South Africa's progress with structural reforms is being threatened by the continued dysfunction at municipalities such as Johannesburg, according to Business Leadership SA (BLSA). The organization has expressed concerns about stalled progress in reforms that helped the country exit the Financial Action Task Force's (FATF) greylist in October 2025. BLSA's reform tracker monitors reform deliverables across economic, criminal justice, and governance categories.
BLSA's reform tracker showed momentum turned positive in the third quarter of 2026, moving from minus 0.4% to 1.7%, the strongest reading since September-December 2025. CEO Busisiwe Mavuso said it is heartening to see progress in water, energy, and transport, which are crucial network sectors. She emphasized that municipal reform must now become an area of much greater urgency, as multinational companies assess operational reliability, infrastructure, logistics, and productivity when considering investments.
The failure of numerous municipalities to deliver basic services such as water, a stable electricity supply, and road repairs has been a focal point of campaigning ahead of local government elections on November 4. Mavuso highlighted that businesses will struggle to operate if municipalities cannot provide reliable services, despite national efforts to stabilize electricity generation and attract investment into new infrastructure.
BLSA's tracker scored 179 reform areas in the third quarter, with 40 changing scores, 33 advancing, and seven declining. Electricity reform rose from 67.8 points to 69.4, while freight logistics ticked up from 69.6 to 72.5, and the score for financial sector reforms was up from 88.1 to 89.5. However, governance declined for the first time, from 55 to 54.6, reflecting the Constitutional Court's declaration of the Public Procurement Act as unconstitutional.
Shortcomings in investigating organized crime, as well as successfully prosecuting and recovering criminal assets, could see the country again greylisted by the FATF, BLSA warned. The global watchdog placed South Africa on the list in early 2023 but removed it a year ago, citing improvements in the country's capabilities. The FATF commenced a mutual evaluation earlier this year, which will conclude in October 2027.
Deputy finance minister David Masondo acknowledged that South Africa still needs to resolve remaining weaknesses in its system to avert another greylisting. Stuart Theobald, executive chair of consultancy firm Krutham, emphasized that the outcomes of the ongoing inquiry by the Madlanga commission into criminality, political interference, and corruption in the criminal justice system would be key.
The Madlanga commission's findings have unveiled significant problems in the leadership of the police and intelligence services. BLSA will be adding new reform areas to its tracker, including recommendations from the Madlanga commission. With the local government elections taking place, it is an important moment to reflect on what must change to ensure capable municipal administrations that can deliver basic services and maintain infrastructure.
Key points
- Municipal dysfunction could deter much-needed investment into South Africa.
- Progress in water, energy, and transport sectors is crucial for economic growth.
- South Africa risks being greylisted again by FATF due to shortcomings in investigating organized crime.
