{"id":871031,"date":"2026-08-20T12:00:00","date_gmt":"2026-08-20T10:00:00","guid":{"rendered":"https:\/\/businesstech.co.za\/news\/?p=871031"},"modified":"2026-08-20T11:46:11","modified_gmt":"2026-08-20T09:46:11","slug":"dark-clouds-gathering-over-south-africa-2","status":"publish","type":"post","link":"https:\/\/businesstech.co.za\/news\/business-opinion\/871031\/dark-clouds-gathering-over-south-africa-2\/","title":{"rendered":"Dark clouds gathering over South Africa"},"content":{"rendered":"\n

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.<\/p>\n\n\n\n

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.<\/p>\n\n\n\n

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.<\/p>\n\n\n\n

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.<\/p>\n\n\n\n

By comparison, the largest planned expenditure in 2025 came from the Vodacom Vision 2030 Project, valued at R85.2 billion.<\/p>\n\n\n\n

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.<\/p>\n\n\n\n

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.<\/p>\n\n\n\n

Fixed investment is an important part of a growing economy, signalling the creation of new jobs and the expansion of services for consumers.<\/p>\n\n\n\n

For example, Coca-Cola currently employs roughly 7,800 people directly, and supports over 87,000 jobs across several sectors.<\/p>\n\n\n\n

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.<\/p>\n\n\n\n

Nedbank said that while public investment has stagnated, it follows record-high amounts planned in previous years, which are currently working through the economy.<\/p>\n\n\n\n

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.<\/p>\n\n\n\n

“Heightened downside risks to global and local growth prospects are likely to make firms more hesitant to expand operations,” it said.<\/p>\n\n\n\n

Fixed investment and the GDP<\/h2>\n\n\n\n
\"\"<\/a>
Economist Frans Cronje.<\/figcaption><\/figure>\n\n\n\n

A country’s fixed investment rate is closely linked to its GDP growth, with higher capital expenditure heralding stronger economic growth.<\/p>\n\n\n\n

Economist Frans Cronje has previously spoken on the close relationship between fixed investment and GDP growth.<\/p>\n\n\n\n

In a video<\/a> for The Common Sense, he highlighted that South Africa’s fixed investment rate is currently below the rates of many other economies.<\/p>\n\n\n\n

The fixed investment rate denotes the total amount of a country’s GDP which is dedicated to capital expenditure projects.<\/p>\n\n\n\n

South Africa’s fixed investment rate was approximately 14% of GDP in 2025, gradually declining from its peak in 2008.<\/p>\n\n\n\n

This is far below the fixed investment rate of many other emerging markets, which averaged approximately 24% in 2025.<\/p>\n\n\n\n

The global average is close to the rate for emerging markets at approximately 25%, while developed economies are generally above 30%.<\/p>\n\n\n\n

Cronje explained that the low fixed investment rate is directly linked to South Africa’s slow GDP growth, which was 1.1% in 2025.<\/p>\n\n\n\n

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%.<\/p>\n\n\n\n

“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.<\/p>\n\n\n\n

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.<\/p>\n\n\n\n

He said that if the country’s GDP growth reaches 4%, unemployment could decrease to approximately 10% over 20 years.<\/p>\n\n\n\n

He called the fixed investment rate a “foundational number” for economic forecasting, raising concerns about the current planned capital expenditure.<\/p>\n","protected":false},"excerpt":{"rendered":"

South Africa’s planned capital expenditure for 2026 raises concerns about the country’s GDP growth, given the close link between the two.<\/p>\n","protected":false},"author":131,"featured_media":767161,"comment_status":"open","ping_status":"closed","sticky":true,"template":"","format":"standard","meta":{"_sma_x_autopost_status":"posted","_sma_x_autopost_error":"","_sma_x_post_id":"2090378578928026107","_sma_facebook_post_id":"191437357620492_2181538175999915","_sma_instagram_post_id":"17964368016151405","_sma_x_attempts":1,"footnotes":""},"categories":[4],"tags":[1814,26139,21863,1799,26235],"class_list":["post-871031","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-business-opinion","tag-coca-cola","tag-fixed-investment","tag-frans-cronje","tag-nedbank","tag-the-common-sense"],"_links":{"self":[{"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/posts\/871031","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/users\/131"}],"replies":[{"embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/comments?post=871031"}],"version-history":[{"count":27,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/posts\/871031\/revisions"}],"predecessor-version":[{"id":871146,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/posts\/871031\/revisions\/871146"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/media\/767161"}],"wp:attachment":[{"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/media?parent=871031"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/categories?post=871031"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/tags?post=871031"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}