Dark clouds gathering over South Africa
South Africa’s lack of planned fixed investment could signal trouble for the country’s future GDP growth, given the close link between the two.
South Africa currently has approximately R137.7 billion in planned capital expenditure in the first half of the year, according to recent reports from Nedbank.
This amount is far lower than in previous years and represents a roughly 81% decline from 2025, when capital expenditure was valued at R718.5 billion.
The largest planned fixed investment comes from Coca-Cola, which plans to expand its manufacturing and supply systems in the country and will spend roughly R17.6 billion.
By comparison, the largest planned expenditure in 2025 came from the Vodacom Vision 2030 Project, valued at R85.2 billion.
2025 saw several projects with larger investments than the largest from 2026, including R50 billion for the Port of Gauteng and R45 billion for MTN’s national network investment project.
Across both years, a large share of fixed investment has come from renewable electricity projects, but the number and scale of these projects have declined from year to year.
Fixed investment is an important part of a growing economy, signalling the creation of new jobs and the expansion of services for consumers.
For example, Coca-Cola currently employs roughly 7,800 people directly, and supports over 87,000 jobs across several sectors.
The group’s expanding operations can not only create new jobs directly but also expand the number of sectors it supports and add overall economic value.
Nedbank said that while public investment has stagnated, it follows record-high amounts planned in previous years, which are currently working through the economy.
For the private sector, it noted that global risks, such as the war in Iran, might be making companies hesitant to commit to large expenditure projects.
“Heightened downside risks to global and local growth prospects are likely to make firms more hesitant to expand operations,” it said.
Fixed investment and the GDP
A country’s fixed investment rate is closely linked to its GDP growth, with higher capital expenditure heralding stronger economic growth.
Economist Frans Cronje has previously spoken on the close relationship between fixed investment and GDP growth.
In a video for The Common Sense, he highlighted that South Africa’s fixed investment rate is currently below the rates of many other economies.
The fixed investment rate denotes the total amount of a country’s GDP which is dedicated to capital expenditure projects.
South Africa’s fixed investment rate was approximately 14% of GDP in 2025, gradually declining from its peak in 2008.
This is far below the fixed investment rate of many other emerging markets, which averaged approximately 24% in 2025.
The global average is close to the rate for emerging markets at approximately 25%, while developed economies are generally above 30%.
Cronje explained that the low fixed investment rate is directly linked to South Africa’s slow GDP growth, which was 1.1% in 2025.
He said that if South Africa wants to lift its annual GDP growth closer to 4%, the average for many other emerging markets, the fixed investment rate would need to be closer to 25%.
“If that happens, the growth rate in South Africa will lift to around 4%, and if that happens, then the unemployment rate, which is currently around 30%, will come down,” he said.
When Cronje made this explanation, the unemployment rate was 32.7%, and it has since increased to 33.6% in the second quarter of the year.
He said that if the country’s GDP growth reaches 4%, unemployment could decrease to approximately 10% over 20 years.
He called the fixed investment rate a “foundational number” for economic forecasting, raising concerns about the current planned capital expenditure.
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