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A faster, cheaper, more fragile world

The global economy is starting to resemble a machine that is getting faster even though its bolts are becoming loose. Payments are becoming cheaper, and artificial intelligence (AI) promises productivity gains. Yet, beneath this progress sits a harder reality: Debt is swelling, monetary control is weakening, trade tensions are hardening, and the next financial shock could move faster than regulators can respond. This should matter to South Africans because we live in an open, financially-exposed economy. When the global system shifts, we feel it in our fuel prices, bond yields, food inflation, and investor confidence.

Let us start with stablecoins. Their appeal is clear: They allow money to move quickly and cheaply, often outside traditional banking. For households in countries with weak currencies, they can look like a lifeboat. Why hold money that keeps losing value when a dollar-linked digital asset is just a click away? But, convenience can become a warning. The more citizens save, trade, and think in dollar stablecoins, the more domestic monetary authorities start to thin out. Central banks lose traction. Capital controls become easier to evade. Tax collection becomes harder. And financial crime finds new channels. The real question is not whether stablecoins are useful. It is what happens when private digital dollars begin doing work once reserved for sovereign money. At this point, innovation is no longer just improving finance; it is relocating power.

Then there is AI. Much of the debate focuses on jobs, and rightly so. But, the deeper macroeconomic issue is whether AI becomes a disinflationary force. If firms can produce more with fewer delays, lower administration costs, and better systems, prices may come under pressure. Central banks could find themselves fighting yesterday’s inflation battle in tomorrow’s productivity boom.

Still, that is only half the story. A technology that cuts costs can also deepen inequality, weaken labour’s bargaining power, and accelerate financial reactions. If banks and asset managers rely on similar AI models, the next shock may not unfold over weeks. It may unfold in hours. A more efficient economy is not automatically a more stable one. South Africa (SA), with its unemployment and social strain, should be careful not to confuse productivity with shared prosperity.

Now, place that next to the United States (US). The world treats US Treasury debt as the bedrock of global finance. Yet, America’s debt keeps climbing, deficits remain entrenched, and conflict is adding new spending pressures. The danger is not simply that Washington owes too much. It is that the global system depends so heavily on a borrower whose fiscal discipline appears increasingly political rather than structural. When US yields rise, emerging markets rarely get a vote. They just get the consequences.

China offers a different version of the same fragility. Its large trade surplus is often read as proof of industrial strength. In truth, it also reflects weak domestic demand. China is producing more than it is comfortably absorbing at home, so the excess spills outward. The result is more tariffs, more suspicion, and more fragmentation in world trade. For SA, that is not an abstract geopolitical contest. It shapes export demand, prices, and growth.

Put these trends together and a striking possibility emerges: The world may be entering an era in which efficiency rises while resilience falls. Money moves faster, but states control less of it. Technology lowers costs, but can also compress jobs and amplify shocks. Great powers produce more, borrow more, and trust one another less.

This is no reason for panic. But, it is a reason for seriousness. SA cannot control these forces. It can decide how exposed it wants to be to them. Stronger institutions, credible public finances, better infrastructure, faster reform, and a financial system that can innovate without losing oversight are no longer nice-to-haves. They are the price of resilience in a world that may become cheaper, smarter, and more dangerous at the same time.

This article has been published on Moneyweb.

 

When efficiency turns into blackmail

The global economy has spent three decades mistaking concentration for strength. Put production where it is cheapest. Let the best firm dominate. Centralise supply chains, data, capital, logistics, and technology in the deepest and most efficient nodes. In the language of modern finance, this all looked rational. In the language of risk, it now looks naïve. The world is discovering that when too much value sits in too few places, efficiency stops being a virtue and starts becoming a vulnerability. And that may be the most important economic lesson of the moment.

Take Taiwan: It sits at the centre of the world’s cutting-edge semiconductor production. This is not just a technology story; it is a fragility story. The modern digital economy, from smartphones to cloud computing, artificial intelligence (AI), and advanced weapons systems, rests on an extraordinary degree of concentration. If this node is disrupted, the shock does not stay in Asia. It moves through equity valuations, investment plans, national security calculations, and the assumptions underlying the AI boom itself.

China reveals a different version of the same pathology. Its best companies are not weak. Many are globally formidable, technologically aggressive, and commercially ambitious. Yet, they are being corroded by a domestic system that often keeps weaker rivals alive through subsidies, political protection, and easy credit. In other words, China is trying to build national champions while also preserving the dead weight around them. That is not merely inefficient; it slowly taxes excellence.

Finance is no different. For years, investors convinced themselves that larger private markets meant stronger private markets. But, size and resilience are not the same. When redemption pressure rises, the old truth returns: Liquidity always looks abundant until too many people want it at once. The same structures that seem sophisticated in an upswing can become awkward, gated, and brittle when confidence turns.

Even the dollar, long treated as America’s ultimate instrument of economic power, is starting to show the same tension. The more often dominance is weaponised, the stronger the incentive for others to route around it. Some of those alternatives are inefficient. Some are risky. Some are plainly dubious. But, they emerge, nonetheless. That is how power works in economics: Used too aggressively, it invites avoidance.

South Africans should not treat any of this as distant geopolitical theatre. We live in a country already familiar with the risk of concentration. We see it in our electricity, freight rail, ports, municipal failures, and policy bottlenecks. But, the deeper point is broader. The whole world has been running on concentrated dependence, and the invoice is now being delivered. When too much trust, production, or market access is controlled by too few systems, shocks become sharper and policy becomes more defensive. And that changes what investors should value.

For years, markets rewarded scale, speed, and efficiency above almost everything else. The next decade may reward something else: Resilience. Spare capacity, supplier diversity, domestic capability, trusted institutions, funding flexibility, and operational redundancy all used to look expensive. Now, they look strategic. They may still reduce short-term margins. But, they also reduce the odds of catastrophic interruption. In a more fractured world, that trade-off begins to matter more.

The deeper irony here is that the systems we most admired were often the systems that removed slack. But, slack is not always waste. Sometimes it is what keeps a business, a country, or a financial architecture standing when pressure arrives.

That is why this is bigger than another geopolitical scare or market wobble. We may be living through the early stages of a global repricing, not only of oil, rates or technology, but of concentration itself. For a generation, the world assumed that the most efficient system was the strongest one. It is beginning to learn that the most efficient system may simply be the one that breaks the fastest.

 

The next economic battle is not about oil; it is about who writes the rules

Markets are drawn to visible power. Missiles, tariffs, sanctions, trade wars, oil spikes; these are all things that move prices quickly and dominate headlines. They feel like the real story because they are dramatic and immediate. But the deeper shifts in the global economy often happen elsewhere, in quieter places: Committees, secretariats, treaties, standards bodies, and the institutions that slowly shape how countries and companies are expected to operate. That is why China’s push to host the secretariat linked to the new United Nations High Seas Treaty matters more than it first appears.

At first glance, it can sound technical, almost bureaucratic. Oceans governance does not have the emotional punch of a war or the market impact of an oil shock. But that is exactly why it deserves attention. This is not simply about where officials meet. It is about who gains proximity to an emerging global institution, who helps shape its administrative culture, who becomes central to its networks, and who strengthens its standing as a responsible organiser of international co-operation. All of this matters economically.

Modern economic power is no longer exercised only through factories, military reach, commodity flows, or export strength. Increasingly, it is exercised through influence over the frameworks that govern trade, regulations, resources, data, and the global commons. Whoever helps shape the rulebook does not need to dominate every market directly. It is often enough to help define the language, procedures, standards, and legitimacy within which others must function.

For years, many assumed that although the global economy was changing, the institutional architecture underneath it would remain broadly Western in its character. The United States (US), in particular, was expected to remain the default anchor of the multilateral order. But when the US steps back (whether as a result of fatigue, domestic political division, or strategic neglect), the vacuum does not stay empty. Other powers move in.

China understands that power is not only about building roads, ports, rail lines, and supply chains. It is also about building influence inside the institutions that govern international life. That is a subtler form of power, but in many ways a stickier one. Countries can reject rhetoric. It is much harder to ignore a system once it becomes embedded in how decisions are made.

For investors and businesses, this should not be dismissed as distant diplomacy. Institutions shape commercial reality. They influence compliance burdens, environmental obligations, dispute-resolution mechanisms, reporting standards, and the broader predictability of doing business across borders. Once those frameworks settle, capital begins to adapt around them. So do governments. So do multinational companies.

South Africa should pay attention. We often think geopolitical rivalry only matters when it hits the oil price, the rand, or shipping costs. But countries like ours are also deeply affected by rule-making that we do not control. We export into systems shaped elsewhere. We seek investment from markets that care about standards, governance, and strategic alignment. We operate within legal and commercial frameworks whose direction can change without our consent. That means the contest over institutions is not a side issue. It is part of the terrain on which smaller and mid-sized economies must compete.

There is an irony here. The world talks endlessly about the return of hard power, yet some of the most important battles are being fought through administrative influence, procedural credibility, and institutional positioning. This is slower power, but it lasts. It accumulates quietly, then suddenly looks obvious.

That may be the most thought-provoking feature of the moment. The world is still obsessed with the visible drama of power. Yet the quieter contest may prove more enduring: Not who fires the loudest shot, but who ends up writing the manual everyone else has to use. And that is why the next global economic struggle may not be decided only by who produces more, exports more, or threatens more. It may be decided by who becomes the default organiser of the world.

This article has been published on Moneyweb.

When markets tremble, discipline matters more than forecasts

Every time the Middle East conflict intensifies, the same pattern unfolds: Oil rises, markets wobble, the rand looks vulnerable, and investors begin to feel that doing ‘something’ must be better than doing nothing. This instinct is powerful. It also causes many of the worst financial mistakes. In moments like these, fear creates an illusion of wisdom. A rushed decision can feel prudent simply because the headlines are unsettling. Yet, a frightening environment does not automatically require a dramatic portfolio change. More often, it requires the opposite: A steadier hand.

This does not mean the risk is imaginary. It is real. The Middle East sits close to one of the most important energy chokepoints in the world. Roughly a fifth of global oil and petroleum product consumption, more than a quarter of global seaborne oil trade, and about a fifth of global liquefied natural gas trade move through the Strait of Hormuz. When conflict raises questions about this route, markets react because the consequences can spread well beyond the region itself.

For South Africans, this matters concretely. We do not feel this only as geopolitics. We feel it through fuel prices, transport costs, imported inflation, pressure on household budgets, and tighter financial conditions. Research has repeatedly shown that energy shocks do not remain confined to oil markets. They spill into broader inflation, weaken real spending power, and complicate the task of central banks trying to stabilise prices without harming growth too severely. In other words, a shock that starts in a shipping lane can end up in your monthly budget and, eventually, in investor behaviour.

Still, the biggest financial threat for most people is usually not the event itself. It is the reaction to it. Research on investor behaviour has shown that people are prone to costly mistakes when uncertainty rises. They become more reactive, more short term in their thinking, and more likely to confuse volatility with permanent loss. That is when investors sell good long-term assets after prices have already fallen, stop monthly contributions because the market feels unsafe, or move too much money into cash just when future returns are becoming more attractive. The damage often comes not from the shock, but from abandoning a sound process under emotional pressure.

What do people do who make better decisions in times like these?

Usually, nothing dramatic. They return to first principles. They ask whether their long-term goals have changed, not whether the news cycle has. They ensure their liquidity is sufficient, because an emergency fund prevents forced selling. They stay diversified across asset classes and geographies, because concentration is what turns volatility into real danger. They keep contributing where appropriate, because lower markets also mean cheaper future returns for long-term buyers. And they rebalance calmly if portfolio weights have drifted too far, rather than tearing up the plan.

This is the part that many investors struggle to accept: Good financial planning is not designed for calm periods only. It is built precisely for seasons when markets are noisy, politics is uncertain, and predictions become less reliable. Anyone can feel like a disciplined investor when prices are rising and the world appears orderly. The true test comes when fear is in the headlines and restraint suddenly feels passive. But restraint is not passivity. In finance, it is often the highest form of judgement.

There is also a deeper lesson here: Volatile periods expose the difference between a portfolio and a plan. A portfolio is just a collection of assets. A plan is a framework for making decisions when emotions are running high. Investors who do well over time are usually not those who predict every geopolitical turn correctly. They are the ones who refuse to let every geopolitical turn rewrite their behaviour.

The Middle East conflict may continue to unsettle markets. Oil may remain volatile. Inflation risks may stay uncomfortable. The rand may remain sensitive. All of that is possible. But none of it automatically means your financial plan is wrong. In fact, this is exactly the kind of environment that a well-built plan was meant to survive. When the world becomes more reactive, the wisest financial move is often to become less so.

This article has been published on Moneyweb.

The war that just exposed SA’s real economic problem

For years, the world told itself a soothing story. Oil was the old economy. Artificial intelligence (AI) was the new one. Tankers, pipelines, and shipping lanes belonged to a fading industrial age, while chips, data centres, and algorithms belonged to the future. The Iran war has exposed how false this story was. The future still runs through narrow sea lanes, vulnerable energy systems, and geopolitical fault lines that markets prefer to treat as distant background noise. That is why this is not merely another oil story. Yes, the Strait of Hormuz matters because about one-fifth of the world’s oil and liquefied natural gas moves through it. Yes, oil has surged above $110 a barrel as traders price in disruption. Yes, major banks have lifted their forecasts because they expect the market to stay tighter and more anxious for longer. But the deeper lesson is that a system built for efficiency can become dangerously fragile the moment a single chokepoint is threatened.

The economic chain reaction is wider than many investors still seem willing to admit. Higher oil prices lift transport, insurance, and freight costs. Food flows start to wobble. Shipping patterns distort. Then capital markets feel it. The Gulf states are not just energy producers; they have become an important source of global liquidity. If more of this capital is pulled inward to deal with domestic strain, the rest of the world loses a crucial funding cushion at exactly the wrong moment, when debt issuance is already heavy, and borrowing costs are uncomfortably high.

And then there is the market’s favourite fantasy: The idea that AI somehow floats above the physical economy. It does not. Taiwan and South Korea remain central to the semiconductor chain, yet both depend heavily on imported energy and industrial inputs exposed to disruption in the Gulf. Data centres, meanwhile, are massively power-hungry, and, in the United States, a large share of planned on-site power is tied to natural gas. Strip away the glamour and the conclusion is almost embarrassingly simple: Silicon still needs ships, fuel, and stable trade routes.

For South Africa (SA), the lazy version of this story begins and ends with the fuel price. This story misses the point. The real danger is that a global shock is landing on an economy that is already brittle. We are a net energy importer. The rand has already come under pressure as oil surged, and analysts have warned that the recent return of inflation to the South African Reserve Bank’s (SARB’s) 3% target may prove temporary as the war’s effects feed through. The SARB has already said that it is redrawing its adverse scenarios for this week’s policy meeting because the Middle East shock has changed the inflation outlook.

That changes the rate conversation. A few weeks ago, many households and businesses were still hoping for a gentler path lower. Now the risk has shifted. On current oil, currency, and inflation dynamics, the question is no longer only whether cuts will be delayed; it is whether the SARB may ultimately have to raise rates instead. That would not be because SA suddenly became reckless overnight. It would be because global energy shocks do not ask whether your economy is ready. They simply expose whether it is resilient. This is an implication from the inflation and market repricing now underway, and it is a serious one.

SA’s deepest problem is, therefore, not that the world is volatile. The world has always been volatile. Our problem is that we built too little resilience while hoping for calmer weather. Economies with strong logistics, credible public finances, reliable energy, and policy room can absorb external blows. Economies with weak growth, strained consumers, fiscal pressure, and infrastructure bottlenecks absorb the same blows far worse. The next decade may not belong to the countries with the cleverest slogans about innovation. It may belong to those with the duller, but more important, virtue of resilience. And SA, frankly, still has too little of it.

Can SA fix its Code 3 economy?

There is a metaphor that says more about our economy than most policy papers do. Think of a Code 3 car. It still runs. It can be repaired, polished, and resold. But everyone knows that something serious happened to it. At some point, it was written off. The damage ran deep enough that, even after repairs, confidence never fully returned. It may still move, but it no longer inspires the trust of a sound, well-maintained car. And that is why some banks will not finance Code 3 cars at all.

This image is uncomfortably close to where South Africa (SA) is now. Not because democracy damaged the car. Democracy gave SA its first legitimate opportunity to rebuild the machine properly. But that is precisely the point: After 1994, SA did not just need repairs. It needed a complete overhaul.

An overhaul is not the same as redistribution. Redistribution can move passengers around inside the car. It can open doors that were locked. It can make access fairer. In a country shaped by Apartheid, that mattered enormously. But it is not the same as rebuilding the engine, replacing failing parts, and establishing the kind of maintenance discipline that allows the car to carry more people, more safely, for decades.

In 1994, SA did not inherit a pristine car. It inherited a deeply unequal one. Official unemployment was 22%, with the expanded rate at 35%. The system was built to serve a minority while excluding millions. Still, some things worked. Institutions had stronger technical capacity. Logistics functioned better. Electricity was more reliable. Ports and freight rail had not yet become the constraints they are today. The inherited machine was unjust in design, but parts of it still provided a platform for future growth. That was the real challenge of a democratic SA: Not merely to share the car, but to rebuild and expand it.

To be fair, democracy did achieve real gains. Government’s own 30-year review records major improvements in access to formal housing, electricity, piped water, and sanitation. Those are meaningful gains in dignity and inclusion, and they should not be casually dismissed. But access is not the same as wealth creation, and this is where the overhaul faltered. SA did not consistently convert expanded access into a stronger, more productive base. Instead of reinvesting while key systems still worked, too much maintenance was deferred. Technical standards weakened. Corruption spread. Cadre deployment undermined capability. In many cases, the workshop itself was looted while the car was still moving.

The consequences are obvious. National Treasury says that easing constraints in electricity, transport, and water is essential for higher investment, faster growth, and job creation. In other words, the engine is underperforming because too many of its critical systems were neglected for too long. That is why the old debate between growth and redistribution is too shallow. SA needed both justice and expansion. It needed more people brought into the car, but it also needed a stronger drivetrain. It needed better schools, stronger skills, infrastructure maintenance, entrepreneurship, capital investment, municipal competence, and institutions strong enough to support growth over time. Instead, too much of the post-1994 path drifted into something weaker: Redistribution without enough productive expansion, inclusion without enough institution building, promises without maintenance. This is how a country ends up with an economy that still runs, but increasingly feels unreliable.

And here lies the real danger: A Code 3 car does not just have a damaged past. It changes how others respond to it in the present. Investors become cautious. Lenders price in more risk. Confidence decreases. Quietly at first, then more persistently. SA is getting close to that threshold. Official unemployment was still 31.4% in the fourth quarter of 2025. That is not the profile of an economy whose repairs have matched its promises.

So perhaps the real question is not whether the car can run. It can. The question is whether we are finally ready to stop patching, stop stripping, stop arguing over the seats, and begin the overhaul that should have started long ago.

The world is repricing dependence, and SA is exposed

The obvious headline is oil. But the more important story is dependence. Brent crude jumped roughly 25% on 9 March, briefly pushing towards $120 a barrel, as the Iran war raised fears over supply disruptions and the Strait of Hormuz. Yet, the market reaction did not stop at oil. Aluminium rose, edible oils jumped, grain prices firmed, bond yields lifted, and expectations for rate cuts faded. This is the reality: It is not just an energy shock. It is a reminder that when the world turns hostile, everything built on cheap transport, cheap inputs, and calm supply chains suddenly becomes more expensive.

This is why the war matters differently across economies. The United States will still feel pain at the pump, but it is cushioned by domestic oil and gas production. Europe and much of Asia are more exposed because they remain more dependent on imported energy and vulnerable shipping routes. At the same time, Europe is already adapting to a harsher world. Germany is exploring a Japanese-style, government-backed structure to secure critical raw materials, while the European Union is moving towards stockpiling strategic minerals to reduce reliance on China. In other words, advanced economies are no longer asking only what is cheapest; they are asking what remains available when geopolitics interrupts the market.

China adds a different layer to the problem. Beijing has set a 2026 growth target of 4.5% to 5%, after achieving last year’s 5% partly through a record trade surplus of about $1.2 trillion. One part of the world is trying to secure inputs. Another is still relying on exports to absorb domestic weakness. Meanwhile, a war shock is now increasing the cost of energy, freight, and industrial production. The old global model assumed efficiency would always be rewarded. The new one is teaching a harsher lesson: Resilience is becoming an economic asset in its own right.

South Africa (SA) sits uncomfortably on the wrong side of that divide. Our domestic refining base has shrunk sharply, only two crude refineries are operating, and the country imports about 75% of its liquid fuel needs. That makes SA highly exposed not only to crude itself, but also to shipping costs, refining bottlenecks, and rand weakness. Before this weekend’s oil spike, local reporting based on Central Energy Fund data already suggested April fuel hikes in the region of R2.28 to R2.41 a litre for petrol and R4.39 to R4.50 a litre for diesel. After Brent’s latest surge, those numbers no longer look dramatic; they look plausible.

Diesel is where the story becomes far more serious than a painful trip to the fuel station. Petrol is politically visible; diesel is economically pervasive. It shapes the cost of freight, agriculture, mining, construction, and backup power. That means a diesel shock works its way into food prices, goods prices, and margins long after the initial jump in oil. Add a weaker rand and the inflationary effect broadens further. The South African Reserve Bank will likely redraw its adverse scenario before its meeting on 26 March because the old one has already been overtaken by events. Governor Lesetja Kganyago stressed that exchange-rate weakness can hit South African inflation even harder than oil itself.

That leaves the Reserve Bank in an awkward, but revealing, position. SA now has a 3% inflation target with a tolerance band of 1 percentage point on either side, and the repo rate was left at 6.75% in January as policymakers waited for expectations to settle lower. In this context, external shocks matter a great deal. A pause now looks more likely than another cut. And if fuel, freight, and the rand start pushing inflation expectations away from that new 3% anchor, another hike cannot be ruled out. That is what makes this more than an oil story. SA is not only importing fuel; it is importing the consequences of a world that is moving from efficiency to security. And in that world, dependence carries a rising price.

This article has been published on Moneyweb.

 

2026 Budget: A little relief, a lot of responsibility

The most important number in this year’s Budget is R21.3 billion, representing the upward revision of gross tax revenue compared to 2025’s estimate. It is also the number that bought Treasury room to withdraw the previously pencilled-in R20 billion tax increase, restore inflation relief, and present a Budget that feels less punitive than many feared. That is not the same as saying that South Africa (SA) suddenly has fiscal abundance. It means that Treasury got a temporary revenue cushion and chose to use it to steady the mood.

For households, the Budget matters immediately. After two years without full inflationary relief, bracket creep is no longer doing all the work for the South African Revenue Service. The tax-free annual investment limit rises from R36 000 to R46 000, and the retirement fund deduction cap increases from R350 000 to R430 000. These are sensible signals: Save more, build resilience, and rely less on the state. But investors should not confuse tax relief with higher real prosperity. Relief from fiscal drag helps cash flow; it does not create income growth.

And the Budget quietly claws some of that relief back. The General Fuel Levy rises by 9 cents a litre for petrol and 8 cents for diesel. On top of that, the Carbon Fuel Levy and Road Accident Fund Levy also rise. Tobacco and alcohol excise duties go up, too. In practice, this means that many households will ‘feel’ the Budget less through their tax tables and more through transport costs, distribution costs, and the slow spread of higher living expenses. That is the real story for households: Not a fiscal gift, but a slightly softer squeeze.

For small businesses, the most practical move may be the increase in the compulsory value-added tax registration threshold from R1 million to R2.3 million. This is meaningful: It reduces compliance pressure on smaller firms, preserves working capital, and removes a layer of admin. It may not create a boom, but it could improve survival at the margin: And, in SA, margins are where many businesses live or die.

At a national level, the Budget is clearly about stabilisation, not escape velocity. Treasury projects real gross domestic product (GDP) growth of 1.6% in 2026, with growth averaging 1.8% over the medium term. The consolidated Budget deficit narrows to 4.5% of GDP in 2025/2026, while gross debt stabilises at 78.9% of GDP before easing. Treasury also plans to table a principles-based fiscal anchor in the Medium-Term Budget Policy Statement. These are all good signs. But they do not change the deeper reality: SA is still trying to become fiscally safer faster than it is becoming economically stronger.

The real limit remains growth. Debt-service costs still rise in nominal terms to R420.6 billion in 2026, and they absorb 21.3% of main Budget revenue in 2025/2026 before gradually declining. That is the hidden tax in this Budget: The cost of old mistakes. Every rand spent servicing debt is a rand not spent fixing municipalities, expanding productive infrastructure, or strengthening the state’s capacity where it actually matters. Fiscal credibility has improved, yes, but fiscal freedom has not.

Government is also still heavily redistributive: The social wage remains more than 60% of non-interest spending. That protects the floor under society, and rightly so. But it also tells investors something uncomfortable: This Budget is better at preventing deterioration than generating lift.

Economist Dawie Roodt captured the mood well when he said that SA is “probably not going to get poorer, but certainly will not be getting richer”. And that is the real verdict on the 2026 Budget: It lowers the risk of a fiscal accident. It gives households and businesses a bit more breathing room. Subtly, it also reinforces a core financial well-being truth: Resilience will still have to be built largely at the household and business levels, not outsourced to Treasury. For investors, this is a Budget to respect, not celebrate. It improves the base case. It does not yet change the long-term one.

The credibility premium: When markets start pricing the referees

Most market weeks feel like a tug of war between growth and inflation. Yet, 2026 is increasingly about a third variable that does not sit neatly in a spreadsheet, namely institutional credibility. This is not about policy itself, but rather about whether institutions that set policy can still commit to it when political incentives change.

In the United States (US), this question has been highlighted through a confrontation that began with tariffs and ended at the Federal Reserve’s (Fed’s) doorstep. A Fed-linked study has argued that the bulk of tariff costs has been borne at home rather than by foreign exporters. The White House’s response on this has been unusually direct: Senior officials have attacked the work and called for the authors to be “disciplined”. Fed policymakers have pushed back, warning that pressure on research is, in practice, pressure on independence. When the referee becomes part of the campaign, markets pay attention.

This matters far beyond Washington because independence is not a moral ornament. It is a pricing input. When investors believe a central bank is insulated, long-dated yields can be lower because the future path of rates is more credible. When investors suspect policy is being leaned on for electoral timing, a credibility premium appears. It shows up as a higher term premium, jumpier auctions, and a market that demands more compensation for tail risks that used to be dismissed as political theatre.

Here is the nuance that South African investors should not miss: The dollar’s reaction is not automatic. If credibility fears flip into global risk-off dynamics, the dollar often strengthens because the world reaches for dollar cash and safe collateral. Emerging markets then take the punch through weaker currencies and wider spreads. But, if the shock is perceived as US institutional damage (confidence in US policymaking itself), the dollar can weaken even as US yields reprice higher. Either way, global financial conditions tighten; the channel just changes.

Tariffs are an accelerant because they impose costs unevenly. Large multinationals can reroute supply chains, renegotiate contracts, and hedge. Mid-sized firms usually cannot. Evidence from US banking research suggests that tariff payments by mid-market businesses have surged sharply even as the headline trade deficit has barely shifted. That combination is politically combustible: Visible costs, an unclear payoff, and pressure to keep borrowing costs low to protect sentiment. A resilient gross domestic product print can, therefore, co-exist with growing micro-level strain, which is exactly the kind of environment where institutional guardrails get tested.

Europe offers a revealing contrast: A decade ago, the eurozone’s so-called periphery (Portugal, Ireland, Italy, Greece, and Spain) was shorthand for fiscal stress. Yet, in recent years, these economies have narrowed bond spreads, improved budget discipline, and outgrown parts of the traditional “core”. Their recovery has not been magic. It has been the slow compounding return of credibility: Reforms that stuck, budgets that became less improvisational, and institutions that regained the benefit of the doubt in capital markets.

Europe’s current competitiveness debate adds a second lesson: Businesses can live with regulation; what they struggle to price is regulatory whiplash. Leaders call for deregulation while simultaneously telling businesses to invest for the long term. Those promises collide when rules are announced, capital is committed, and then policies are diluted to placate whoever shouts the loudest. Predictability is a form of capital. Remove it, and you raise the cost of doing business without ever announcing a tax.

For South Africans, this is not distant theatre. We live with a currency that reprices quickly when global term premia rise, and a bond curve that reflects not only inflation expectations but trust in medium-term fiscal arithmetic and institutional restraint. The investing question for 2026 is, therefore, less about what the Fed will do next and more about what will happen if markets start doubting who the Fed is allowed to be. Markets can digest bad news. They struggle with politicised referees. Trust, once discounted, is expensive to buy back, and emerging markets usually pay the surcharge first.

 

The 18-month myth: AI cannot automate jobs until companies do

The countdown narrative is back. In a recent interview, Mustafa Suleyman argued that most computer-based professional tasks could be automated within 12 to 18 months. This is a bold claim and easy to believe if you only watch model demonstrations. Here is the controversial counter: The timeline is wrong, not because the models are weak, but because organisations are slow. Everyone is confusing capability with adoption. Models can improve at an exponential-looking rate, whereas institutions almost never do. Companies move through procurement, governance, integration, training, and change management, only to discover that the edge cases were never documented. The bottleneck is not intelligence. It is implementation.

Most white-collar work is also not ‘sitting at a computer’. It is the invisible glue between systems: Exceptions, approvals, hand-offs, judgement calls, liability, and audit trails. This glue is what makes work expensive, and what makes automation hard. You cannot replace an accounts payable clerk with an agent if invoices arrive in five formats, vendor masters are inconsistent, approvals happen via e-mail, and the record of truth lives in someone’s head. Artificial intelligence (AI) can draft, classify and suggest, but true automation requires machine-readable work: Clean data, defined controls, and a reliable path from input to decision to audit. That is why the phrase “retrofit AI into any organisation” should make executives smile. Most companies cannot quickly retrofit far simpler technology. Anyone who has lived through a simple workflow redesign knows the pattern: Data cleansing, policy fights, scope creep, and months lost to the messy 10% that drives 90% of the risk.

In regulated industries, the friction is multiplied. If a workflow touches client money, privacy, or fiduciary duty, “good enough” is not good enough. You need governance: What the model can access, how it is monitored, how errors are escalated, and who is accountable when it fails. Automation is not a software purchase; it is a new operating model with new liability. Productivity is even messier than the hype suggests: A rigorous field experiment by METR found that experienced software developers sometimes took longer with AI tools because they spent time verifying, correcting, and integrating outputs. That does not disprove AI; it proves that efficiency depends on workflow fit, not just raw capability.

So, what happens first, if not mass unemployment in 18 months?

Task compression: The hours spent on drafting, searching, summarising, first-pass analysis, routine reporting, and basic client communication shrink. Teams do not disappear overnight; they re-shape. The biggest hit is often at the entry level: Fewer junior analysts and fewer apprenticeship roles that used to be justified by grunt work. The labour market adjusts quietly long before it adjusts loudly through mass layoffs.

And here is the investor implication that people keep missing: If adoption is the bottleneck, the winners are not only the frontier model builders. The winners are the businesses selling the plumbing that turns old institutions into AI-ready institutions: Data engineering, integration layers, identity and access management, cybersecurity, model monitoring, audit trails, and process redesign. In other words, the boring enterprise stack that makes automation safe, accountable, and scalable.

Expect the AI boom to show up first as spending on integration and governance, not sudden headcount collapses. This matters in South Africa more than most, as many firms are still digitising basics and modernising legacy cores. In this environment, AI does not replace the back office overnight; it sits on top of it, constrained by it. The sequence is to digitise, standardise, implement, and then automate. Skip the first steps, and you do not get a jobless boom; you get a compliance incident.

The point is simple: AI may be racing ahead. Organisations are not. The next 18 months will be noisy, experimental, and occasionally brutal at the margins. But the “white-collar extinction event” is not a date on a calendar. It is an organisational decade disguised as a technological year.