Illegal mining data gives SA's debt ratio an unexpected lift

South Africa’s public finances just got a statistical helping hand from one of the least expected corners of the economy: the informal and illegal activities that had long escaped the statisticians’ gaze. For ordinary citizens, the practical consequence is real. The country’s debt burden, measured against the size of the economy, now looks meaningfully lighter than it did only weeks ago, and that shift could eventually translate into lower borrowing costs and stronger confidence in the state’s ability to manage its affairs.

The story begins with a routine but consequential exercise. Statistics South Africa has completed a rebasing of the country’s gross domestic product, shifting the base year to 2022 from 2015. This happens roughly twice a decade and follows standard international practice. Its purpose is to capture the changing structure of the economy by measuring output in constant currency terms against an updated reference year. Far from being an accounting trick, the exercise is designed to smoke out activities that had gone uncounted.

What emerged surprised many observers. According to Stats SA, the 2026 benchmarking and rebasing raised the level of the economy in 2022 to R6.99-trillion, an increase of 4.9% from the previously published R6.667-trillion. The largest change came in the mining industry, which grew by 12.5%, driven by the inclusion and better coverage of illegal mining. The zama zamas, the artisanal and illegal miners who work abandoned shafts, had literally been operating underground. Now their output shows up in the national accounts.

Stats SA refers to the activities concerned as the non-observed economy, or NOE, which it estimates accounts for 8.7% of the economy. The agency noted that after the pandemic, the NOE increased significantly, and the revised estimates show a larger contribution than previously thought. The estimates cover chiefly illegal production and sales in categories such as cannabis, abalone, diamonds and precious metals, with specific attention in the mining sector to artisanal and illegal mining. The methodology also casts a wide net, including the unauthorised trade in firearms, ammunition, explosives and motor vehicles.

A caveat is worth noting for the public record. While mining recorded the biggest uplift in percentage terms, the sector remains dwarfed by others such as finance, which contributed a larger sum to the overall GDP number. The zama zama contribution is small in absolute terms, but it was one of the big surprises of the rebasing.

The real stakes for citizens lie in what the bigger GDP number does to the country’s fiscal ratios. Most of these metrics are measured against GDP, so when GDP grows, ratios such as debt shrink by comparison. The National Treasury confirmed it had recalculated these metrics after the rebasing. The debt-to-GDP ratio, closely watched by markets and credit rating agencies, is now estimated to peak at 74.6% in 2025/26, down from the 78.4% pegged in last month’s Medium-Term Budget Policy Statement. That is a fall of almost four percentage points, a shift that could potentially trigger another credit upgrade, with the lower borrowing costs and enhanced investor confidence such a move would bring.

Other key fiscal ratios have likewise improved. Treasury said the primary surplus is 1.6% of GDP in 2026/27, compared with 1.7% in the MTBPS, rising to 2.8% in 2029/30 from 2.9%, while the 2026/27 main budget deficit is 3.5% of GDP, against 3.7% previously. Importantly, the rebasing has not altered the revenue, spending or overall debt estimates outlined in the MTBPS. It does, however, give the Treasury more room down the road if GDP estimates disappoint, which is often the case.

Meanwhile, mining continues to carry weight in the fiscal picture beyond the statistical exercise. In the MTBPS, higher precious metals prices translated into increased taxes and royalties, and the projection for gross tax revenue this year was revised upwards by R17.1-billion compared with the February estimate, largely because of that windfall.

The wider context remains challenging. Moves to formalise artisanal mining face a daunting task, given that the criminal syndicates behind the illegal mining sector are heavily armed and prefer to remain in the shadows, out of the prying eyes of the SA Revenue Service. Security costs for the legal mining sector continue to mount. Yet all of it, good and bad alike, is crunched into the GDP number, which is morally neutral. The result is a more attractive fiscal picture, and a reminder that the public’s understanding of the economy is only ever as complete as the statistics allow. The open question now is whether that improved picture holds once the next round of estimates lands.