Why South Africans need USD diversification for wealth preservation

THE past month has seen both Moody's and Fitch Ratings publish their updated assessments of the South African economy.

- WILLEM J. OBERHOLZER

Their conclusions, while diplomatically phrased, are sobering: South Africa’s growth is projected to hover between 1% and 1.5% over the next 12 months, weighed down by sluggish reform, elevated financing costs, and persistent structural bottlenecks in energy, logistics, and state-owned enterprises.

Moody’s has stressed that the country’s cost of capital remains stubbornly high relative to emerging market peers, reflecting both policy drift and weak private investment. While South Africa benefits from deep domestic capital markets and a credible central bank, Moody’s warns that unless reform momentum accelerates, the economy will remain trapped in a low-growth cycle.

Fitch echoes this view, having affirmed South Africa at ‘BB-’ with a Stable Outlook on 12 September 2025. It projects real GDP growth of just 1.2% p.a. through 2027, far below the median for comparable peers.

For ordinary South Africans, these credit assessments may sound abstract. But their implications are very real when translated into the value of the rand (ZAR) and the ability of households and businesses to preserve wealth in U.S. dollar (USD) terms.

The currency reality