The Government of National Unity that emerged from South Africa’s May 2024 election has now been in place for almost two years. The initial uncertainty of mid-2024 has resolved into a more textured operating picture. Some risks that looked acute in 2024 have softened. Some that looked manageable have hardened. And several new exposures have emerged that were not on the political risk radar when the GNU first took shape.
For SA businesses with significant fixed assets, long-dated contracts, or cross-border exposure, an honest reassessment of political risk in mid-2026 is overdue. The conversation cannot be reduced to “the GNU is stable” or “the GNU is unstable.” It is more granular than that, and the insurance implications matter for any business whose plan extends beyond the next election cycle. All cover discussed here is subject to underwriting and final policy wording.
TL;DR
- Two years after the GNU formed, SA’s sovereign risk profile has changed but not in the way many expected. Policy execution risk has eased on some files (energy, financial services) and hardened on others (mining, infrastructure procurement).
- Currency volatility has been lower than 2024 forecasts predicted, but the South African Reserve Bank (SARB)‘s room to defend the rand has narrowed if global conditions deteriorate.
- Expropriation rhetoric has not translated into expropriation action, but expropriation-without-compensation legislation remains a live policy backdrop that political risk insurance markets continue to price.
- Contract frustration exposure for businesses with government counterparties has risen in some procurement areas where coalition disputes have delayed payment or cancelled contracts.
- Political risk insurance pricing for SA exposures has stabilised in 2026 after a 2024-2025 spike. Cover is available but the underwriting questions have become more detailed.
Table of Contents
What has actually changed in SA political risk since 2024
The mid-2024 environment carried real uncertainty. A new coalition government with multiple constituent parties had to find working arrangements on policy files where the parties disagreed sharply. The risk was that policy paralysis or coalition collapse would push significant economic exposures onto SA businesses and into the political risk insurance market.
Two years in, the picture is more layered:
1. Coalition has held. The GNU has not collapsed. Internal disputes have been visible and sometimes loud, but the structural arrangement has survived political pressure tests that observers in 2024 thought might break it.
2. Policy progress is uneven. Energy reform has moved forward materially. Financial services regulation has stabilised. Mining policy has stalled. Infrastructure procurement has been mixed, with some files moving and others delayed by coalition disputes. Land reform legislation has been re-introduced in modified form but has not been implemented at the speed some constituencies wanted.
3. Service delivery remains the weak link. Local government performance has not materially improved in most metros. Water infrastructure failures, road decay, electricity instability at municipal level, and policing capacity gaps have continued. These affect business operations even where national political risk has eased.
4. External factors compound. The Middle East political risk environment that emerged in 2024-2025 (see our analysis on Middle East instability and SA business) continues to affect SA exporters, importers, and businesses in supply chains touched by Red Sea routing changes. These external pressures interact with domestic risks in ways that are difficult to disaggregate.
For an insurance perspective, the takeaway is not that SA is safer or riskier in absolute terms in 2026 than in 2024. The takeaway is that the specific risks have shifted, and a programme structured against the 2024 risk profile may no longer match the 2026 reality.
Policy execution risk: where the GNU has eased and where it has hardened
Different industries have experienced different sides of the GNU’s policy execution record. Honest segmentation is more useful than a single summary.
Where execution risk has eased
Energy and renewables. Independent power producer procurement has continued and accelerated in some categories. Battery energy storage system procurement has progressed. Bid window outcomes have been published on roughly the announced schedule. For businesses with renewable energy contracts or investments, the political execution risk in 2026 is materially lower than the 2024 perception.
Financial services regulation. The FSCA has continued to operate effectively. Twin Peaks implementation has proceeded. Policyholder protection rules have been updated. For SA financial services businesses and for international firms operating into SA through FSP arrangements, the regulatory environment has been stable.
Public-private partnerships in selected infrastructure. National Treasury‘s PPP framework has been used in several recent transactions, with concession terms that political risk markets have found insurable on terms consistent with 2023-2024 placements.
Where execution risk has hardened
Mining policy. The mining charter and exploration policy have stalled in coalition disputes. Investment commitments by mining houses have been deferred or scaled back. For businesses with mining-sector exposure (services, equipment, finance), political risk has risen rather than fallen.
Infrastructure procurement under coalition-dispute conditions. Selected provincial and metro infrastructure tenders have been cancelled, re-tendered, or delayed following coalition disagreements over award decisions. Contractors with awards in these jurisdictions have faced contract frustration exposure that political risk insurance markets have started to price in.
Land reform. The expropriation legislation has been reintroduced with revised parameters but the underlying policy direction creates a backdrop that affects investment decisions in agriculture, commercial property, and any land-dependent project.
Foreign policy alignment. SA’s continued non-alignment posture on several geopolitical fronts (Russia, Israel, Iran-related sanctions debates) creates secondary risks for SA businesses serving customers in the EU, UK, and US that require sanctions clearances or due diligence on counterparties.
Contract frustration scenarios with SA government counterparties
Contract frustration cover within political risk insurance responds when a government counterparty’s action or inaction prevents performance of a commercial contract. In 2026, the scenarios SA businesses are seeing include:
Cancelled or re-tendered procurement
A contractor wins a metro tender, signs the contract, and begins mobilisation. Several months in, the metro cancels the contract following a coalition dispute over the award process. The contractor has incurred preliminary costs, made mobilisation commitments, and may have arranged bonds or guarantees that need to be released. Contract frustration cover can respond, depending on the policy wording and the specific cancellation circumstances.
Delayed payment by state entities
SOEs and metros have a documented record of delayed payment to suppliers. Where the delay is severe enough to prevent ongoing performance, the contractor may need to consider whether contract frustration applies. The threshold is typically high (months of non-payment, not weeks), but some 2026 cases have reached that threshold.
Licence or approval frustration
Where a business depends on a government licence (mining, environmental, financial services, telecoms), delays or refusals to issue or renew that licence can frustrate the underlying contract or business plan. Political risk insurance can respond, depending on the specific cover trigger and the cause of the licence issue.
Regulatory change that prevents performance
A regulatory change (new tariffs, new approval requirements, new restrictions on imports/exports) can make an existing contract impossible to perform on the original terms. Where the change is government-driven and not market-driven, contract frustration cover may respond.
For businesses with significant SA government-counterparty exposure, a review of political risk insurance structuring is appropriate. The exposure has not gone away; in some categories it has grown.
Currency volatility and transfer risk for cross-border businesses
The rand has been more stable in 2025-2026 than many 2024 forecasts predicted, but this stability has been achieved partly through SARB intervention and partly through favourable terms of trade for some SA exports. Neither factor is guaranteed to persist.
For political risk insurance purposes, the two relevant exposures are:
Currency inconvertibility. The risk that a host government prevents conversion of local currency into hard currency. SA itself has not imposed currency controls in 2025-2026, but SA businesses with operations in other African markets (Mozambique, Zimbabwe, occasionally Zambia) continue to face transfer restrictions on those host-country earnings. Political risk insurance can respond.
Transfer restriction. The risk that a host government allows conversion but prevents the transfer of converted funds out of the country. This has been a live exposure for SA exporters in selected African markets and has accelerated 2026 placement of political risk cover for cross-border receivables.
For SA exporters specifically, the combination of political risk insurance with trade credit insurance is becoming a more common programme structure in 2026. The two products address different exposures (sovereign action versus commercial default) but can be coordinated through a single broker placement.
Expropriation: rhetoric, action, and insurance market response
The expropriation conversation in SA is one of the most-discussed and most-misunderstood elements of the country’s political risk profile. The reality in 2026 is more nuanced than either of the two simple narratives (“expropriation is happening” or “expropriation is a non-issue”).
Legislative status. The Expropriation Act has been passed and is in force. Implementation has been gradual. The constitutional changes that would have permitted expropriation without compensation in defined circumstances have moved forward in modified form. Several test cases have begun working through administrative and court processes.
Action to date. Large-scale expropriation has not occurred. Most cases proceeding in 2025-2026 involve abandoned properties, properties with unclear ownership, or properties affected by labour tenancy claims rather than active commercial operations. The “creeping expropriation” pattern (a series of regulatory or administrative actions progressively depriving an owner of economic benefit) has been more relevant than direct seizure in 2026.
Insurance market response. Political risk insurers have continued to write expropriation cover for SA exposures, with pricing that reflects the assessment of forward-looking risk rather than current action. Premiums for expropriation cover in 2026 have stabilised after 2024 increases. Cover is available for both direct expropriation and creeping expropriation, with policy wording that defines the trigger carefully.
For businesses with significant fixed-asset exposure in SA (commercial property, agriculture, mining infrastructure), expropriation cover should be evaluated against the realistic exposure profile rather than headline risk. A broker assessment can quantify whether the cover is justified by the specific assets and contracts at risk.
SA political risk insurance market in 2026
The political risk insurance market for SA exposures in 2026 has the following characteristics:
- Capacity available. Lloyd’s syndicates and specialist political risk insurers continue to write SA exposures. Capacity has not contracted materially.
- Pricing stabilised. After 2024 premium increases, 2026 placements are tracking 5 to 10% above 2023 levels for comparable SA exposures, but not the further increases some 2024 forecasts predicted.
- Underwriting more detailed. Insurers are asking more detailed questions about specific counterparties, contract terms, and risk mitigation actions before pricing. Generic exposure descriptions are no longer sufficient.
- Coordinated programmes preferred. Insurers are showing preference for combined political risk + trade credit programmes that cover both sovereign and commercial exposures through a single placement, rather than separate covers that may have wording gaps.
- Lender-driven placements continuing. Project finance and infrastructure financing involving SA assets continues to require political risk insurance at financial close. Lender requirements have not eased.
A structured political risk reassessment for SA businesses
For SA businesses whose political risk programme was structured in 2023-2024, a 2026 reassessment is appropriate. Six steps:
- Map current exposures. List every contract, asset, or receivable where political risk could affect the financial outcome. Include SA exposures and cross-border exposures.
- Categorise by trigger. For each exposure, identify which political risk trigger applies (expropriation, contract frustration, currency inconvertibility, political violence, embargo).
- Assess current cover. Compare the exposure list with the current political risk and trade credit cover. Identify gaps.
- Update sums insured. Adjust exposures for current values (contract values have grown, asset values have inflated). 2023 sums insured may be 20 to 25% below current exposure.
- Review trigger wording. Confirm that policy triggers cover the realistic scenarios. A contract frustration trigger written for foreign government action may not respond to SA provincial coalition disputes; a wording update may be needed.
- Coordinate with related covers. Where political risk overlaps with trade credit, marine, or specialised project insurance, ensure the programmes are structured to respond consistently rather than create disputes over which cover applies.
See our overview on political instability and your business for a related framing of how these exposures show up in day-to-day operations.
Frequently asked questions
Has the GNU made SA a higher or lower political risk environment overall?
Neither in a simple sense. The GNU has reduced execution risk in some areas (energy, financial services regulation) and increased it in others (mining, coalition-affected procurement). For SA businesses, the relevant question is not the aggregate political risk score but the specific exposures the business faces. A reassessment against current GNU dynamics is more useful than a single rating.
Is expropriation actually happening to SA commercial assets in 2026?
Large-scale expropriation of commercial assets has not occurred. The Expropriation Act is in force and implementation has begun, but the cases active in 2025-2026 have involved abandoned properties, properties with unclear ownership, and labour tenancy claims, rather than active commercial operations. The “creeping expropriation” pattern (progressive regulatory restrictions affecting an asset’s economic value) has been more relevant than direct seizure. Political risk insurance can cover both.
Do I need political risk insurance for SA assets if I do not operate cross-border?
It depends on the specific exposure. SA businesses without cross-border operations typically face two main political risk exposures: contract frustration with SA government counterparties (metros, SOEs, departments) and creeping expropriation or regulatory deprivation of asset value. Where neither exposure is material to the business, political risk cover may not be needed. Where significant contracts with state counterparties or significant fixed-asset exposure exists, a broker assessment can quantify the case for cover.
What is the cost of political risk insurance for SA exposures in 2026?
Premium rates vary by exposure type, amount, duration, and counterparty. As a broad indication, political risk premium for SA-domestic exposures in 2026 is typically 0.4 to 1.5% of insured value per annum, with cross-border SA-into-Africa exposures running 0.8 to 3% depending on host country. These rates are 5 to 10% higher than 2023 levels but lower than the 2024 spike. A broker quote will reflect the specific exposure and insurer terms available.
How long does it take to arrange political risk insurance for a SA exposure?
For straightforward exposures with clean information, a placement can be completed in 4 to 8 weeks. More complex exposures (large project finance, multi-country structures, novel triggers) can take 8 to 16 weeks. The timeline is significantly shorter when the broker has existing relationships with the relevant Lloyd’s syndicates and political risk insurers. Early engagement at the start of a contract or investment process is more efficient than late engagement after the exposure has crystallised.
Does the GNU’s foreign policy alignment affect my SA business’s political risk?
For SA businesses serving EU, UK, or US customers, yes. SA’s non-alignment posture on several geopolitical files has created secondary effects: sanctions screening of SA counterparties has become more thorough, due diligence requirements for SA suppliers have tightened, and some EU/UK financial institutions have applied additional scrutiny to SA-linked transactions. These are not formal sanctions but they are commercial frictions that can be material. Political risk insurance may not respond to these specific frictions, but trade credit cover with broader political risk extension can in some cases.
If the GNU collapsed, what would happen to my political risk cover?
Existing political risk policies typically continue to respond on their terms even if there are changes in government. The cover responds to the events defined in the policy (expropriation, contract frustration, currency inconvertibility), not to political stability per se. However, renewal terms after a major political event are likely to be re-evaluated by insurers, and capacity may tighten for new placements. The practical lesson is to secure cover ahead of perceived inflection points rather than after.
Reassess your political risk programme against the 2026 reality
The GNU’s two-year track record gives SA businesses enough evidence to structure political risk programmes around the actual exposure profile rather than the 2024 uncertainty. Some businesses will find their existing cover is correctly sized. Others will find gaps that have grown without anyone noticing. Contact Berkley Risk or call 011-702-8250 to arrange a political risk programme review through our Lloyd’s market access, subject to underwriting and insurer appetite.
Berkley Risk (Pty) Ltd arranges/places/co-ordinates insurance with licensed insurers. FSP #54407. This article is general information only and does not constitute legal, financial, or regulatory advice. All cover is subject to underwriting acceptance and final policy wording.
