Economic contraction exposes strain in South Africa's business-government recovery plan

South Africa’s economy shrank 0.2% in the second quarter, a contraction that landed as a direct challenge to the business-government partnership that policymakers have promoted as the engine of the country’s recovery.

The tension surfaced sharply at the INN8 Invest Summit at the Sandton Convention Centre, where Deputy Finance Minister David Masondo reached for a parable to defend the partnership model. Running the Sanlam Cape Town Marathon in May, he recalled a spectator accusing government of underperforming. He stopped to respond. The marathon itself, he argued, illustrated the division of labor: government maintained the roads and deployed traffic police; the private sector organized the event; citizens ran. “Business, you’ve got control of capital; government, we don’t have money,” Masondo said. “All we have to do is to provide the necessary environment for us to run this marathon successfully to the benefit of everyone.”

Additional reference context is available at https://fm.co.za/opinion/2026-09-16-rob-rose-is-south-africa-s-business-government-collaboration-just-a-comforting-ruse/.

Bernard Swanepoel, former CEO of Harmony Gold and organizer of the Junior Indaba and Joburg Indaba, was not persuaded. He called the collaboration narrative part of a “bullshit narrative” that has failed to move the needle on growth. “If total failure is 0% growth and decent success is 5% growth, we are very close to total failure,” he said. GDP growth remains stubbornly weak, and Swanepoel’s argument was blunt: stop making excuses, start making fundamental changes.

The timing sharpened his point. Stats SA’s announcement of the quarterly contraction came while President Cyril Ramaphosa has been publicly targeting 3% growth. Busi Mavuso, CEO of Business Leadership South Africa, said the reversal should “humble us all.” She acknowledged that reforms in power and logistics have improved baseline conditions, but conceded those improvements have not catalyzed wider investment. Kevin Lings of Stanlib put a number to the gap: gross fixed capital formation has fallen to 13.6%, well below the 20% threshold needed to generate jobs at scale.

Swanepoel’s deeper concern was that the conversations themselves are misdirected. Debates about beneficiation and value-add in mining, he argued, miss the point for most South Africans. The real delivery challenge is not solving problems for large corporations like Anglo American but creating pathways for small firms and the 47% of people under 35 who cannot find work. “Society’s job goes beyond solving the problems of the Anglo Americans of the world. We also have to solve the economic challenges facing smaller new entrants,” he said.

Masondo countered that structural reforms do address bottlenecks affecting everyone. Opening monopolies like Eskom and Transnet to competition, or reducing crime’s drag on tourism, ultimately benefits the broader economy. He cited the example of a single tourist attacked in Mpumalanga generating international headlines that deter investment, a reminder that delivery failures in one sector ripple outward.

Meanwhile, Alan Knott-Craig jnr, founder of fibertime, pointed to what operational execution can look like when it actually reaches underserved markets. Fibertime has installed fiber internet in 575,000 township homes, selling 100Mbps connections with no data cap for R5 a day. That growth rate is a concrete data point in a debate otherwise heavy on assertion. Knott-Craig identified two levers government could pull to catalyze township economies: directing funding to genuine entrepreneurs through private sector venture capital rather than politically connected figures, and restoring law enforcement where it is largely absent. “If you just solved crime in the townships, you’d see a doubling of the economy, and you’d get back to 2%, 3% GDP growth,” he said.

The exchange, covered in detail at fm.co.za/opinion/2026-09-16-rob-rose-is-south-africa-s-business-government-collaboration-just-a-comforting-ruse/, exposes an accountability gap at the center of the partnership model. The private sector can support at the margins. It cannot fix crime, rebuild infrastructure, or break monopolies. Those remain government responsibilities, and delivery on those fronts has been uneven at best. The collaboration narrative may be appealing, but it remains untested against the economic outcomes it promises to unlock, and a 0.2% contraction is not the kind of result that buys more time for patience.