Corporate finance expert Jason Hamilton believes that South Africa needs to strengthen fiscal discipline, reliable infrastructure, and stable policies to attract private investment and create jobs. He put forward these theses ahead of the presentation by the Ministry of Finance of Enoch Godongwana of the Medium-Term Budget Policy Statement (MTBPS).
Hamilton, who teaches corporate and development finance courses at Stellenbosch Business School, emphasizes that before companies decide to expand or hire staff, they require greater certainty regarding government spending, infrastructure project implementation, and economic reforms.
According to Hamilton, when Godongwana presents the MTBPS on Wednesday, businesses will seek a clearer foundation for making investment decisions. This applies to small businesses considering hiring new employees as well as large corporations weighing major expansion plans. Investment decisions depend on numerous factors, including the state of public finances, infrastructure reliability, policy consistency, and confidence in fulfilling commitments, which affects available financing and required returns.
The expert insists that more attention should be paid to the gap between policy announcement and the moment when businesses can start acting according to it. In February, the National Treasury projected the stabilization of gross public debt at 78.9% of GDP in 2025/26, followed by a decrease to 77.3% in 2026/27, and also indicated an acceleration in the introduction of the proposed fiscal anchor in the MTBPS. However, Hamilton believes that the statement must explain how this trajectory will be maintained amid changing economic conditions.
The economic outlook has become more complex. In February, the Treasury projected growth of 1.6% in 2026, whereas the South African Reserve Bank projected 1.2% in September and raised its interest rate to 7.25% in response to renewed inflationary pressure caused by global supply shocks. The official unemployment rate reached 33.6% in the second quarter. Hamilton notes that growth at such levels leaves little room to solve the employment problem in South Africa.
Despite this, there have been positive signals from rating agencies. In May, S&P maintained a positive outlook and affirmed South Africa's BB foreign currency rating, while Moody's upgraded its outlook to positive and confirmed the Ba2 rating. Nevertheless, Hamilton warns that further improvement depends on actual implementation, and a positive outlook does not yet mean a rating upgrade.
While a stronger fiscal position can boost confidence, Hamilton argues that businesses may still hesitate due to unreliable water supply or electricity connection delays. He believes that fiscal discipline and practical reform must advance in parallel, with the MTBPS providing greater clarity on the government's choices. It is necessary for revenue assumptions to be realistic, new obligations to be adequately funded, and risks associated with state-owned enterprises to be clearly disclosed. Furthermore, Hamilton points to the need to improve expenditure efficiency while protecting priority spending.
Infrastructure investment is a central element of these efforts. Support from the World Bank for reforms in electricity, transport, and water underscores the link between functioning infrastructure, private investment, and employment. For investors, projects become viable when necessary permits are in place, procurement is credible, contractual obligations are clear, and repayment terms are sound. Hamilton advises the government to focus more on project preparation and the capacity of state institutions, while measuring progress against clear implementation commitments. Servicing must also be financed alongside new infrastructure investments.
Private sector participation can help, provided that risks and government obligations are transparently and appropriately distributed. Hamilton believes that simplifying licensing, predictability of administrative procedures, and timely payment of valid invoices could significantly impact, especially for small and medium-sized enterprises (SMEs). He argues that the government must improve expenditure management and tax administration before assuming that compliant businesses and households can continue to bear additional burdens.
In turn, businesses must make investment decisions based on sound commercial judgment rather than waiting for every economic problem to be fully resolved. Hamilton also calls for broader access to suitable financing, referencing the International Finance Corporation's work on supporting SME lending, trade, and supply chain finance, as well as business training and support. He believes that businesses should be helped to develop the financial information and managerial capabilities needed to use funds effectively. Some investments may increase efficiency under various conditions, while others depend on the completion of specific reforms. Where possible, Hamilton recommends phased capital deployment and setting clear criteria before further action.
The external environment also influences investment decisions. In the World Economic Forum's 2026 Global Risks Report, geopolitical confrontation was named the leading short-term risk, according to a survey of leaders and experts. Hamilton advises companies to analyze their exposure to trade risks, supplier concentration, and alternative market exit routes. Scenario planning is useful as it defines how a company will react to changing conditions and who has the authority to act.
Hamilton concludes that the MTBPS gives the government an opportunity to provide greater clarity on the direction of the economy and the necessary decisions to support investment. The government must implement reforms and improve the use of public resources, while businesses must manage risks, develop personnel, and invest where they can create sustainable value. He notes that the test in the coming months will be whether these commitments enable businesses to expand and employ more people.