South Africa’s modest rebound in gross fixed capital formation (GFCF) is a welcome development, but it’s far from the structural shift needed to lift the economy out of stagnation.
The 1.6% rise in the third quarter of 2025 ends a three-quarter decline, but GFCF remains stuck at about 14% of GDP, well below the 20% threshold widely seen by economists as necessary for sustained 3% growth.
East Asian economies that successfully transitioned to high-income status — think South Korea or Singapore — sustained investment rates of 30% to 40% of GDP during their industrialisation phases. South Africa’s current trajectory doesn’t come close.
Unlocking the country’s R1.8-trillion in corporate cash reserves will require more than a few quarters of positive sentiment. It demands credible reforms in energy, logistics and water infrastructure, as well as a regulatory environment that rewards long-term capital deployment. The uptick in GFCF, driven partly by public procurement and private spending in aircraft and software, is encouraging but insufficient.
The good thing is that there’s evidence that reforms in energy and logistics are opening floodgates of private capital.
Just this week, Traxtion announced a R3.4bn programme to buy and upgrade 46 locomotives and wagons, joining a growing pipeline of private projects which together indicate policy shifts are unlocking private capital.
The National Planning Commission’s estimate that an overhaul of the monetary architecture could unlock about R5-trillion reframes the debate as the absence of bankable vehicles to channel them into long-lived assets.
The risk is that policymakers treat this rebound as a destination. Convert the R5-trillion potential into projects, not press releases, and only then will investment stop being a headline and start being the engine for a different South Africa.
