President Cyril Ramaphosa has warned that South Africa desperately needs to increase investment to drive the growth it needs to create jobs—and he wants the private sector to do it.
In his weekly letter to the nation, the president outlined his administration’s strong investment drive to mobilise trillions of rands over the coming years to drive economic growth.
However, he conceded that these projects and investments take time to achieve results, and the country is falling behind schedule.
But he pointed to non-financial companies in the country having R1.8 trillion in reserves, which could be put to good use.
According to Ramaphosa, while the government will continue to push for more investment, he urged private businesses to move their “substantial private capital” from reserve to productive domestic investment.
“The task of building a more prosperous, inclusive society is a collective one. It relies on productive investment at scale,” he said.
Ramaphosa flagged a significant gap in South Africa’s investment landscape.
He pointed to one of the most used measurements of investment in the economy: gross fixed capital formation (GFCF).
GFCF reflects the value of acquisitions of new or existing fixed assets—like buildings, machinery, and roads—by businesses, governments, and households, minus disposals.
Expressed as a percentage of GDP, South Africa’s GFCF is currently around 14%, the president said, while the National Development Plan challenged the state to reach 30% by 2030.
“Our GFCF reached around 21% in 2008, driven by a sustained commodity boom, the start of Eskom’s build programme and infrastructure expansion ahead of the 2010 FIFA World Cup,” he said.
“There has been a steady decline since then, as the global financial crisis and the period of state capture progressively undermined private investment and business confidence.”
Ramaphosa said the government has been trying to arrest this decline since 2018, moving to stabilise public finances, resolve the energy crisis and advance structural reforms.
While many of these actions have yielded results and even turned investor sentiment towards South Africa, the president noted that there is “still a disconnect between improved investor sentiment and greater investment”.
This has been further stifled by a consistently low economic growth environment—now expected around 1% in 2026 and reaching only 1.5% in the medium term—and high levels of unemployment.
Data from Stats SA in the past week showed that South Africa shed 345,000 jobs in the first quarter of the year, taking the unemployment rate up to 32.7%.
There are 8.1 million unemployed people in the country, with hundreds of thousands of people giving up looking for work.
Sending mixed messages
While Ramaphosa stressed that the message South Africa has been taking to investors is that the country is creating the conditions for growth and providing the necessary policy certainty, it hasn’t been consistent.
Business groups have noted that this message has been undermined by a counterintuitive leaning into murky policies like BEE, which is seen as a high barrier to entering and investing in South Africa.
The latest examples have been a concerted effort to push back against BEE equivalency programmes in the IT sector, as well as new BEE procurement rules that undermine majority-owned businesses in favour of 100% black-owned businesses.
The government has also created self-inflicted turmoil in the healthcare sector through the National Health Insurance scheme, while generally making it more difficult to do business in the country.
Government policy often works against stated goals of driving business and growth, while promised reforms are hampered by lags in execution.
According to Business Leadership South Africa (BLSA) CEO, Busi Mavuso, one of the most critical sectors needed to feed economic growth—logistics—is under pressure here.
In her latest newsletter, Mavuso said reforms in this sector are urgent and critical for job creation.
Mavuso said that economic growth is the only path to creating the jobs South Africa desperately needs, and “growth requires competitive logistics that enable our exporters to succeed in global markets”.
“We cannot be a competitive exporting nation without efficient ports and efficient access to them,” she said.
“Our farms, factories and mines need to be able to get their output to markets around the world at prices that are competitive with other producers. That is critical to enabling economic growth and job creation.”
While some progress has been made, the CEO said it is going slower than liked, and urged Ramaphosa and the rest of the government to accelerate the necessary reforms.
“We need the Network Statement completed. We need more port concessions finalised. We need transaction terms that genuinely enable private investment rather than protecting Transnet’s monopoly,” she said.
