How South Africa's potential return to investment grade by 2028 could impact your pocket

South Africa could regain its investment-grade credit rating by 2028, according to investment firm Investec. This would be a significant turnaround from more than a decade of being rated below investment grade. The downgrade has made it more expensive for South Africa to borrow money and increased the cost of borrowing for both companies and consumers.

Investec's South African Asset Allocation Committee believes there is a reasonable chance the country will return to investment-grade status in 2028. Currently, South Africa's prime lending rate is 10.5%, but this rate has been increased in May and held steady since then. The ratings upgrade could lead to more affordable borrowing for the government, businesses, and consumers.

While the improvement is largely due to better fiscal performance and structural reforms, transitioning to investment grade requires stronger economic growth and continued reforms. The Bureau for Economic Research predicts modest economic growth of 1.0% to 1.4% in 2026, with a slightly faster growth of 1.4% to 1.7% in 2027. Growth could be boosted by better electricity infrastructure, private sector involvement in transport and logistics, and falling inflation.

However, risks remain, such as reduced global demand for commodities, volatile oil prices, and limited domestic investment. South Africa's public institutions have accumulated significant liabilities that are not reflected in the official debt figures, which could put pressure on the country's finances. Despite these challenges, Investec remains optimistic about South Africa achieving investment-grade status by 2028, citing improving economic growth, a more stable rand, and greater energy stability as key factors.