I refer to your article, “Cash held by firms surges to R2-trillion,” (October 14).
In our October 13 client-exclusive Risk Alert, we analyse the growing trend of non-financial companies holding on to more cash. The growth in cash holdings reflects reluctance to deploy funds into investments, driven by a lack of opportunity combined with a heightened sense of uncertainty. SA’s stagnant economy offers limited investment opportunities, and the political and policy environment does not inspire confidence.
The Reserve Bank emphasises that companies are not stockpiling cash for the sake of it, writing: “They are responding to economic conditions and balancing risk with readiness to invest when confidence returns.”
This means that substantial financial resources are available to be deployed should the government adopt meaningful pro-growth reforms.
Chris Hattingh
Centre for Risk Analysis
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