployed.

“It’s a false dichotomy to suggest that we cannot grow the economy and at the same time combat xenophobia,” Schreiber said, adding that bringing in skilled foreigners can help create jobs.

The Democratic Alliance party, which Schreiber belongs to, was the recognised opposition until it partnered with the African National Congress in a coalition government in 2024. Campaigners for human rights criticised both parties for having anti-immigrant sentiment in their election platforms.

According to Schreiber, the current system is a “catastrophic failure” that excludes the very people that South Africa needs.

He claimed that South Africa had a backlog of 306,000 visas that had been built for more than ten years when he took office in July 2024. His team has now reportedly made it through 62% of those by bringing in reinforcements and working overtime.

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