Economists have poured cold water on President Cyril Ramaphosa’s announcement of hundreds of billions of rands pledged at the sixth instalment of the South Africa Investment Conference this week.
While the conference announced a total of 81 investment pledges from as many companies — totalling R415bn from 22 source markets — this figure fails to align with official data on gross fixed capital formation as a percentage of GDP.
Speaking at the conference, Ramaphosa said the sixth investment conference was being convened under the framework of “decarbonisation, digitisation and diversification”, with the ease of doing business as a “cross-cutting theme”.
“Between 2018 and 2023, having set a target of attracting R1-trillion in investments, we attracted R1.5-trillion in credible, verified investment commitments in energy, telecoms, infrastructure, property, mining, advanced manufacturing, and across a range of sectors. This proved that South Africa is an investable market and ready for business,” the president said.
The first investment conference took place in late 2018, and the Presidency said the event had since attracted R1.14-trillion worth of investment commitments in mining, manufacturing, agriculture, energy and the digital economy.
However, according to Stats SA, gross fixed capital formation declined by 1.4% in the fourth quarter of 2019. It said gross fixed capital formation increased by 1.3% in the fourth quarter of 2025, contributing 0.2 percentage points to the total growth.
I’m just very cynical about the whole exercise. It’s almost a sense of a ‘rah-rah exercise’ ... or an attempt to show that the government is co-operating with the private sector.
— Azar Jammine, economist
According to the World Bank, in 2018, when Ramaphosa was first sworn in as president, gross fixed capital formation stood at 16%. It had since slid to a low of just above 13% in 2021 before recovering to the 14%-15% range, although by 2024 it had failed to return to 16% and now languishes at 13% of GDP.
Azar Jammine, the director and chief economist of Econometrix, said neither the claims made by supporters of the investment conference nor the data on GDP growth showed evidence of positive results of this initiative in the economy.
“I’m just very cynical about the whole exercise,” he said. “It’s almost a sense of a ‘rah-rah exercise’ ... or an attempt to show that the government is co-operating with the private sector to help it improve structurally.”
Jammine said the annual reports of companies contain commitments for investment, but these could often be converted into statements of investment pledges at the conference, when the company in question was planning to make investments anyway.
“This summit was held to discuss investment in the real economy and infrastructure,” he said. “You can plot the flows in the JSE, and there have been periods of big outflows and inflows. We saw inflows that were reflected in a rise in the value of the rand, but that was largely investment in bonds.”
He said South Africa has an opportunity to capitalise on a commodity boom, as the price of gold and platinum rises, but many of the pledges made at the conference come across as rhetoric. While many energy and logistics challenges have been addressed, South Africa is still struggling with the constraints of crime and overregulation on business.
The key constraint on gross fixed capital formation lies in the government’s fiscal situation. There exists very little room in government budgets for capital expenditure.
— John Loos, economist
Independent economist John Loos said pledges could fall through and projects could be delayed for myriad reasons, from the organisation’s own internal conditions, global economic conditions, red tape or the pledge being subject to some form of change in South Africa, such as the regulatory environment.
“The key constraint on gross fixed capital formation lies in the government’s fiscal situation,” he said. “There exists very little room in government budgets for capital expenditure.”
Loos said interest payments on debt have increased their share of the total budget in response to a rising debt burden, while social services take up much of the budget, with the welfare grants portion having risen steadily over the past few decades.
“Since the late 1970s, government fixed capital formation as a percentage of GDP fell sharply and never recovered meaningfully. State-owned entities’ capex percentage is also low by historic standards.”
Loos said the private sector was doing significantly better at 9.9%, but even its levels of investment were down compared to historic highs.
“The private sector often waits for the economic policy and government infrastructure environment to be acceptable for it to operate in, and also responds with investment to better economic growth performance. So the private sector often responds to the environment and doesn’t always lead.”
Independent economist Duma Gqubule said investment levels in the economy had gone down since Ramaphosa’s ascension, indicating that the conference had no bearing on the state of investment in the real economy.
“I don’t know why the president insists on having these national charades,” he said. “If you look at the stats from 2018 to 2025, gross fixed capital formation collapsed by 15.1%. The government component of that went down by 19.1%. Real per capita investment went down by 26.3%.”
Citing an announced investment by De Beers into the Venetia Mine in Limpopo, Gqubule said the conference was supposed to showcase new investments, but presented announcements of investments that had already been made as though they were new pledges.
“The president, I think, is gaslighting us. If you look at the stats since he came into power, gross fixed capital formation as a percentage of GDP has declined. He was supposed to be business-friendly, and [he] sent envoys abroad to draw investment. What have they achieved?”
Prof Raymond Parsons of the North-West University School of Business said the conference was a useful annual reminder of the extent to which investment remains the kingpin of economic growth.
“To achieve the 3.5% GDP growth target by 2030, as wanted by the GNU, total fixed investment now needs to be closer to 20% of GDP over the next few years, rather than about 15% at present,” he said. “The latter ratio explains why current GDP growth is only about 1%-1.5%, which is the result of well-known past policy challenges.”
Parsons said reforms such as accelerating the pace of infrastructural implementation, enhancing public-private sector partnerships, tackling corruption and scaling up Operation Vulindlela were dedicated to improving the climate for investment prospects in South Africa.
Efficient Group economist Dawie Roodt said the pledges at the conferences did not seem to be making a dent in capital formation, and South Africa needed gross-fixed capital formation of at least 25% of GDP for investment in the economy to lead to meaningful growth.
“We haven’t seen a change in capital formation in South Africa,” Roodt said. “So I just do not see how the president can boast about these new investments and all these numbers and all of these wonderful things that are going to happen if the actual capital formation remains at about 15% of GDP.”
He said the initiative of the investment conference needed a rigorous and objective mechanism to track progress on investment pledges to prevent the distortion of pledges, the restatement of existing pledges and other wrinkles that may exaggerate the figures.
“I don’t believe all of these numbers. Many of these numbers would have happened in any event. And I also believe that there is a lot of double counting, and there are a lot of lies in here as well. People are saying they are going to do A, B and C, and they just don’t do it.”
Roodt said that last year South Africa saw policy changes, such as the reduction in the inflation target, which triggered a huge inflow into capital markets, equities and bond markets. However, a similar flow of investment was not being seen in the “real economy”, where factories and mines are built.
Ramaphosa acknowledged in his address to the conference that network industry bottlenecks and years of state capture had hampered the state’s and parastatals’ ability to invest strongly in the economy, hence the government’s introduction of Operation Vulindlela.
“This has enabled us to implement far-reaching economic reforms for rapid growth,” he said. “Its mandate is simple: to reduce the cost and the risk of investing in South Africa, not through speeches, like what I am doing now, but through measurable implementation. So if you like, you can just discard what I am saying now and focus on whether we are implementing what we say or not.”
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