South Africa needs R1.1 trillion in investment to boost economic growth

South Africa needs a significant increase in investment to accelerate economic growth, create jobs and address long-standing infrastructure challenges. However, new research suggests that simply pouring more money into the economy will not be enough to deliver the growth the country needs.

The issue is not only how much South Africa invests, but also how effectively that money is used to expand productive capacity, improve infrastructure and support businesses.

According to recent research by Old Mutual Corporate, South Africa invested an average of approximately 14% of gross domestic product (GDP) over the five years to 2025. This is considerably below the roughly 22% average recorded across the economies included in its comparison. The research highlights the need to increase investment while improving the returns generated by every rand invested.

The research estimates that South Africa needs approximately R14.50 in investment to generate an additional rand of economic output. In comparison, some of the most capital-efficient, fast-growing economies generate an additional rand of output from just R3 to R5 in investment.

This gap helps explain why South Africa can invest substantial amounts without seeing the economic gains it needs.

The research models three possible scenarios:

These are modelled scenarios, not guaranteed growth outcomes.

South Africa’s infrastructure problems remain a major obstacle to economic expansion. Electricity transmission, water systems, railways and ports are among the areas where investment could help businesses operate more efficiently and improve the country’s competitiveness.

The government expects approximately R1.07 trillion in public-sector infrastructure expenditure over three years. However, a joint study by the Development Bank of Southern Africa and the World Bank estimates the country’s infrastructure financing gap at approximately R13 trillion.

Public funding alone will therefore not be sufficient. Private investors, pension funds, insurers and development finance institutions will need to play a greater role in financing infrastructure projects.

However, attracting this capital requires credible projects, sound governance, regulatory certainty and confidence that investments will generate sustainable returns.

For ordinary South Africans, the real test is whether increased investment leads to more jobs, higher incomes and better economic opportunities.

Investment in transport infrastructure could reduce the cost of moving goods, while improvements to electricity and water networks could help businesses expand production. Greater investment in manufacturing, agriculture and other productive industries could also strengthen employment and exports.

The challenge is ensuring that investment creates new productive capacity rather than simply changing ownership of existing assets.

South Africa’s investment challenge is twofold: it must mobilise more capital and improve how efficiently that capital is deployed.

The latest research suggests that higher investment alone will not unlock the country’s economic potential. Better project preparation, infrastructure delivery and capital allocation are equally important.

Ultimately, faster economic growth will depend on whether South Africa can turn its investment into productive businesses, reliable infrastructure and sustainable job creation.

Sources: South Africa must invest R1.1 trillion to grow the economy by 1% – Daily Investor

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