Capital investment plans in South Africa soared last year as private commitments tripled while government projects excluding state-owned enterprises fell, according to a Nedbank report.
The value of the newly announced plans increased by 16% to R705.6 billion, the financial institution said in its capital expenditure project list report published on Monday.
Private companies have committed to invest R382.5 billion, up from R116.2 billion in 2024. Key initiatives include the R85.2-billion expansion and modernization of digital infrastructure through Vodacom’s network upgrades and accelerated 5G rollout, and NT55 Investments’ planned R50-billion inland port in central Gauteng.
“The increase in private sector project announcements reflects an improving cyclical environment,” Nedbank said.
A 12% increase in the value of planned projects by state-owned enterprises also stimulated investment activity, mainly driven by Eskom’s R320 billion power infrastructure overhaul.
In contrast, the value of projects planned by the government itself fell from R204 billion in 2024, when authorities announced a R43.7 billion housing and community development program and a R35.8 billion second phase of the Lawywal wastewater project, to R2.9 billion last year.
Years of underinvestment and mismanagement have left Africa’s largest economy with a huge infrastructure backlog that is holding back production.
President Cyril Ramaphosa has previously estimated that the country will need R1.6 trillion in public sector infrastructure investment and an additional R3.2 trillion from the private sector to meet its infrastructure targets by 2030.
The government is trying to attract private investment through reforms while shifting spending to infrastructure that will foster growth.
Measures under President Ramaphosa’s task force Operation Brindlera set up to address energy and cargo constraints are making progress, with 47% of reforms on track and most of the rest progressing despite delays, National Treasury announced on Friday.
South Africa raised R11.8 billion in its first infrastructure bond sale late last year, attracting bids more than double the amount offered.
“The fundamentals driving investment are clearly improving,” Nedbank said.
Credit default swap spreads on South African government bonds have narrowed across all maturities to their lowest levels since 2010, indicating a sharp decline in risk premiums.
According to Nedbank, combined with the decline in long-term interest rates, the hurdles for new investment are lowering. Supporting more cyclical conditions, such as easing inflation and lower borrowing costs, are also boosting domestic demand, which should gradually absorb excess capacity and encourage companies to consider expansion, the report added.
“We expect gross fixed capital formation to increase from -2.3% in 2025 to 2% in 2026, with growth averaging below 1.9% over the next three years,” the lender said, while warning that investors are likely to remain cautious as high operating costs, overcapacity in some sectors and rising U.S. tariffs threaten private capital investment.
