{"id":878136,"date":"2026-10-05T08:48:22","date_gmt":"2026-10-05T06:48:22","guid":{"rendered":"https:\/\/businesstech.co.za\/news\/?p=878136"},"modified":"2026-10-05T08:48:25","modified_gmt":"2026-10-05T06:48:25","slug":"alarm-bells-ringing-for-south-africa-2","status":"publish","type":"post","link":"https:\/\/businesstech.co.za\/news\/business-opinion\/878136\/alarm-bells-ringing-for-south-africa-2\/","title":{"rendered":"Alarm bells ringing for South Africa"},"content":{"rendered":"\n

Investment in South Africa fell to 13.6% of GDP in the second quarter, as the public sector struggles to turn planned development into reality.<\/p>\n\n\n\n

The second quarter was a weak period for South Africa, as the country’s GDP contracted for the first time in six consecutive quarters.<\/p>\n\n\n\n

The contraction came amid global uncertainty around oil prices and an interest rate hike from the South African Reserve Bank (SARB), further cooling the economy.<\/p>\n\n\n\n

With the economic contraction, investment as a percentage of GDP was also worryingly low, at 13.6%.<\/p>\n\n\n\n

Business Leadership South Africa (BLSA) CEO Busiswe Mavuso said the investment percentage was at its lowest in five years.<\/p>\n\n\n\n

She said this was despite South Africa’s turnaround in the energy and logistics sectors since 2021, with the private sector still not fully confident in the country.<\/p>\n\n\n\n

“The economy must prove it is working better before businesses commit long-term investment capital,” she said.<\/p>\n\n\n\n

She said public-private partnerships aim for a higher investment rate, but it remains lower than what is considered necessary for the country.<\/p>\n\n\n\n

“The business-government partnership has targeted 20% of GDP as a medium-term goal, though we have long seen 30% as the level needed to support credible economic growth,” she said.<\/p>\n\n\n\n

Frans Cronje Private Clients economist, Frans Cronje, has previously discussed the relationship between the fixed investment rate and a country’s economic growth.<\/p>\n\n\n\n

In a video<\/a> for the Common Sense, Cronje said South Africa needs to improve its fixed investment rate if it wants to foster economic growth and job creation.<\/p>\n\n\n\n

He said the global average for fixed investment in emerging economies was approximately 25%, and that South Africa would need to aim for this if it wants to have 4% economic growth.<\/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

Public sector investment<\/h2>\n\n\n\n
\"\"<\/a>
Business Leadership South Africa Chief Executive, Busisiwe Mavuso<\/figcaption><\/figure>\n\n\n\n

While the private sector is often looked to for investment, Mavuso said the government also plays a part in South Africa’s long-term development.<\/p>\n\n\n\n

She said that the public sector has historically accounted for a large share of the country’s overall investment.<\/p>\n\n\n\n

“The public sector is a major investor, historically responsible for about one third of investment,” she said.<\/p>\n\n\n\n

She noted that in the February budget, Finance Minister Enoch Godongwana said the public sector is committed to investing over R1 trillion over the next three-year period.<\/p>\n\n\n\n

“That would be material to the overall figures, given we currently see about R1 trillion of investment per year,” Mavuso said.<\/p>\n\n\n\n

She said the issue with public sector investment is converting planned developments into live projects.<\/p>\n\n\n\n

In June, Infrastructure SA highlighted how difficult it is to get projects live, due to the government’s current tender process.<\/p>\n\n\n\n

The government body reported that, in 2025, 2,549 tenders had been advertised, but only 433 had been awarded.<\/strong><\/p>\n\n\n\n

“With only one in six tenders being awarded, the R1 trillion budget is never going to be spent,” Mavuso said.<\/p>\n\n\n\n

Despite the concerning trend, Mavuso said she is confident that public-private partnerships can effectively address the issues.<\/p>\n\n\n\n

“These constraints are solvable,” she said. “Business has worked successfully with the public sector on many fronts, including turning around the performance of the electricity sector and the logistics system.”<\/p>\n\n\n\n

“I believe we are well-positioned to support the public sector to accelerate the procurement of infrastructure projects.”<\/p>\n\n\n\n

She said that the public sector’s biggest issue is a lack of skills, as specialist staff leave government for private-sector roles.<\/p>\n\n\n\n

“Government delivery has been hampered by the exodus of skilled staff from the public sector,” she said.<\/p>\n\n\n\n

“The president\u2019s efforts to professionalise the civil service and turn around its capabilities are the right approach, and progress is slowly becoming evident.”<\/p>\n","protected":false},"excerpt":{"rendered":"

South Africa’s fixed investment rate hit a five-year low last quarter, with the public sector struggling to turn planned development into live projects.<\/p>\n","protected":false},"author":131,"featured_media":878167,"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":"2107000108210393257","_sma_facebook_post_id":"191437357620492_2226967838123615","_sma_instagram_post_id":"18098131478536581","_sma_x_attempts":1,"footnotes":""},"categories":[4],"tags":[15620,19461,26691],"class_list":["post-878136","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-business-opinion","tag-business-leadership-south-africa","tag-busisiwe-mavuso","tag-infrastructure-sa"],"_links":{"self":[{"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/posts\/878136","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=878136"}],"version-history":[{"count":21,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/posts\/878136\/revisions"}],"predecessor-version":[{"id":878175,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/posts\/878136\/revisions\/878175"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/media\/878167"}],"wp:attachment":[{"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/media?parent=878136"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/categories?post=878136"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/tags?post=878136"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}