Jeremy’s weekly wrap: Fitch upgrades SA, but drought and Eskom test outlook

South Africa’s ability to withstand the next round of economic and infrastructure shocks came under sharp focus in three of the top interviews this week on Moneyweb@Midday, with Karen King, climate resilience director at Atana, Jim Matsemela, chief director for strategy and risk management at National Treasury, and energy analyst and commentator Ruse Moleshe all warning that progress will count for little unless it is matched by delivery, discipline and long-term planning.

In the first interview, King warned that South Africa remains dangerously underprepared for a possible El Niño-driven drought in the 2026/27 summer season. While floods tend to grab immediate attention, she argued that drought is often underestimated because it develops slowly, creating a false sense of security.

Its effects, however, are severe and cumulative: water shortages, lower agricultural output, rising food prices, and pressure on local economies.

King said some major cities could again face “day-zero type” conditions, with parts of Johannesburg already experiencing localised water failure. Her central message was that preparedness must become practical rather than theoretical.

That means fixing municipal water infrastructure, reducing losses, protecting groundwater, expanding water storage and reuse, and helping agriculture shift towards more drought-resilient crops such as millet and sorghum. The economics are also clear: prevention is far cheaper than crisis response.

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You can also listen to this podcast on iono.fm here.

We also focused on South Africa’s first Fitch Ratings upgrade since 2005. Matsemela said the upgrade was more than symbolic, describing it as confirmation that government’s fiscal discipline, primary budget surpluses and structural reforms are being recognised.

He argued that, over time, the upgrade should help lower borrowing costs for government, business, and households.

But he also acknowledged that the benefit will not be immediate for ordinary South Africans facing weak growth, unemployment, and failing services. The next test, he said, is maintaining debt stabilisation and not losing fiscal discipline, particularly as pressure grows around wages, social spending, and struggling municipalities.

You can also listen to this podcast on iono.fm here.

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Then we turned our attention to Eskom and the proposed creation of an independent transmission system operator. Moleshe said Eskom’s monopoly will reduce over time but warned that reform is complex and must not be rushed.

An independent grid operator is essential to give private power producers fair access to the transmission network and create real competition.

But the difficulty lies in separating strategic assets from Eskom without damaging its balance sheet, worsening debt problems, or exposing taxpayers. His conclusion was blunt: everyone agrees reform is needed, but the challenge is how to do it properly.

You can also listen to this podcast on iono.fm here.

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