When he became president in 2018, we were told that Cyril Ramaphosa was “business friendly” and liked by white people. There would be more investment in the economy after “nine wasted years” of state capture under his predecessor, Jacob Zuma. He appointed envoys to attract foreign direct investment and hosted annual investment summits, where companies made pledges worth billions of rand every year.
I went to the first summit in 2018 and wrote on this page that “$2.2bn of the $6bn Anglo American pledge refers to the construction of the Venetia diamond mine, a project that was launched in 2013. A significant portion of the investment has already happened.”
I realised that many of the “pledges” were fake and decided never to go to another summit. Eight years later, the numbers show that investment has gone from bad under Zuma to worse under Ramaphosa.
The “business friendly” policies have resulted in a sharp decline in investment in the economy. At the summit last week the government said it had attracted “R1.5-trillion of credible verified investment commitments”, of which more than R600bn had been deployed. I wonder if Ramaphosa’s economic advisers told him that R600bn is not something to boast about because it is equivalent to only 9% of the investment of R6.6-trillion that happened from 2019-25. Some of these “investments” had happened when the pledges were made and others would have happened anyway.
There is no evidence that investment responds to business confidence, whatever that means, or policy certainty. The idea that a “confidence fairy” can revive the economy is absurd. Private investment responds with a lag to increased demand or GDP growth. According to Statistics South Africa, in November 2025 large industrial companies had spare capacity (or excess supply) of 22.2%, primarily because there was insufficient demand for the goods and services they could produce.
Why would the private sector invest in a disaster of an economy where GDP per capita is lower than it was in 2007? This means that the only option is for public investment and consumption spending to kickstart the economy.
At a minimum, gross fixed capital formation (GFCF), a measure of total investment, must keep up with inflation and the growth of the population. From 2018-25, real per capita GFCF collapsed 22.7%, which explains why so many parts of the “beloved country” look like dangerous and filthy slums. GFCF as a percentage of GDP declined to 13.9% from 16.2%.
Why would the private sector invest in a disaster of an economy where GDP per capita is lower than it was in 2007? This means that the only option is for public investment and consumption spending to kickstart the economy.
A public sector investment strike ― not BEE ― is the major reason for the collapse in GFCF over the past seven years. Real per capita investment by general government and public corporations declined 22.2% and 31.9%, respectively. Real per capita public investment (by general government and public corporations) declined 26.3%. Real per capita investment by private business enterprises declined 20.2%.
In the 2026 budget, the Treasury said there would be public investment of R1.1-trillion over the next three years until 2028/29. This means that the public sector investment strike will continue. Public investment will decline from 4.5% of GDP to 3.9%. Real per capita public investment will decline about 4% a year.
These statistics illustrate the insanity of austerity. What logic is there in cutting public investment when it has very high GDP and employment multipliers? Since it can generate the resources to more than pay for itself, there should be no budget constraints on public investment.
Some countries have implemented golden rules that protect public investment from indiscriminate and irrational budget cuts. The government must stop the illogical public investment strike.
• Gqubule is an adviser on economic development and transformation.
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