South African corporates are sitting on an extraordinary $96 billion (around R1.7 trillion) in cash and short-term deposits – a record high equivalent to roughly 15 percent of GDP. It’s a striking paradox: in an economy desperate for investment and job creation, corporate balance sheets have never been stronger. What began as a crisis buffer during the pandemic has quietly evolved into a symbol of hesitation.
The buildup of cash is broad-based. Miners, having enjoyed windfalls during this commodity cycle, have held back on reinvestment as global demand normalises and domestic policy uncertainty clouds long-term project visibility. Banks maintain elevated liquidity buffers amid weak loan demand and tighter regulation. Retailers and fast-moving consumer-goods groups are prioritising flexibility over fixed-asset expansion, wary of overcommitting while households battle high living costs and unemployment. In essence, for every rand being reinvested into productive capacity, several more are being parked in low-yield deposits. Treasury departments have become the quiet heroes of corporate strategy, not by generating returns, but by ensuring survival in a world perceived as unpredictable. Inside the boardroom, “capital discipline” has evolved from virtue to reflex. Following years of erratic policymaking, energy disruptions, and slow structural reform, executives have learned that caution feels safer than conviction. The scars of past shocks – from the pandemic to the Eskom crisis – have reshaped risk appetite. Some have even floated the idea that in South Africa, liquidity is strategy. This defensive posture manifests in governance with boards backing dividends, buybacks, and conservative gearing. Many firms have adopted capital-allocation frameworks that explicitly require exceptionally high hurdle rates for new projects, effectively filtering out all but the safest investments. Policy volatility amplifies this stance. Electricity reform remains incomplete, logistics bottlenecks persist, and an uncertain political landscape adds another layer of unpredictability. Each of these factors contributes to a higher perceived risk premium on local investment. Even as inflation moderates, borrowing costs remain stubbornly high – with real interest rates still discouraging expansion.
The Hidden Costs of Hoarding
Yet corporate prudence comes at a national cost. Idle cash depresses returns on equity, saps entrepreneurial energy, and starves the broader economy of productive capital. It also undermines South Africa’s ability to shift gears from recovery to expansion.
When companies refrain from investing, productivity stagnates, innovation slows, and job creation stalls. The irony is stark: while policymakers call for private-sector dynamism, many of the country’s most profitable firms are disengaging from the growth cycle.
South Africa today faces a curious imbalance – a fiscal deficit in the public sector and a “savings glut” in the private one. The state borrows heavily to fund current expenditure, while corporates accumulate cash instead of deploying it. The outcome is macroeconomic stasis: liquidity exists, but conviction does not. The market, too, is beginning to notice. Investors who once applauded cash discipline are now questioning what those idle balances say about leadership intent. Excessive liquidity, without a clear reinvestment plan, increasingly looks like under-management. Global shareholders compare South African firms to peers in markets where capital is being actively recycled into capacity growth, technology, or new markets – and the contrast is unflattering.
Structural Headwinds
Several structural factors deepen the impasse. South Africa’s infrastructure decay raises execution risk for any new project – whether it’s a factory, mine, or logistics hub. Energy costs remain unpredictable despite recent stabilisation, and transport inefficiencies continue to inflate input prices. Bureaucratic hurdles around permits, land use, and environmental compliance often delay projects to the point of discouragement. Moreover, capital controls and exchange-rate volatility deter foreign investors and complicate offshore diversification. Local management teams, constrained by regulatory red tape and shareholder scrutiny, default to short-term optimisation rather than long-term vision. The result: strong balance sheets but weak pipelines.
From Hoarded Cash to Catalyst: Unlocking the Mountain
Unlocking South Africa’s R1.7 trillion cash mountain won’t hinge on fiscal stimulus or looser monetary policy alone – it depends on shifting the narrative from paralysis to partnership. One of the most promising developments in this space has been Transnet’s pivot toward private sector participation (PSP) in rail and port infrastructure. For decades, Transnet has been viewed as a bottleneck – undercapitalised, overextended, and struggling with both physical decay and chronic underinvestment. But in 2025, the company and the government have signalled a meaningful turning point: the opening of the freight rail network to private operating firms, the issuance of Requests for Information (RFIs) and upcoming Requests for Proposals (RFPs), and a more flexible approach toward partnerships. These initiatives open genuine pathways for capital deployment. Corporates sitting on cash can choose from a spectrum of roles. Viewed in the broader growth narrative, Transnet’s PSP approach acts as a catalyst. It signals to boards that infrastructure risk is being de-risked. It offers projects where the risk-return profile is clearer, and the downside is constrained by contract structures and oversight. More importantly, it helps institutional investors and corporates justify stepping off the sidelines: with credible frameworks in place, a portion of that cash mountain can be mobilised.
If this momentum holds, we may begin to see a virtuous cycle: private investment in logistics improving rail efficiency; lower transport costs unlocking marginal projects; further reinvestment in manufacturing, mining, and processing located closer to end markets; and renewed confidence inspiring further capital deployment.