According to the South African Reserve Bank’s March 2025 Quarterly Bulletin, real gross fixed capital formation declined by 3,7% in 2024 after a 3,9% increase in 2023. This downturn raises concerns about the current state of fixed investments in South Africa and its impact on economic growth.
Deteriorating infrastructure like Eskom’s energy issues and Transnet’s aging infrastructure, along with rising public debt, limits government’s investment capacity. Despite the government’s continued commitment (evidenced by the finance minister, Enoch Godongwana’s, announcement of an allocation of approximately R1 trillion, over 3 years, towards infrastructure in the 2025 budget speech) this level of investment alone will not be sufficient to drive long-term economic growth beyond the 2024 GDP growth rate of 0.6%. Achieving national infrastructure goals is projected to cost R6,2 trillion between 2016 and 2040, with a finance gap of R2,15 trillion as of 2021. This highlights the critical need for private sector investment, which is essential to fill in the funding gap left by the government’s fiscal deficit.
Private sector investment in SA has remained low from 2021 to 2024. According to StatsSA, fixed investments by private business enterprises declined through Q1 to Q3 of 2024, only showing a modest recovery in Q4 due to improved investor sentiment. Overall, this resulted in a -4.1% annual contraction in private investment in 2024, compared to 3% annual growth in 2023. This decline reflects ongoing concerns around policy uncertainty, energy supply challenges and weak investor confidence.
In response, government launched Operation Vulindlela in 2020, a joint initiative led by the Presidency and National Treasury to fast tracks structural reforms to aid recovery. Other efforts include partnership to support anti-crime initiatives through Business Against Crime South Africa, which is a tech-based enforcement solution.
National Treasury advanced its implementation of recommendations to enhance the PPP policy and legal framework to boost investor confidence. However, it has acknowledged that the legislative changes are not sufficient to attract meaningful private sector participation and continues to work on supporting mechanisms to enable broader participation.
In conclusion, the implementation of structural reforms will be essential in attracting adequate funding to enable the participation of private and public sector investments into critical economic sectors.
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Tamela partners with public and private sector clients to unlock long-term economic value through tailored financial solutions. We offer corporate finance advisory, capital raising, and mezzanine funding with expertise across sectors such as mining, energy, finance and industrials, advising clients like Harmony, Exxaro, Sasol, Old Mutual and Barloworld.
Our sector-agnostic mezzanine fund supports scalable growth in businesses such as Boodle (microfinance), Live Easy (housing), and Kiara Health (pharmaceuticals).
Through private investments we invest in industrial firms like Global Wheel and Roytec and promote inclusive ownership through investments like Phuthuma Nathi and MTN Zakhele Futhi.
For more information, please contact For more information contact Bontle Setshedi on +27 11 783 4907 or bontle@tamela.co.za.