Deputy Minister Zuko Godlimpi: 2026 State of the Nation Address Debate

Honourable Honourable Speaker,
Chairperson of the NCOP
Honourable President,
Honourable Deputy President
Honourable Members,

We participate in this debate on the President’s 2026 State of the Nation Address at a moment when our primary task is clear: to accelerate growth, rebuild our country’s productive capacity and create jobs at scale.

The President has called for faster and more inclusive growth driven by higher investment, increased infrastructure expenditure, trade expansion and a broadly capable developmental state. Naturally, Industrial policy is central to this programme. It is through continuing industrialisation that we will expand production, promote innovation, deepen localisation, transform ownership, and create sustainable employment. This is the core of the ANC’s economic programme and the 10-Point Plan to reignite growth and employment.

The debate on economic growth must be anchored on the objective realities of the economy, not impressions.

The President’s 2026 State of the Nation Address spoke to an improving but not perfect economic environment. That improvement is not a coincidence, it is visible in the data, and is being driven by deliberate structural interventions to stabilise the macroeconomy, restore credibility, and defend productive capacity.

Turning the corner: macro stability with evidence

Honourable Members,

South Africa has now recorded a fourth consecutive quarter of economic expansion. The latest Growth forecasts project South Africa’s economy to grow at 1.3 – 1.6% in the near term, with growth expected to strengthen as improvements in energy, logistics, increased infrastructure expenditure and new investments take effect. This is the signature of an economy that is regaining momentum beneath global headwinds.

Inflation has also eased materially. The South African Reserve Bank revised its forecast for headline inflation to 3.3% for 2025 and 3.5% for 2026 and noted progress in inflation expectations towards the 3% goal. The shift to a 3%-point target with 1% tolerance band lowers inflation expectations. The lowered inflation expectation are helpful when they begin to lower the cost of borrowing which is an instrumental condition for higher fixed investment and industrial expansion. Interest rates have begun to fall for households, and the cost of government debt is also falling

South Africa’s exit from the FATF grey list on 24 October 2025 removed a material reputational and transaction-cost penalty from the economy. This has helped us with the first sovereign ratings upgrade/outlook improvement in around two decades.

Externally, the trade numbers also show resilience. South African exports have improved in 2025 despite the volatile global trading environment. SARS recorded a trade surplus of R21.8 billion in September 2025, with exports of R186.4 billion and imports of R164.6 billion. These are not abstract indicators, they reflect the regained capacity of the economy to earn, produce, and export. Overall, the data shows resilience even amid global shocks. This data matters because it proves that when we fix network constraints in port performance, logistics coordination, expanded market access, South African producers can expand exports even when global conditions are volatile.

This is why we say: the corner is being turned, not because we simply folded our arms and wished it so, but because we have been working to stabilise fundamentals in ways that create space for growth.

But we are quite clear: stability is not the destination. It is the platform on which we anchor our growth agenda. To reduce unemployment meaningfully, we must lift growth to at least 3% and beyond, because below that threshold, the economy does not produce new firms at scale and the labour market does not absorb new entrants at scale.

Trade posture: defending markets, diversifying exports, building Africa’s value chains

Honourable Speaker,

The global trading system is being reshaped by protectionism, unilateral measures and supply-chain competition. In that environment, South Africa’s trade posture must be both defensive and expansionary. We are actively defending existing market access that sustains jobs, while diversifying into new markets and building regional value chains.

First, on Africa and AfCFTA: the data shows both progress and unrealised potential.

TradeMap data indicates that South Africa’s exports to AfCFTA implementing countries were R32.75 billion in 2024, and R28.19 billion in 2025 up to end-September. Yet preferential utilisation under AfCFTA remains low. SARS data shows that from January 2024 to October 2025, South Africa’s exports under AfCFTA preferences into non-SADC implementing countries were about R2.26 billion, with imports at R1.58 billion, yielding an AfCFTA utilisation rate of 3.85%. Those preferential exports have mainly gone to Ghana, Kenya, Egypt, Rwanda, Cameroon, and Algeria, demonstrating a concentration risk. There remains huge potential for export to North Africa, particularly markets like Egypt and other regions in the continent.

Africa is already a major market, but we are still at the early stages of using AfCFTA preferences to scale industrial exports into new markets. AfCFTA currently provides new market access in 13 non-SADC countries on 90% tariff coverage, while negotiations continue to finalise the remaining 10% (sensitive and excluded products). Our task is to drive utilisation, firm by firm, product by product, so that the AfCFTA becomes not only a trade agreement, but a platform wherein South African manufactured goods reach all corners of the continent.

Secondly, on diversification beyond Africa: we are pushing new market openings and defending existing ones. Our trade strategy is not a set of announcements; it is action oriented, to defend, diversify, and industrialise through trade.

Minister Tau returned from China last week: The Early Harvest envisaged in the recently signed framework agreement with China is part of expanding duty-free access and building new export corridors for South African products into a growing market of 1.5 billion people, whilst attracting Chinese industrial technology firms into South Africa.

The Southern African Customs Union negotiations with India are progressing toward a preferential trade agreement that would open access into a market of more than 4 billion people and attract Indian manufacturers into South Africa.

Trade engagements with Gulf economies are unlocking new investment and market opportunities in agro-processing, green hydrogen and advanced manufacturing exports.

The renewal of AGOA, even for a limited period, provides important relief for exporters and is a positive signal for continued strategic engagement with the United States. Government continues to engage our US counterparts to stabilise and deepen this relationship, recognising its importance for South African manufactured exports.

[On that note, honourable Speaker, I wish to take this moment to pay tribute to Reverend Jessie Jackson, the legendary Civil Rights leader of the United States, who passed away today peacefully at the age of 84. Reverend Jessie Jackson was a lifelong friend and dependable ally of the people of South Africa, and the ANC. Reverend Jackson tirelessly championed our cause of freedom during Apartheid and up to his last days- he continued to champion the truth about democratic South Africa against hostile political opinion, always lending a hand to our efforts to reach out to a wider audience of progressive policymakers in Washington and defended the bonds of solidarity and friendship between the peoples of South Africa and the United States. May his spirit rest in eternal power as a symbol of solidarity, truth, and justice!]

Defending productive capacity: steel, smelters and strategic industries

Honourable Members,

As said earlier, Macroeconomic stability does not automatically produce jobs. Jobs come when we defend and expand productive capacity.

This is why government has been intervening directly in distressed industrial sectors. In steel, we have been preventing the erosion of our strategic capacity in a way that collapses downstream industries, which span from construction and mining to automotive components. The Industrial Development Corporation’s interventions in the steel ecosystem, including ongoing engagements with ArcelorMittal South Africa, are about one thing: protecting our industrial capability and the jobs linked to it. These engagements are advanced and the state’s position is clear: we will land at a deal that sustains our country’s strategic industrial capacity.

On smelters and minerals beneficiation, the cost of electricity has become a major global competitiveness weakness. Work led by the Minister of Energy and Electricity to reduce electricity costs for the chrome sector, from R2 to around 87 cents per kilowatt-hour, is precisely the kind of targeted structural intervention that prevents furnace closures, protects jobs, creates cost structures that will reopen other smelters and improves overall beneficiation capacity. This approach will eventually be extended across other energy-intensive sectors that are strategic to our industrial base.

In the sugar industry, government support through the IDC has ensured more than 65 000 direct jobs and hundreds of thousands of livelihoods are protected. However, government remains seized with stabilising the sector and addressing the recent developments relating to Tongaat Hulett. Working with industry, labour, and sugarcane growers, we are committed to safeguarding jobs and supporting a sustainable sugar industrial value-chain.

The illicit economy: defending the fiscus, consumers and legitimate industry

Honourable Speaker,

The President also spoke to confronting the illicit economy. This is not a peripheral issue, it is a direct attack on jobs, revenue and industrial capability.

The tobacco case is instructive. BAT South Africa has announced its intention to shut its Heidelberg cigarette factory by end-2026, citing that illicit cigarettes now account for about 75% of the local market, pushing the plant down to 35% capacity and threatening jobs. This is not just about tobacco. It reflects a broader illicit ecosystem: counterfeit goods, under-invoicing, illicit imports, and criminal networks that undermine legitimate manufacturers and weaken the national economy.

If illicit imports and illicit trade thrive, then honest firms cannot compete, consumers face unsafe products, and government loses revenue needed for infrastructure, services, and development. This is why the response must be coordinated and firm: strengthened customs enforcement, modernised excise administration, better border management, tighter value-chain traceability, and stronger prosecution capacity. It also requires consistent action against predatory practices and undercutting through the abuse of trade channels.

Conclusion

Honourable Speaker,

The President’s SONA is correct: the environment is improving, and the data supports that view. Growth momentum is emerging, inflation has eased and is being anchored lower, fiscal credibility is being restored, greylisting has been exited, and trade performance shows resilience.

But the deeper point of this debate is why that improvement is occurring: because the state is acting, stabilising fundamentals, removing constraints, defending strategic industrial capacity, negotiating trade deal to diversify markets, and confronting the illicit economy that destroys jobs and revenue.

If we consolidate these gains and push harder with industrial execution in, beneficiation, logistics, export diversification, AfCFTA utilisation and waging a war on the illicit economy, South Africa can move onto a sustained 3% growth path and beyond, the threshold where unemployment begins to decline meaningfully.

I thank you.

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