Private sector pumping money into South Africa – while government cuts back


The private sector is driving investment in South Africa, with spending on infrastructure, software, research and development increasing while government investment into infrastructure goes down.

This is according to Investec chief economist Annabel Bishop, who said the private sector continues to drive capital investment in South Africa, contributing over 70% to growth in fixed investment.

However, spending from public corporations (SOEs) remained weak at 11%, and general government spending at only 17%. 

Reserve Bank data shows public corporations further reduced spending on infrastructure in both the fourth quarter of 2023 compared to the previous quarter and over the entirety of 2023 compared to 2022.

In comparison to SOEs, private sector infrastructure spending continued to lift year-on-year.

Gross fixed capital formation or fixed investment growth came from the construction of non-residential buildings and infrastructure investment in computer software, research and development, cultivated biological resources and mineral exploration.  

Source: Annabel Bishop

Bishop said fixed investment remains key to economic growth outcomes, providing many of the structural and productive factors necessary for growth. 

In March, the Bloomberg economic consensus for this year’s economic growth was 1.2%, and the same consensus view was held amongst the surveyed economists in January and February, too, while December saw 1.3% expected for 2024.

Bishop said the downward moderation in consensus has come as progress on resolving South Africa’s freight and electricity concerns, while gaining traction in some areas, has not substantially reduced the constraints on growth enough to see a lift in forecasts.

May saw the Department of Trade, Industry and Competition (DTIC) launch its Industrial Policy & Strategy Review for South Africa. 

President Cyril Ramaphosa said, “It is only through attracting higher levels of investment, both foreign and domestic, that a swift, sustainable economic recovery can be assured.”

The DTIC said the role of industrial policy is to unleash private investment and energise the state to boost economic growth and inclusion. 

“This is an essential part of building investor confidence and the platform for job creation,” it said.

This includes a change from the “old model of intergovernmental cooperation”, which often focused on broad meetings of very senior officials, towards a model in which talented implementation-level officials are given the space to collaborate on specific objectives.  

Source: Annabel Bishop


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